US based electricals balance of system (BOS) supplier for solar industry, Shoals Technologies Group improved its annual revenues by 49% and gross profit by 40% in Q1/2022, but citing anti-circumvention investigation has altered its annual guidance for 2022.
During the reporting quarter, Shoals locked in $68 million revenues thanks to 73% increase in components business with increase in shipment of battery storage and solar products, and 40% improvement in system solutions business. Net income increased to $9 million, compared to $8.8 million in the previous year.
Management also reported a rise in backlog and awarded orders with a 67% and 1% increase, respectively on annual basis which it stated reflects the continued robust demand for its products, representing a total of $302.3 million. It has been registering interest for its big lead assembly (BLA) solution that combined cable assemblies, combiner boxes eliminating the need for standard combiner boxes, cable trays, and the like.
A total of 7 BLA customers it converted in Q1/2022 represent as much as 2 GW of demand in 2022. Out of these 7 customers, 3 are internationally located. Shoals also brought online its new 219,000 sq. ft. manufacturing facility in March 2022.
Guidance
For 2022, the company has changed its previous guidance for full year 2022 lowering the higher end of the forecast due to 'continued industry headwinds' and 'uncertainty posed by the Commerce Department investigation in particular' (see 2021 Financial Results Of Shoals Technologies).
Now, it expects 2022 revenues to fall within the range of $300 million to $325 million, with adjusted EBITDA of $77 million and $86 million. Adjusted net income for the whole year is likely to be between $45 million to $53 million.
Philip Shen of Roth Capital Partners believes the company's non-solar and adjacent businesses as wire management solutions, energy storage products, and EV business, along with healthy international expansion could support some of the solar challenges ahead, but bookings may slow down in the near future.
"We highlight FTCI's 'going concern' language in yesterday's 10Q as a harbinger of challenges in the utility scale segment. These challenges could serve as a risk for SHLS's 2023 outlook assuming the AntiCirc case drags on (which is our base case)," explained Shen.