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Shoals Technologies Group (SHLS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 4, 2026

Source: earnings call transcript

Executive summary

Shoals Technologies Group Q2 FY26 — Record Backlog and Strong Demand

Shoals Technologies Group delivered a strong second quarter, meeting revenue and adjusted EBITDA guidance, driven by robust demand in the U.S. utility-scale solar market and significant new orders. The company achieved a record backlog and awarded orders, reinforcing its competitive stance following a favorable ITC case outcome. Management is focused on optimizing new manufacturing facilities and expanding into new markets like energy storage and data centers, with new product introductions expected to drive future margin accretion.

Highlights

5

  • Second quarter revenue reached $163 million, up 47% year-over-year, within guided range.

  • New orders totaled approximately $207 million, driving a book-to-bill ratio of 1.3.

  • Backlog and awarded orders (BLAO) hit a company record of $801 million, an increase of 19% year-over-year.

  • Adjusted EBITDA grew approximately 28% year-over-year to $31.6 million, within guided range.

  • Prevailed in the 2025 ITC case against Voltage, strengthening competitive position.

Concerns

4

  • GAAP net income declined to $12.1 million compared to $13.9 million in the prior year, partly due to a prior-year gain on asset sale.

  • Net debt increased over the prior quarter, with net debt to adjusted EBITDA at 1.6 times.

  • Factory consolidations and lean manufacturing processes still require work to optimize efficiency.

  • Q4 revenue is implied to be slightly down from Q3, potentially impacting gross margins due to fewer production days and product mix.

Guidance & targets

CategoryTargetConfidence
Q3 FY26 Revenue
$150M-$170M
high materiality
High
Q3 FY26 Adjusted EBITDA
$32M-$37M
high materiality
High
FY26 Revenue
$600M-$640M
high materiality
High
FY26 Adjusted EBITDA
$118M-$132M
high materiality
High
FY26 Cash flow from operations
$65M-$85M
medium materiality
High
FY26 Capital expenditures
$20M-$30M
medium materiality
High
FY26 Interest expense
$8M-$12M
low materiality
High
TerraFlow MOU Revenue Impact
No impact in 2026
low materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Utility Scale Solar
Core market, strong period of growth. Quote volume exceeded $1 billion of unique projects in the quarter.
Quote volume: >$1B (unique projects in Q2)
————
OEM
Providing a stable and visible revenue stream, growing 51% year-over-year.
—51%——
BEST (Battery Energy Storage)
Produced $20 million in revenue and secured $10 million in additional orders. BEST orders are episodic and dependent on customer construction schedules.
Additional orders secured: $10MBLAO: $65M
$20M———
International
Increased quote activity and customer engagement, particularly in Australia. Driving continued growth and diversification in 2027 and beyond. Pricing may not be as strong as export markets for organic opportunities.
BLAO: $102M
————

Orderbook & backlog

New Orders $207M Q2 FY26
Backlog and Awarded Orders (BLAO) $801M Q2 FY26

19% YoY increase

Company record.

Backlog and Awarded Orders (BLAO) $801.4M Q2 FY26

$43.4M sequential increase

Record level.

Backlog (constituent of BLAO) $425.1M Q2 FY26

Constitutes part of the total BLAO.

BLAO with shipment dates in upcoming four quarters $700M Q2 FY26

Through Q2 of 2027.

BLAO with planned delivery dates in coming four quarters $699.7M 2026-06-30

Through Q2 of 2027.

BLAO with planned delivery dates beyond upcoming four quarters $101.7M 2026-06-30

Beyond Q2 of 2027.

Product announcements

ProductTypeDetails
PowerHub recombiner solutionexpansion
AerLink productroadmap

Deals & partnerships

TerraFlow MOU to support TerraFlow's energy storage portfolio with PowerHub recombiner solution for utility scale and data center applications.

TerraFlow is a leading grid scale developer of long duration energy storage infrastructure. This partnership is a meaningful step for Shoals to diversify its customer base.

On Energy Partnership for battery energy storage solutions, with products landing and being installed on the largest battery paired AI data center site in the country.

Shoals continues to be excited about this partnership. As On Energy's business grows, Shoals expects to be a big part of their solution. A handful of projects were booked after quarter close, potentially with this customer.

Capital programs

New Mega Facility (Portland, TN) completed

Benefit:Expanded capacity and capabilities

Finished the move into the new facility. Focus on improving productivity and maximizing efficiency. One redundant facility will be exited mid-year 2027.

Risks & headwinds

Factory consolidation and lean manufacturing optimization ongoing

Still have work to do

Mitigation:Deploying new lean manufacturing processes, consistent weekly and monthly improvement.

District court case for damages against Voltage Q3 FY26

Expected to be completed in Q3 FY26

Mitigation:Company prevailed in the ITC case, now pursuing damages.

Impact of Q4 production days and product mix on margins Q4 FY26

Implied slight reduction in Q4 revenue, potential negative impact on gross margin

Mitigation:Maximize efficiencies, push product, secure more short-term orders (BEST orders can be short-term).

Rising leverage and free cash flow generation H1 FY26

Net debt increased over prior quarter; net debt to adjusted EBITDA at 1.6x

Mitigation:Expect positive cash flows in H2 FY26 from inventory burn-down to pay down revolver; leverage ratio expected to improve in H2 FY26.

Tariff policy changes (Section 232, inverters) near-term

No near-term impact whatsoever

Mitigation:Monitoring landscape closely, underlying demand environment expected to remain strong.

Lengthening booking cycle current

Backlog conversion window lengthening from 6 months

Mitigation:Managing capacity within new facility, pleased with demand environment.

What to watch in Q3 FY26

District Court Case Completion

Q3 FY26
Current Expected in Q3 FY26
Target Completion of damages determination

Why it matters

Resolution of the Voltage ITC case's damages phase will provide clarity on potential financial inflows and legal expenses.

Our district court case to determine damages against Voltage is expected to be completed in the third quarter.

Find out whether SHLS delivers this. Inve re-checks your case every morning.

Q&A highlights

What is the expected timeline for meaningful revenue from the TerraFlow MOU, and how does this partnership compare to the On Energy relationship?

Revenue from TerraFlow is expected to begin in 2027, with no impact in 2026. TerraFlow uses vanadium-based solutions for short and long-cycle battery storage, targeting renewable sites and data centers, similar to On Energy's goals of managing energy flow and reducing spikes. This partnership is a meaningful step for diversification.

“I would probably model that revenue will begin in 2027. We will not see an impact in 2026.”

asked by Unknown Speaker · answered by Brandon Moss

2 min read 6 chapters

Detailed narrative

ITC Case Victory and Market Position

Shoals prevailed in its 2025 ITC case against Voltage, a critical outcome for shareholders and U.S. innovation. The company looks forward to resolving damages in the upcoming district court case, which is expected to be completed in Q3 FY26. This victory strengthens Shoals' competitive position and its optimism for market evolution.

New Manufacturing Facility and Productivity

The company has finished the move into its new mega facility in Portland, Tennessee, and is expanding capacity and capabilities at a measured pace. While steady progress has been made in deploying lean manufacturing processes, management acknowledges there is still work to do to realize full operational improvements and efficiencies. The new facility is expected to drive value for stakeholders in future periods.

International Expansion and Diversification

Shoals is making progress in key international markets, particularly Australia, evidenced by increased quote activity and customer engagement. International BLAO now stands at $102 million, contributing to continued growth and diversification beyond 2027. The company is also diversifying its customer portfolio to create a more resilient business.

TerraFlow Partnership and Energy Storage

Shoals announced a partnership with TerraFlow, a grid-scale developer of long-duration energy storage. Under a Memorandum of Understanding (MOU), Shoals will support TerraFlow's deployment plan of up to 5 gigawatts annually with its PowerHub recombiner solution for utility-scale and data center applications. Revenue from this partnership is expected to begin in 2027.

AirLink Product Development and Market Disruption

The company is excited about its AirLink product, which has received significant customer reception. AirLink is positioned as a disruptor in how power is delivered to the rack, and an educational period is anticipated for engineers, installers, and inspectors. Shoals aims to have a live test installation in 2026, with IP filed and third-party lab testing underway. AirLink is expected to command a price premium due to substantial value delivery.

Tariff Landscape and Demand Environment

Management is closely monitoring the tariff landscape, including Section 232 and recent news on inverters, but does not foresee a near-term impact on the business. The underlying demand environment is expected to remain robust, with the market anticipated to be 'stronger for longer.' The company believes its diversified product portfolio and new facility investments position it well to handle continued growth.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.