With an order book of backlog and awarded orders that grew 74% annually as of September 30, 2022, and 44% sequentially to $471.2 million, a healthy Q3/2022 with annual revenues going up 52% YoY to $90.8 million and a strong regulatory environment, US based electrical balance of system (EBOS) solutions provider Shoals Technologies Group has improved its FY 2022 outlook.
Shoals attributed higher revenues to higher sales volumes thanks to increased demand for solar EBOS in general, and that for the company's combine-as-you-go system solutions and initial sales of electric vehicles (EV) solutions products.
System solutions revenue increased 80% annually and represented 77% of total revenue, having increased its share of total revenues from 65% last year. This also helped improve gross profit 66% YoY to $36 million.
Net income rose to $12.8 million compared to $5.3 million in Q3/2021 when it faced project delays (see Shoals Technologies Q3/2021 Financial Results).
This time around, however, things are looking up as Shoals CEO Jason Whitaker said, "The two-year tariff exemption for Chinese solar panels, the recently passed Inflation Reduction Act (IRA) and higher energy prices have given our customers and end-users the confidence to reinitiate previously delayed projects, make multi-year commitments to invest in solar generation and prioritize product availability and performance over price. As a result of the improving solar market conditions and our recent performance, we are raising the low end of our 2022 outlook."
Financial analyst Jeffrey Osborne of Cowen sees Shoals as a 'beneficiary of the IRA and see the company's expansion into EV systems along with its migration to BLA 2.0 serving as tailwinds to drive a tripling of revenue from '22 to '25'.
Guidance
According to its revised guidance, the company expects 2022 revenues to range between $310 million to $325 million, up from $300 million to $325 million. Adjusted EBITDA too has been revised from $77 million to $86 million previously, to now between $80 million to $86 million.
Adjusted net income is now anticipated to range within $48 million to $53 million, as against $45 million to $53 million it guided for earlier (see Shoals Technologies Releases Q1/2022 Results).
Having grown its big lead assembly (BLA) customer count to 33 in Q3/2022, Shoals expects to grow further in 2023 with its BLA 2.0 and high-capacity plug-and-play wire harnesses securing UL certification, anticipated by the year end.