UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 15, 2021

Shoals Technologies Group, Inc.
(Exact name of registrant as specified in its charter)

Delaware 001-39942 85-3774438
(State or other jurisdiction of incorporation or organization) Commission File Number: (I.R.S. Employer Identification No.)
1400 Shoals Way
Portland, Tennessee 37148
(Address of principal executive offices, including zip code)
(505) 881-7567
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Class A Common Stock, $0.00001 Par Value SHLS Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 Results of Operations and Financial Condition.

On March 15, 2021, Shoals Technologies Group, Inc. (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2020. In the press release, the Company also announced that it would be holding a conference call on March 15, 2021 to discuss its financial results for the quarter and year ended December 31, 2020. The full text of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference. The transcript of the conference call is
attached hereto as Exhibit 99.2 to this Form 8-K.

The information set forth in this Item 2.02, including Exhibit 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 15, 2021, the Board of Directors of the Company increased the size of the Board from eight to ten directors and filled the existing and newly created vacancies by appointing, effective March 22, 2021, (i) Lori Sundberg as a Class II director, with a term expiring at the Company’s annual meeting of stockholders in 2023, (ii) Toni Volpe as a Class I director, with a term expiring at the Company’s annual meeting of stockholders in 2022 and (iii) Ty Daul as a Class I director, with a term expiring at the Company’s annual meeting of stockholders in 2022 (Ms. Sundberg, Mr. Volpe and Mr. Daul are collectively referred to as the “New Directors”). The Board also appointed Ms. Sundberg to be the chair of the Compensation Committee of the Board (the “Compensation Committee”) and a member of the Nominating and Governance Committee (the “Nominating and Governance Committee”) of the Board, effective March 22, 2021, and concurrent with such appointments Peter Wilver will cease to be a member of the Compensation Committee and Peter Jonna will cease to be a member of the Nominating and Governance Committee. The Board also appointed Mr. Volpe and Mr. Daul to be members of the Audit Committee of the Board (the “Audit Committee”), effective March 22, 2021, and concurrent with such appointment Brad Forth and Jason Lee will cease to be members of the Audit Committee. The Board has determined that the New Directors are independent for purposes of serving on the Board under the applicable rules of the Securities and Exchange Commission (the “SEC”) and Nasdaq.

Ms. Sundberg is Executive Vice President and Chief Human Resources Officer for Western Digital Corporation, leading key global human resources initiatives and people strategies. Ms. Sundberg has more than 30 years of experience in developing and aligning HR strategy with business needs. She has led large corporate initiatives focused on culture, organization effectiveness, diversity, leadership development, merger and acquisition, and total rewards. Before joining Western Digital, she served as SVP, Global Human Resources at Jacobs, a global provider of technical, professional and construction services. Sundberg has also served as SVP, Human Resources and Ethics at Arizona Public Services Company, the largest electric utility in Arizona, and advanced through a series of HR leadership roles at American Express. Ms. Sundberg holds a Bachelor of Science degree in Business Management from Brigham Young University.

Mr. Volpe is Chief Executive Officer and Board Member of Falck Renewables S.p.A., a global leader in the development, design, construction and management of renewable energy plants and infrastructure. Under his leadership, the company expanded geographically in Europe and the U.S. with growth in wind and solar energy, and into the energy flexibility and efficiency sectors in Italy, implementing a significant investment plan in both digital and physical assets. Prior to Falck Renewables, Mr. Volpe served in various senior leadership positions at Enel Green Power (EGP). As President and Chief Executive Officer of EGP North America, Mr. Volpe led the company’s portfolio diversification geothermal, solar, mini-hydro, wind, and biomass, and built



pipelines of projects in various technologies. Substantial growth in installed capacity and gross margin allowed EGP NA to become a leading owner and operator of renewable energy plants in the United States and Canada. He graduated magna cum laude in Management, Economics and Industrial Engineering, at Polytechnic of Milan and obtained his MBA from Columbia Business School.

Mr. Daul is Chief Executive Officer and a member of the Board of Directors of Primergy Solar, a developer, owner and operator of both distributed and utility scale solar PV and energy storage projects across North America. Prior to Primergy, Mr. Daul served as Vice President of Canadian Solar’s energy project development business throughout North and South America and was President of Recurrent Energy Group, a wholly owned subsidiary of Canadian Solar that functions as the company’s U.S. project development arm. In addition, Mr. Daul served on the Board of 8point3 Energy Partners, the SunPower-First Solar publicly traded Yieldco. Prior to joining SunPower, he co-founded Element Power in 2009 and oversaw the company’s wind and solar businesses in the Americas for five years. With more than three decades of experience in the power generation industry, Mr. Daul has been integrally involved in more than 8 GW of operating renewable projects representing well over $11 billion of total investment. A seasoned leader with an ability to execute complex transactions across diverse technologies and teams, Ty’s energy industry experience also includes seven years at PPM Energy/Iberdrola Renewables, Entergy and Newport Generation. He was on the Board of Directors of the Solar Energy Industries Association for nearly three years and served on the Wind Solar Alliance Board for more than seven years. He earned a B.S. in mechanical engineering from the University of Washington and an MBA from Texas A&M University.

The New Directors will be compensated and reimbursed in accordance with the Company’s existing policies with respect to directors and committee members. The Company will enter into indemnification agreements with each of the New Directors in connection with their appointment to the Board. The indemnification agreements will be substantially the same form as the indemnification agreement for the other directors of the Company that was filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-1, filed with the Securities and Exchange Commission on December 30, 2020. There are no other transactions with the New Directors which would require disclosure under Item 404(a) of Regulation S-K.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
99.1
99.2






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Shoals Technologies Group, Inc.
By: /s/ Jason Whitaker
Name:   Jason Whitaker
Title: Chief Executive Officer

Date: March 16, 2021


Exhibit 99.1
Shoals Technologies Group, Inc. Reports Financial Results for Fourth Quarter and Full-Year 2020
03/15/2021

– Reports Record Revenue and Earnings for 2020 –

– Fourth Quarter Gross Margin Expands More Than 530 bps Year-Over-Year –

– Backlog at December 31, 2020 up 46% Versus Last Year –

– Provides 2021 Outlook for Continued Strong Growth –

PORTLAND, Tenn., March 15, 2021 (GLOBE NEWSWIRE) -- Shoals Technologies Group, Inc. (“Shoals” or the “Company”) (Nasdaq: SHLS), a leading provider of electrical balance of system (“EBOS”) solutions for solar, battery storage and electric vehicle charging infrastructure, today announced financial results for its fourth quarter and full year ended December 31, 2020.

“2020 was another record year for Shoals. We grew revenues 21%, expanded adjusted EBITDA margins more than 900 basis points, increased the percentage of our revenues from system solutions to 66% and successfully navigated the unique challenges created by the coronavirus pandemic. Our results reflect the tremendous efforts of our team members and the passion they have for our technology and its important role in the energy transition,” said Jason Whitaker, Chief Executive Officer of Shoals.

Mr. Whitaker continued, “Our focus for 2021 is executing on the growth strategies that we described during our initial public offering which include converting more customers to our BLA solution, broadening our product offering into complementary categories of EBOS, expanding internationally and introducing new products for EV charging infrastructure. We are on or ahead of plan for each of these initiatives. BLA is continuing to take share from conventional homerun solutions and we are on track to convert several new EPCs and developers to our system in 2021. We are on schedule to launch wire management and IV curve benchmarking products in Q2 to complement the BLA and we expect both products to begin generating revenues in Q4. We recently hired our head of EMEA sales to continue building our international sales pipeline. We are taking steps to accelerate the development of our EV infrastructure business because we see an opportunity to bring game changing innovation to that market similar to what we did in solar. As part of that effort, we hired Jeff Tolnar to head our newly formed EV infrastructure business. Jeff previously served as Chief Commercial Officer of Greenlots, a leading provider of turnkey EV charging solutions that was acquired by Shell.”

“The entire Shoals organization contributes to the Company’s success and we are proud that all of our employees became shareholders through our recent initial public offering. The energy transition is a global megatrend that is in the very early innings. We see tremendous opportunity ahead for our employees and shareholders,” concluded Mr. Whitaker.




Exhibit 99.1
Results Three Months Ended December 31, 2020
Revenues were $38.8 million, compared to $37.9 million for the prior-year period. Year-over-year growth was more modest in the fourth quarter due to extended downtime we took in December while we expanded capacity, as well as an extraordinarily strong fourth quarter of 2019.

Gross profit increased 19.0% to $14.8 million, compared to $12.5 million in the prior year period driven primarily by a higher proportion of revenue from combine-as-you-go system solutions, purchasing efficiencies from increased volumes, improved material planning which reduced logistics costs, enhancements to product design that lowered manufacturing costs, and other manufacturing efficiencies resulting from higher production volume. Gross margin increased more than 530 bps to 38.3% from 32.9% in the prior year.

Operating expenses were $7.7 million compared to $4.3 million during the same period in the prior year primarily as a result of higher equity-based compensation, increased payroll expense due to higher headcount, and non-recurring expenses related to our IPO.

Income from operations was $7.2 million, compared to $8.1 million during the same period in the prior year.

Net income was $4.2 million, compared to $7.8 million during the same period in the prior year. Adjusted net income increased 10.6% to $11.1 million, compared to $10.1 million during the same period in the prior year.

Adjusted EBITDA increased 32.0% to $14.1 million, compared to $10.7 million for the prior-year period.

Results Full Year Ended December 31, 2020
Revenues grew 21.5% to $175.5 million in 2020, compared to $144.5 million in the prior year driven by significantly higher sales volumes as a result of increased demand for solar EBOS generally and our combine-as-you-go products specifically. The sale of system solutions represented 66% of revenues versus 51% in the prior year.

Gross profit increased 50.5% to $66.5 million in 2020, compared to $44.2 million in the prior year, primarily driven by purchasing efficiencies from increased volumes, improved material planning which reduced logistics costs, enhancements to product design that lowered manufacturing costs and other manufacturing efficiencies resulting from higher production volumes. Gross margin increased to 37.9% from 30.6% in the prior year, in part due to changes in product mix, with sales of higher-margin products such as system solutions for combine-as-you-go EBOS increasing as a percentage of total revenues.

Operating expense was $29.3 million compared to $17.3 million in the prior year primarily as a result of higher general and administrative expense. Operating expense for the year includes $8.3 million for non-cash equity-based compensation and $2.9 million for COVID-19 related costs, as well as professional fees related to the company’s IPO and additional staffing compensation, offset by a reduction in marketing related expenses.



Exhibit 99.1

Income from operations increased 38.4% to $37.3 million, compared to $26.9 million in the prior year.

Net income grew 34.3% to $33.8 million, compared to $25.1 million in the prior year. Adjusted net income increased 66.4% to $56.3 million, compared to $33.9 million in the prior year.

Adjusted EBITDA grew 65.6% to $60.9 million, compared to $36.8 million in the prior year.

Backlog and Awarded Orders
The Company’s backlog and awarded orders at December 31, 2020 were $157 million, an increase of 46% year-over-year. The increase in backlog and awarded orders reflects continued robust demand for the company’s products from customers in the U.S.

Full Year 2021 Outlook
Based on current business conditions, business trends and other factors, for the full year 2021 ending December 31, 2021, the Company expects:
Revenues to be in the range of $230 million to $240 million, up 31.0% to 36.7% year-over-year
Adjusted EBITDA to be in the range of $75 million to $80 million
Adjusted net income to be in the range of $47 to $51 million
For a reconciliation of a non-GAAP figure to the applicable GAAP figure please see page 9 of this release. These expectations do not consider, or give effect for, material acquisitions that may be completed by the Company during 2021 or other unforeseen events, including changes in global economic conditions.

Webcast and Conference Call Information
Company management will host a webcast and conference call, March 15, 2021, at 5:00 p.m. Eastern Time, to discuss the Company's financial results.

Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at https://investors.shoals.com.

The conference call can be accessed live over the phone by dialing 1-877-407-0789 (domestic) or +1-201-689-8563 (international). A telephonic replay will be available approximately two hours after the call by dialing 1-844-512-2921, or for international callers, +1-412-317-6671. The conference ID for the live call and pin number for the replay is 13717191. The replay will be available until 11:59 p.m. Eastern Time on March 29, 2021. A slide presentation highlighting the Company's results and key performance indicators will also be available on the Investor Relations section of the Company's website at https://investors.shoals.com.

About Shoals Technologies Group, Inc.
Shoals Technologies Group, Inc. is a leading provider of electrical balance of system (“EBOS”) solutions for solar, battery storage and electric vehicle charging infrastructure. The Company’s



Exhibit 99.1
mission is to provide innovative products that reduce the cost of installation while improving system performance, reliability and safety. At least one Shoals’ product was used on more than half of the solar energy projects installed in the U.S. in 2020. To learn more about Shoals Technologies, please visit the company's website at https://www.shoals.com.

Investor Relations Contact
Shoals Technologies Group, Inc.
Email: investors@shoals.com
Phone: 615-323-9836

Non-GAAP Financial Information
(1) A reconciliation of projected adjusted EBITDA and adjusted net income per share, which are forward-looking measures that are not prepared in accordance with GAAP, to the most directly comparable GAAP financial measures, is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty in predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measures may include the impact of such items as non-cash share-based compensation, amortization of intangible assets and the tax effect of such items, in addition to other items we have historically excluded from adjusted EBITDA and adjusted net income per share. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future (collectively, "non-GAAP adjustments").

Forward-Looking Statements
This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our projected future results of operations, business strategies, and industry and regulatory environment. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted Net Income
We define Adjusted EBITDA as net income plus (i) interest expense, (ii) income taxes, (iii) depreciation expense, (iv) amortization of intangibles, (v) equity-based compensation, (vi) COVID-19 expenses and (vii)



Exhibit 99.1
non-recurring and other expenses. We define Adjusted Net Income as net income plus (i) amortization of intangibles, (ii) amortization of deferred finance costs, (iii) equity-based compensation, (iv) COVID-19 expenses and (v) non-recurring and other expenses, all net of applicable income taxes.
Adjusted EBITDA and Adjusted Net Income are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted EBITDA and Adjusted Net Income because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA and Adjusted Net Income: (i) as factors in evaluating management’s performance when determining incentive compensation; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA and Adjusted Net Income to measure our compliance with certain covenants.
Among other limitations, Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; do not reflect income tax expense or benefit; and other companies in our industry may calculate Adjusted EBITDA and Adjusted Net Income differently than we do, which limits their usefulness as comparative measures.
Because of these limitations, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA and Adjusted Net Income on a supplemental basis. You should review the reconciliation of net income to Adjusted EBITDA and Adjusted Net Income below and not rely on any single financial measure to evaluate our business.





Exhibit 99.1
Shoals Parent LLC
Consolidated Balance Sheets
(in thousands)
December 31,
2020 2019
Assets
Current Assets
Cash and cash equivalents $ 10,073  $ 7,082 
Accounts receivable, net 27,004  27,292 
Unbilled receivables 3,794  2,505 
Inventory, net 15,121  8,834 
Other current assets 155  798 
Total Current Assets 56,147  46,511 
Property, plant and equipment, net 12,763  10,947 
Goodwill 50,176  50,176 
Other intangible assets, net 71,988  79,973 
Other assets 4,236  — 
Total Assets $ 195,310  $ 187,607 
Liabilities and Members’ Equity (Deficit)
Current Liabilities
Accounts payable $ 14,634  $ 10,383 
Accrued expenses 5,967  1,264 
Long-term debt—current portion 3,500  12,894 
Total Current Liabilities 24,101  24,541 
Revolving line of credit 20,000  — 
Long-term debt, less current portion 335,332  13,160 
Total Liabilities 379,433  37,701 
Commitments and Contingencies
Members’ Equity (184,123) 149,906 
Total Liabilities and Members’ Equity (Deficit) $ 195,310  $ 187,607 



Exhibit 99.1
Shoals Parent LLC
Consolidated Statements of Operations
(in thousands, except per share amounts)

Three Months Ended
December 31, 2020
Year Ended
December 31,
2020 2019 2020 2019
Revenues $ 38,753  $ 37,883  $ 175,518  $ 144,496 
Cost of Revenue 23,911  25,410  108,972  100,284 
Gross Profit 14,842  12,473  66,546  44,212 
Operating Expenses
General and administrative expenses 5,618  2,270  21,008  9,065 
Depreciation and amortization 2,068  2,061  8,262  8,217 
Total Operating Expenses 7,686  4,331  29,270  17,282 
Income from Operations 7,156  8,142  37,276  26,930 
Interest Expense, net (2,909) (306) (3,510) (1,787)
Net Income $ 4,247  $ 7,836  $ 33,766  $ 25,143 
Earnings per Unit
Basic and Diluted $ 0.03  $ 0.05  $ 0.21  $ 0.16 
Weighted Average Number of Units
Basic and Diluted 160,279  160,279  160,279  160,279 



Exhibit 99.1
Shoals Parent LLC
Consolidated Statements of Cash Flows
(in thousands)

Three Months Ended
December 31,
Year Ended
December 31,
2020 2019 2020 2019
Cash Flows from Operating Activities
Net income $ 4,247  $ 7,836  $ 33,766  $ 25,143 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred finance costs 320  351  38 
Depreciation and amortization 2,388  2,325  9,405  9,163 
Equity-based compensation 1,032  —  8,251  — 
Provision for slow-moving inventory (300) 401  188  301 
Changes in assets and liabilities:
Accounts receivable 1,375  384  288  (473)
Unbilled receivables 4,787  (2,588) (1,289) (1,345)
Inventory (3,522) 1,122  (6,475) (694)
Other current assets (27) (81) 643  137 
Accounts payable 3,966  (867) 4,251  4,195 
Accrued expenses 1,701  (1,046) 4,703  (283)
Net Cash Provided by Operating Activities 15,967  7,495  54,082  36,182 
Cash Flows Used In Investing Activities
Purchases of property, plant and equipment (450) (310) (3,236) (1,719)
Net Cash Used in Investing Activities (450) (310) (3,236) (1,719)
Cash Flows from Financing Activities
Member distributions (364,690) (3,711) (376,046) (13,989)
Proceeds from term loan facility 350,000  —  350,000  — 
Debt discount and financing costs (11,821) —  (11,821) — 
Deferred offering costs (3,738) —  (3,738) — 
Proceeds from revolving credit facility 20,000  —  20,000  — 
Proceeds from delayed draw term loan facility 20,000  —  20,000  — 
Payments on delayed draw term loan facility (20,000) —  (20,000) — 
Payments on senior debt - term loan (4,440) (875) (26,250) (3,500)
Payments on senior debt - revolving line of credit —  (2,500) —  (12,500)
Proceeds from senior debt - revolving line of credit —  2,500  —  2,500 
Net Cash Used in Financing Activities (14,689) (4,586) (47,855) (27,489)
Net Increase in Cash and Cash Equivalents 828  2,599  2,991  6,974 
Cash and Cash Equivalents—Beginning of Period 9,245  4,483  7,082  108 
Cash and Cash Equivalents—End of Period $ 10,073  $ 7,082  $ 10,073  $ 7,082 



Exhibit 99.1
Shoals Parent LLC
Adjusted EBITDA and Adjusted Net Income Reconciliation (Unaudited)
(in thousands)

The following table reconciles net income to Adjusted EBITDA (in thousands):
Three Months Ended
December 31,
Year Ended
December 31,
2020 2019 2020 2019
Net income $ 4,247  $ 7,836  $ 33,766  $ 25,143 
Interest expense 2,909  306  3,510  1,787 
Depreciation expense 391  329  1,420  1,179 
Amortization of intangibles 1,997  1,996  7,985  7,984 
Equity based compensation 1,032  —  8,251  — 
COVID-19 expenses(a)
884  —  2,890  — 
Non-recurring and other expenses(b)
2,633  210  3,077  686 
Adjusted EBITDA $ 14,093  $ 10,677  $ 60,899  $ 36,779 

(a) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees, premium pay during the pandemic to hourly workers and direct legal costs associated with the pandemic.
(b) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses and other costs.

The following table reconciles net income to Adjusted Net Income (in thousands):
Three Months Ended
December 31,
Year Ended
December 31,
2020 2019 2020 2019
Net income $ 4,247  $ 7,836  $ 33,766  $ 25,143 
Amortization of intangibles 1,997  1,996  7,985  7,984 
Amortization of deferred finance costs
320  351  38 
Equity based compensation 1,032  —  8,251  — 
COVID-19 expenses(a)
884  —  2,890  — 
Non-recurring and other expenses(b)
2,633  210  3,077  686 
Adjusted Net Income $ 11,113  $ 10,051  $ 56,320  $ 33,851 

(a) Represents costs incurred as a direct impact from the COVID-19 pandemic, disinfecting and reconfiguration of facilities, medical professionals to conduct daily screenings of employees, premium pay during the pandemic to hourly workers and direct legal costs associated with the pandemic.
(b) Represents certain costs associated with non-recurring professional services, Oaktree’s expenses and other costs.


Exhibit 99.2

Shoals Technologies Group, Inc.
4Q20 Earnings Conference Call Script
March 15, 2021


Operator
————————————————————————————————————————————————
Good afternoon, and welcome to Shoals Technologies Group Fourth Quarter 2020 Earnings Conference Call. Today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I would like to turn the conference over to Mehgan Peetz, General Counsel for Shoals Technologies Group. Thank you. You may begin.

Mehgan Peetz, General Counsel, Shoals Technologies Group, Inc.
————————————————————————————————————————————————
Thank you operator and thank you everyone for joining us today. Hosting the call today are Shoals’ Chairman, Brad Forth; CEO, Jason Whitaker; and CFO, Philip Garton.

On this call, management will be making statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.shoals.com. We do not undertake any duty to update any forward-looking statements.

Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the company's fourth quarter press release for definitional information and reconciliations of historical non-GAAP measures to the comparable financial measures.
With that, let me turn the call over to Brad.

Brad Forth, Chairman, Shoals Technologies Group, Inc.
————————————————————————————————————————————————
Thank you very much Mehgan and good afternoon, everyone.

This is our first conference call since completing our initial public offering in January. I would like to start out by thanking our team for their outstanding execution as well as our new shareholders for their tremendous support. The IPO was an important milestone for our company, and we are all excited about the new opportunities that being public creates for us. 2020 was a year of record revenues, margins and profits for Shoals and I think Jason and his team are just getting started on what they can achieve.

I’ll now turn it over to Jason to provide an update on our business performance and strategy.

Jason Whitaker, CEO, Shoals Technologies Group, Inc.
————————————————————————————————————————————————
Thanks Brad. I’m going to focus my remarks today on four topics:
1.How we performed against our KPIs in 2020
2.The outlook for our end-markets in 2021



Exhibit 99.2
3.Progress we have made on our growth strategy; and
4.Actions we have taken to further strengthen the depth, capabilities and commitment of our leadership team

Following that, I will turn it over to Shoals’ Chief Financial Officer, Phil Garton, who will provide financial highlights from the fourth quarter and full-year 2020, as well as our 2021 financial outlook.

So, starting with our performance against our KPIs. Those of you who met us during our IPO roadshow know that we have two primary financial objectives – grow our topline faster than the market and maintain or expand our Adjusted EBITDA margins. We achieve the former by taking share and entering new product categories, and the latter by increasing the contribution of higher-margin system solutions to our total revenues.

We grew our total revenues and system solutions revenues 21% and 57%, respectively, in 2020. Our system solutions revenues grew faster than the overall EBOS market as a result of share gains. In 2020, we believe approximately 50% of the solar energy projects installed in the U.S. used at least one Shoals product, an increase of more than ten percentage points versus the prior year.

In 2020, we generated 66% of our revenues from the sale of system solutions, an increase of approximately 15 percentage points versus the prior year. The increase in the percentage of our revenues from system solutions contributed to an expansion of our adjusted EBITDA margins of more than 900 basis points from 25.5% in 2019 to 34.7% in 2020.

Now turning to the outlook for our end-markets. In our core U.S. solar business, we are seeing increasing levels of demand as the build-out of new projects accelerates. The acceleration is being driven by growing corporate and utility commitments to buy more of their energy from renewable sources as well as a normalization of permitting processes as more states reopen from the pandemic. The two-year extension of the solar ITC in December has also expanded the total number of projects that are viable, though it may lead to some projects being started later in the year than originally planned as developers have a longer window to commence construction. To put the market momentum we are seeing in context, our quoting activity in the first two months of this year has increased approximately 50% year-over-year.

It’s also important to highlight that the acceleration in the solar market does more than just increase our addressable market – it also pushes customers to adopt our solution versus conventional EBOS. The reason for that is as activity levels grow, labor rates rise and labor availability falls. Many of our EPC customers are telling us that they are having difficulty staffing jobs. The opportunity right now is that big. Because our combine-as-you-go system installs much faster than conventional EBOS and does not require skilled labor, we can be the difference between our customer being able to take on an incremental job versus letting it go to a competitor because they simply don’t have the crews available to do the work.

Longer-term, we are even more bullish about solar than we were a few months ago. The Department of Energy’s estimate for the LCOE of utility scale solar coming online in 24 months has improved 17% from where it was just a year ago reflecting solar’s continued march down the cost curve. We’ve noted that based on declining costs, one of the major solar industry analysts that we follow has increased their forecast for new installations by more than 20% for the next three years from what they were forecasting in June. That’s a huge increase in the size of the market and aligns with what we have been seeing in the marketplace and hearing from customers.

I’ll now spend a couple of minutes on our growth strategy and the progress we have made on each element since our IPO. There are five elements to our growth strategy:



Exhibit 99.2
1.Growing market share by converting more customers to our combine-as-you-go BLA solution;
2.Selling more product to our customers by focusing on projects that incorporate energy storage;
3.Growing our wallet share with customers by introducing complementary products that address other EBOS categories;
4.Expanding internationally; and
5.Introducing new products for EV charging infrastructure.

I am excited to report that we are on or ahead of plan for each of these initiatives.

First, our combine-as-you-go system continues take share from conventional home run solutions. Late in the fourth quarter we converted an additional EPC to our system. That EPC has entered into an MSA with us that has already resulted in approximately 320 MW of orders for this year. We are targeting converting additional EPCs to our system in 2021 as we work to increase our market share to our 60% target.

Second, our strategy of concentrating on projects with energy storage is beginning to pay early dividends. Projects with storage spend about 55% more on EBOS than projects with just solar. More and more of our project pipeline includes storage which we expect to lead to higher Shoals’ revenues on each project we ship.

Third, our strategy to introduce new products in the EBOS segments where we did not historically play is on track. Last week we installed pre-production versions of our basic IV Curve Benchmarking solution across two different projects. The customers reported that the installations went flawlessly, and the project owners are already seeing benefits from the granular performance data the products provide. Next quarter selected customers will begin installing pre-production versions of our wire management solutions. Those installs will start as soon as our patent dockets issue.

We are also working on improved versions of our existing products and are currently in the process of filing seven new patent applications both in the U.S. and internationally.

Fourth, we have continued to make progress on our international expansion strategy. We have recently hired a new VP of EMEA sales to lead our international expansion in that region and we are already in conversations with five potential new European customers.

Fifth, we are focused on developing products for EV charging infrastructure where the same issues of installation inefficiencies and labor availability make building stations more expensive and time consuming than they need to be. We see shortcomings in the products currently available in the marketplace that create an opportunity for disruption.

With Ford, GM, and other OEMs recently announcing plans to phase out ICE vehicles, we are moving toward an EV world even faster than was projected six months ago. Considering that, we have taken steps to accelerate the development of our EV infrastructure business which we believe could become an entirely new leg to our business. We recently hired Jeff Tolnar to be our Senior Vice President of EV for our organization. Jeff previously served as Chief Commercial Officer of Greenlots, a leading provider of turnkey EV charging solutions that was acquired by Shell. We are confident that Jeff and his team will help Shoals disrupt the EV charging space the way we’ve disrupted solar EBOS.

Lastly, I wanted to cover a couple things we have done since our IPO to further strengthen the depth, capabilities and commitment of our leadership team. First, we will be announcing shortly the appointment of



Exhibit 99.2
three new independent directors to our board bringing the total to four independents. Each of these new independent directors are established business leaders who bring new capabilities to our board, including international business experience. Second, we have further strengthened our U.S. sales and marketing team by hiring the former director of marketing for Canadian Solar and a North American Vice President of Sales who previously held similar roles at Delta and Huawei. Third, we made all of our employees shareholders in connection with our IPO. We believe that aligning every member of our team with our shareholders is important.

As you can tell, we have been busy since our IPO. Solar is growing rapidly, our products are winning in the marketplace and we are executing well against the growth plans that we laid out in our IPO roadshow. I could not be more optimistic about our potential this year and beyond.

With that, I will turn it over to Phil for an update on Shoals’ financial results and outlook.

Philip Garton, CFO, Shoals Technologies Group, Inc.
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Thank you, Jason. I will provide some commentary on our fourth quarter and full year 2020 results, followed by our 2021 outlook.

For the fourth quarter, we generated revenues of $38.8 million which was in line with our expectations. Year-over-year growth was more modest in the fourth quarter due to extended downtime we took in December while we expanded capacity, as well as an extraordinarily strong Q4 2019. We expect quarterly comparisons going forward to be consistent with the year-over-year growth implied by our guidance, although we expect more of our growth to come in the second half vs. the first half.

Prices across our product lines during the fourth quarter were comparable to the prior year.

Gross margins in the fourth quarter increased by more than by 530 basis points to 38.3% from the prior year period as a result of a higher proportion of revenue from combine-as-you-go system solutions, purchasing efficiencies from increased volumes, improved material planning which reduced logistics costs, enhancements to product design that lowered manufacturing costs, and other manufacturing efficiencies resulting from higher production volume.

Operating expenses were $7.7 million compared to $4.3 million in the prior period, this was driven by higher equity-based compensation, increased payroll expense due to higher headcount, and non-recurring expenses related to our IPO.

Adjusted EBITDA, which excludes amortization of intangibles, stock-based compensation, COVID-19 related expenses, and other non-recurring items, was $14.1 million up 32.0% from $10.7 million in the prior period, with adjusted EBITDA margin increasing approximately 820 basis points year-over-year to 36.4%.

Adjusted net income increased 10.6% to $11.1 million compared to $10.1 million during the same period in the prior year.

Now turning to our full year results. Revenues for the year ended December 31, 2020, grew 21.5% to $175.5 million compared to $144.5 million in the prior year, this was driven by significantly higher sales volumes as a result of increased demand for solar EBOS generally and our combine-as-you-go products specifically.




Exhibit 99.2
We derived 66% of our revenues in 2020 from sales of system solutions which was an increase of approximately 15 percentage points versus 2019.

Gross profit increased 50.5% to $66.5 million compared to $44.2 million in the prior year, this was driven by higher volume and efficiency gains. Gross margin expanded by approximately 700 basis points to 37.9% in 2020 compared to 30.6% in the prior year period. Higher gross margin was the result of having more revenues to absorb fixed costs as well as increased sales of system solutions for combine-as-you-go EBOS which carry higher margins than our other products.

Operating expenses were $29.3 million compared to $17.3 million in the prior year, this was primarily as a result of the higher non-cash equity-based compensation related to Class C units issued, an increase in headcount and professional fees related to our IPO.

Adjusted EBITDA grew 65.6% to $60.9 million compared to $36.8 million in the prior year. Adjusted net income increased 66.4% to $56.3 million compared to $33.9 million in the prior year. Adjusted EBITDA and adjusted net income exclude amortization of intangibles, stock-based compensation, COVID-19 related expenses, and non-recurring items. Please see the adjusted EBITDA and adjusted net income tables in our fourth quarter press release.

Turning to our outlook for 2021, our backlog as of December 31, 2020 was $157 million representing an increase of 46% year-over-year. We have also seen our backlog continue to grow during the first quarter as a result of robust order activity. Based on what we are seeing in the market and feedback from our customers, we currently expect 2021 revenues to be in the range of $230 million to $240 million, representing a 34% year-over-year increase based on the midpoint of the range. We expect adjusted EBITDA to be in the range of $75 million to $80 million, and adjusted net income to be in the range of $47 million to $51 million.
Now I will turn it back over to Jason for closing remarks.

Jason Whitaker, CEO, Shoals Technologies Group, Inc.
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Thanks Phil. I would like to wrap up with five simple reasons why we are excited about Shoals for 2021 and beyond.
1.Growth in our core U.S. solar market is accelerating;
2.We have the category killing product for solar EBOS and we are taking share;
3.We continue to migrate customers from components to system solutions which allows us to earn higher margins;
4.We are on our way to tapping the international market opportunity which could ultimately be as large as our core U.S. market; and
5.We see an opportunity to bring innovation to EV charging which could create an entirely new leg for our business.

Thank you for your time today. Now we will open up the line for questions.

Jason Whitaker, CEO, Shoals Technologies Group, Inc.
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Thank you everyone for joining us today.




Exhibit 99.2
I would like to close by reiterating how proud I am of our team and the excitement I have for our future. I would also like to thank our shareholders for their tremendous support. We look forward to future discussions updating you on our progress.