Electrical balance of system (EBOS) solutions company Shoals Technologies Group exited Q3/2023 with YoY revenue growth of 48%, a record for the company. Higher sales volumes, thanks to increased domestic demand for solar EBOS, contributed to the revenue of $134.2 million.
While its adjusted EBITDA increased 81% YoY to $48 million and adjusted net income improved 101% to $33.4 million during the reported period, gross profit declined from $36 million to $14.2 million.
The management blamed $50.2 million in wire insulation shrinkback expenses, slightly offset by lower raw materials input costs, increased leverage on fixed costs, and efficiencies gained in operations for this drop and also a net loss of -$9.8 million.
Shoals has filed a complaint against Prysmian Cables and Systems USA seeking compensatory and punitive damages, recovery of all costs and expenses incurred, expenses incurred by the Company in connection with the identification, repair and replacement of the defective wire, and other legal and equitable relief.
In terms of its order book, at the end of September 2023, Shoals' order backlog and awarded orders were worth $633.3 million, with a 34% YoY and 16% sequential increase (see Strong Financials For Shoals In Q2/2023).
"While the domestic utility scale solar market is currently experiencing slower growth, we believe our strong value proposition and the emerging strength from our international business will continue to drive order growth. We are pleased that international now represents more than 10% of our backlog and awarded orders," said Shoals' CEO Brandon Moss.
Despite a strong quarter, the company has narrowed its 2023 revenue guidance to now within $485 million to $495 million, from the $480 million to $510 million range provided earlier. It forecasts adjusted EBITDA of $165 million to $175 million, along with adjusted net income of $110 million to $120 million.