# EDGAR Filing Document

**Accession Number:** 0001831651
**File Stem:** 0001831651-23-000023
**Filing Date:** 2023-2
**Character Count:** 56860
**Document Hash:** 2869b26d8e444fb4db6d2a212d49f893
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001831651-23-000023.hdr.sgml**: 20230228

**ACCESSION NUMBER**: 0001831651-23-000023

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230228

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230228

**DATE AS OF CHANGE**: 20230228

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Shoals Technologies Group, Inc.
- **CENTRAL INDEX KEY:** 0001831651
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEMICONDUCTORS & RELATED DEVICES [3674]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39942
- **FILM NUMBER:** 23685467

**BUSINESS ADDRESS:**
- **STREET 1:** 1400 SHOALS WAY
- **CITY:** PORTLAND
- **STATE:** TN
- **ZIP:** 37148
- **BUSINESS PHONE:** 615-451-1400

**MAIL ADDRESS:**
- **STREET 1:** 1400 SHOALS WAY
- **CITY:** PORTLAND
- **STATE:** TN
- **ZIP:** 37148

?xml version="1.0" ? shls-20230228

**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) February 28, 2023**

——————————

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

---

——————————

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| | | | |
|:---|:---|:---|:---|
| **Delaware** | **001-39942** | **001-39942** | **85-3774438** |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| **1400 Shoals Way** | **Portland** | **Tennessee** | **37148** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |
|  | **(615)** | **451-1400** |  |
| (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) | (Registrant's telephone number, including area code) |

---

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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:

☐ 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:

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| | | |
|:---|:---|:---|
| 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. ☐

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**Item 2.02 Results of Operations and Financial Condition.**

On February 28, 2023, Shoals Technologies Group, Inc. (the "Company") issued a press release announcing its financial results for the year ended December 31, 2022. In the press release, the Company also announced that it would be holding a conference call on February 28, 2023 to discuss its financial results for the the year ended December 31, 2022. 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 9.01 Financial Statements and Exhibits.**

***(d) Exhibits***

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| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 99.1 | <u>[Press Release issued by Shoals Technologies Group, Inc. dated February 28, 2023](exhibit991earningsrelease2.htm)</u> |
| 99.2 | <u>[Earnings release transcript dated February 28, 2023](exhibit992earningsreleaset.htm)</u> |

---

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**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.

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

---

Date: February 28, 2023

## Exhibit 99.1

**Exhibit 99.1**

![image_0.jpg](image_0.jpg)

**Shoals Technologies Group, Inc. Reports Financial Results for Fourth Quarter 2022**

– Revenue Nearly Doubled Year-Over-Year to $94.7 million –

– System Solutions Revenue Increased 150% Year-Over-Year –

– Gross Margin Expanded More Than 950 bps Year-Over-Year –

– Backlog and Awarded Orders Up 43% Year-Over-Year to $428.6 million –

– Provides 2023 Outlook for Continued Strong Growth –

PORTLAND, TN. – February 28, 2023 (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 results for its fourth quarter and full year ended December 31, 2022.

"Shoals set new records for revenue, gross profit, net income, adjusted EBITDA and adjusted net income in both the fourth quarter and full year. Compared to the prior-year periods, fourth quarter and full year revenue grew 97% and 53%, respectively. Versus the same period last year, fourth quarter gross margin increased more than 950 basis points to 42.7%. Demand for our products continues to grow and our higher sales volumes are providing greater leverage on our fixed costs leading to margin expansion," said Jason Whitaker, Chief Executive Officer of Shoals.

Mr. Whitaker added, "Shoals' annual revenue growth rate has increased each year since we have been public, despite having more than doubled our revenues over the past three years. That is a reflection both of the strength of the end-markets we serve and the capacity for our products to take share from competing alternatives. I am confident that we will see continued strong growth in 2023 as our new products gain traction in the marketplace, including BLA 2.0 which we recently began quoting and expect to begin shipping during the first half of this year."

"The strength of demand for our products is underscored by the $428.6 million of backlog and awarded orders that we ended the year with, which represented growth of 43% compared to the same time last year. As a matter of fact, in just the first few weeks of the new year, backlog and awarded orders has hit another record high yet again, as we have continued to win new customers. I am incredibly proud of what Shoals has accomplished over the past several years and that I will leave the Company commercially, operationally and financially stronger than it has ever been," concluded Mr. Whitaker.

**Fourth Quarter 2022 Financial Results**

Revenue was $94.7 million, compared to $48.0 million for the prior-year period, an increase of 97% driven by higher sales volumes as a result of greater demand for solar EBOS generally and the Company's combine-as-you-go system solutions specifically as well as our EV solutions products.

------

**Exhibit 99.1**

![image_0.jpg](image_0.jpg)

System Solutions revenue increased 150% while Components revenue decreased 14%, compared to the prior-year period. System Solutions represented 86% of revenue in the quarter versus 68% in the prior-year period.

Gross profit increased 154% to $40.4 million, compared to $15.9 million in the prior-year period. Gross profit as a percentage of revenue increased over 950 basis points to 42.7% compared to 33.1% in the prior-year period, due to a higher proportion of revenue generated from the Company's combine-as-you-go system solutions, which carry higher margins than its other products, and increased leverage on fixed costs as a result of higher sales volumes.

General and administrative expenses were $14.9 million, compared to $11.0 million during the same period in the prior year. This change was primarily a result of planned increases in payroll expense due to higher headcount to support growth and investment in new product initiatives.

Income from operations increased more than eightfold to $23.4 million, compared to $2.7 million during the same period in the prior year.

Net income was $118.3 million, compared to net loss of $2.2 million during the same period in the prior year. The significant increase in net income was driven by a $110.9 million one-time gain on the termination of the TRA and significantly higher income from operations, offset by higher interest expense. Basic and diluted net income per share was $0.94 and $0.70, respectively, compared to basic and diluted net loss per share of $(0.02) in the prior-year period.

Adjusted EBITDA was $30.1 million, compared to $11.3 million for the prior-year period. Adjusted EBITDA margin increased approximately 840 basis points to 31.8%

Adjusted net income was $25.0 million compared to $0.9 million during the same period in the prior year. Adjusted diluted earnings per share was $0.15 compared to income of $0.01 in the prior-year period.

**Backlog and Awarded Orders**

The Company's backlog and awarded orders on December 31, 2022 were $428.6 million, representing an increase of 43%versus the same time last year, reflecting continued robust demand for the Company's products.

**Full Year 2023 Outlook**

Based on current business conditions, business trends and other factors, for the full year 2023, the Company expects:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Revenue to be in the range of $470 million to $510 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA to be in the range of $140 million to $155 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted net income to be in the range of $87 million to $97 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Interest expense to be in the range of $22 to $26 million

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Capital expenditures to be in the range of $8 to $12 million

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**Exhibit 99.1**

![image_0.jpg](image_0.jpg)

A reconciliation of the Company's non-GAAP measures to the applicable GAAP measures are found at the back of this release. A reconciliation of Adjusted EBITDA and Adjusted net income guidance, 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. 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.

**Webcast and Conference Call Information**

Company management will host a webcast and conference call on February 28, 2023, 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<u>.</u>

The conference call can be accessed live over the phone by dialing 1-855-327-6837 (domestic) or + 1-631-891-4304 (international). A telephonic replay will be available approximately three hours after the end of the call by dialing 1-844-512-2921 or for international callers, + 1-412-317-6671. The pin number for the replay is 10020953. The replay will be available until 11:59 p.m. Eastern Time on March 14, 2023.

**About Shoals Technologies Group, Inc.**

Shoals Technologies Group, Inc. is a leading provider of electrical balance of systems solutions for solar, storage, and electric vehicle charging infrastructure. Since its founding in 1996, the Company has introduced innovative technologies and systems solutions that allow its customers to substantially increase installation efficiency and safety while improving system performance and reliability. Shoals Technologies Group, Inc. is a recognized leader in the renewable energy industry whose solutions are deployed on over 20 GW of solar systems globally. To learn more about Shoals, 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

**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

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**Exhibit 99.1**

![image_0.jpg](image_0.jpg)

statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "will," "would" or similar expressions and the negatives of those terms.

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. Some of the key factors that could cause actual results to differ from our expectations include, among others, lower growth than anticipated in demand for solar energy projects and EV charging infrastructure; macroeconomic events, including heightened inflation, rise in interest rates and a potential recession; existing electric utility industry, renewable energy and solar energy policies and regulations, and any subsequent changes, which may present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our products or harm our ability to compete; changes in the United States trade environment, including the imposition of import tariffs and antidumping and countervailing duties; our failure to, or incurrence of significant costs in order to, obtain, maintain, protect, defend or enforce our intellectual property and other proprietary rights; failure to integrate acquired businesses, and delays, disruptions or quality control problems in our manufacturing operations in part due to vendor concentration; and other risks and uncertainties described in the section entitled "Item 1A. Risk Factors" of our periodic reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. 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.

**Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share ("EPS")**

We define Adjusted EBITDA as net income (loss) plus (i) interest expense, net, (ii) income tax expense, (iii) depreciation expense, (iv) amortization of intangibles, (v) payable pursuant to the TRA adjustment, (vi) gain on termination of TRA, (vii) loss on debt repayment, (viii) equity-based compensation, (ix) acquisition-related expenses, (x) COVID-19 expenses and (xi) non-recurring and other expenses. We define Adjusted Net Income as net income (loss) attributable to Shoals Technologies Group, Inc. plus (i) net income impact from assumed exchange of Class B common stock to Class A common stock as of the beginning of the earliest period presented, (ii) amortization of intangibles, (iii) amortization of deferred financing costs, (iv) payable pursuant to the TRA

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**Exhibit 99.1**

![image_0.jpg](image_0.jpg)

adjustment, (v) gain on termination of TRA, (vi) loss on debt repayment, (vii) equity-based compensation, (viii) acquisition-related expenses, (ix) COVID-19 expenses and (x) non-recurring and other expenses, all net of applicable income taxes. We define Adjusted Diluted EPS as Adjusted Net Income divided by the diluted weighted average shares of Class A common stock outstanding for the applicable period, which assumes the exchange of all outstanding Class B common stock for Class A common stock as of the beginning of the earliest period presented.

Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS 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, Adjusted Net Income and Adjusted Diluted EPS: (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, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants.

Among other limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS 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; in the case of Adjusted EBITDA, does not reflect income tax expense or benefit for periods prior to the reorganization; and may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures.

Because of these limitations, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. You should review the reconciliation of net income to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business.

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**Shoals Technologies Group, Inc.**

**Consolidated Balance Sheets (unaudited)**

*(in thousands, except shares and par value)*

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| | | |
|:---|:---|:---|
| | **December 31,** | **December 31,** |
| | **2022** | **2021** |
| **Assets** |  |  |
| Current Assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $8766 | $5006 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 50575 | 31499 |
| &nbsp;&nbsp;&nbsp;&nbsp;Unbilled receivables | 16713 | 13533 |
| &nbsp;&nbsp;&nbsp;&nbsp;Inventory, net | 72854 | 38368 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other current assets | 4632 | 5042 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 153540 | 93448 |
| Property, plant and equipment, net | 16870 | 15574 |
| Goodwill | 69941 | 69436 |
| Other intangible assets, net | 56585 | 65236 |
| Deferred tax assets | 291634 | 176958 |
| Other assets | 6325 | 5762 |
| **Total Assets** | $594895 | $426414 |
| **Liabilities and Stockholders' Equity (Deficit)** |  |  |
| Current Liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $9481 | $19985 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other | 17882 | 7728 |
| &nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 23259 | 1841 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-term debt—current portion | 2000 | 2000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 52622 | 31554 |
| Revolving line of credit | 48000 | 55140 |
| Long-term debt, less current portion | 189063 | 189913 |
| Payable pursuant to the tax receivable agreement |  | 156374 |
| Other long-term liabilities | 4221 | 931 |
| Total Liabilities | 293906 | 433912 |
| Stockholders' Equity (Deficit) |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of December 31, 2022 and 2021 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 137,904,663 and 112,049,981 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Class B common stock, $0.00001 par value - 195,000,000 shares authorized; 31,419,913 and 54,794,479 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 1 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 256894 | 95684 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated earnings (deficit) | 34478 | (93133) |
| Total stockholders' equity attributable to Shoals Technologies Group, Inc. | 291374 | 2553 |
| Non-controlling interests | 9615 | (10051) |
| Total stockholders' equity (deficit) | 300989 | (7498) |
| **Total Liabilities and Stockholders' Equity (Deficit)** | $594895 | $426414 |

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**Shoals Technologies Group, Inc.**

**Consolidated Statements of Operations (unaudited)**

*(in thousands, except per share amounts)*

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| **Revenue** | $94651 | $48046 | $326940 | $213212 |
| **Cost of revenue** | 54272 | 32123 | 195629 | 130567 |
| **Gross profit** | 40379 | 15923 | 131311 | 82645 |
| **Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses | 14871 | 11028 | 55908 | 37893 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2134 | 2215 | 9073 | 8520 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total operating expenses** | 17005 | 13243 | 64981 | 46413 |
| **Income from operations** | 23374 | 2680 | 66330 | 36232 |
| Interest expense, net | (5778) | (3638) | (18538) | (14549) |
| Payable pursuant to the tax receivable agreement adjustment | (6675) | 2015 | (6675) | (1663) |
| Gain on termination of tax receivable agreement | 110883 |  | 110883 |  |
| Loss on debt repayment |  |  |  | (15990) |
| **Income before income taxes** | 121804 | 1057 | 152000 | 4030 |
| Income tax expense | (3502) | (3209) | (8987) | (86) |
| **Net income / (loss)** | 118302 | (2152) | 143013 | 3944 |
| Less: net income / (loss) attributable to non-controlling interests | 5691 | (315) | 15402 | 1596 |
| **Net income / (loss) attributable to Shoals Technologies Group, Inc.** | $112611 | $(1837) | $127611 | $2348 |
|  |  |  | **Year Ended<br>December 31, 2022** | **Period from January 27, 2021 to December 31, 2021** |
|  | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended<br>December 31, 2022** | **Period from January 27, 2021 to December 31, 2021** |
|  | **2022** | **2021** | **Year Ended<br>December 31, 2022** | **Period from January 27, 2021 to December 31, 2021** |
| **Earnings (loss) per share of Class A common stock:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | $0.94 | $(0.02) | $1.11 | 0.00) |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | $0.70 | $(0.02) | $0.85 | 0.00) |
| **Weighted average shares of Class A common stock outstanding:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic | 120236 | 106233 | 114495 | 99269 |
| &nbsp;&nbsp;&nbsp;&nbsp;Diluted | 168631 | 106233 | 167631 | 99269 |

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**Shoals Technologies Group, Inc.**

**Consolidated Statements of Cash Flows (unaudited)**

*(in thousands)*

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| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| **Cash Flows from Operating Activities** |  |  |
| &nbsp;&nbsp;Net income | $143013 | $3944 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 10509 | 10053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization/write off of deferred financing costs | 1365 | 5969 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation | 16108 | 11286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for credit losses | 200 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for obsolete or slow-moving inventory | 2073 | (1418) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred taxes | 8406 | (1476) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payable pursuant to the tax receivable agreement adjustment | 6675 | 1663 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on termination of tax receivable agreement | (110883) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of assets |  | 52 |
| &nbsp;&nbsp;Changes in assets and liabilities, net of business acquisition: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (19207) | 818 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unbilled receivables | (3180) | (9739) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | (36927) | (17188) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 244 | 341 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (11029) | (3877) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other | 10670 | (6179) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 21418 | 1668 |
| **Net Cash Provided by (Used in) Operating Activities** | 39455 | (4083) |
| **Cash Flows Used In Investing Activities** |  |  |
| &nbsp;&nbsp;Purchases of property, plant and equipment | (3154) | (4126) |
| &nbsp;&nbsp;Acquisition of a business, net of cash acquired |  | (12909) |
| &nbsp;&nbsp;Other | (503) |  |
| **Net Cash Used in Investing Activities** | (3657) | (17035) |
| **Cash Flows from Financing Activities** |  |  |
| &nbsp;&nbsp;Distributions to non-controlling interests | (7762) | (4837) |
| &nbsp;&nbsp;Employee withholding taxes related to net settled equity awards | (1297) | (137) |
| &nbsp;&nbsp;Deferred financing costs |  | (94) |
| &nbsp;&nbsp;Payments on term loan facility | (2000) | (152750) |
| &nbsp;&nbsp;Proceeds from revolving credit facility | 46000 | 49140 |
| &nbsp;&nbsp;Repayments of revolving credit facility | (53140) | (14000) |
| &nbsp;&nbsp;Proceeds from issuance of Class A common stock sold in an IPO, net of underwriting discounts and commissions |  | 278833 |
| &nbsp;&nbsp;Purchase of LLC Interests with proceeds from IPO |  | (124312) |
| &nbsp;&nbsp;Proceeds from issuance of Class A common stock in follow-on offering, net of underwriting discounts and commissions | 42943 | 281064 |
| &nbsp;&nbsp;Purchase of LLC Interests with proceeds from follow-on offering |  | (281064) |
| &nbsp;&nbsp;Payment of debt assumed in acquisition |  | (1537) |
| &nbsp;&nbsp;Deferred offering costs | (1463) | (9704) |

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**Shoals Technologies Group, Inc.**

**Consolidated Statements of Cash Flows (unaudited)**

*(in thousands)*

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| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| &nbsp;&nbsp;Early termination payment of tax receivable agreement | (58000) |  |
| &nbsp;&nbsp;Payment of fees for tax receivable agreement termination | (1870) |  |
| **Net Cash Provided by (Used in) Financing Activities** | (36589) | 20602 |
| **Net Decrease in Cash, Cash Equivalents and Restricted Cash** | (791) | (516) |
| **Cash, Cash Equivalents and Restricted Cash—Beginning of Period** | 9557 | 10073 |
| **Cash, Cash Equivalents and Restricted Cash—End of Period** | $8766 | $9557 |

---

------

**Shoals Technologies Group, Inc.**

**Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share ("EPS") (Unaudited)**

Reconciliation of Net Income to Adjusted EBITDA (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Net income / (loss) | $118302 | $(2152) | $143013 | $3944 |
| Interest expense, net | 5778 | 3638 | 18538 | 14549 |
| Income tax expense | 3502 | 3209 | 8987 | 86 |
| Depreciation expense | 487 | 436 | 1858 | 1701 |
| Amortization of intangibles | 2021 | 2272 | 8651 | 8352 |
| Payable pursuant to the TRA adjustment<sup>(a)</sup> | 6675 | (2015) | 6675 | 1663 |
| Gain on termination of TRA | (110883) |  | (110883) |  |
| Loss on debt repayment |  |  |  | 15990 |
| Equity-based compensation | 4221 | 4382 | 16108 | 11286 |
| Acquisition-related expenses | 10 | 652 | 42 | 2349 |
| COVID-19 expenses<sup>(b)</sup> |  | 70 |  | 339 |
| Non-recurring and other expenses<sup>(c)</sup> |  | 777 |  | 2598 |
| Adjusted EBITDA | $30113 | $11269 | $92989 | $62857 |

---

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(a)</sup> Represents an adjustment to eliminate the adjustment of the payable pursuant to the TRA.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(b)</sup> 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 and direct legal costs associated with the pandemic.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(c)</sup> Represents certain costs associated with non-recurring professional services, our prior private equity owners' expenses and other costs.

Reconciliation of Net Income Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Net income / (loss) attributable to Shoals Technologies Group, Inc. | $112611 | $(1837) | $127611 | $2348 |
| Net income impact from assumed exchange of Class B common stock to Class A common stock <sup>(a)</sup> | 5691 | (315) | 15402 | 1596 |
| Adjustment to the provision for income<br>tax <sup>(b)</sup> | (1433) | 20 | (3726) | (456) |
| Tax effected net income / (loss) | 116869 | (2132) | 139287 | 3488 |
| Amortization of intangibles | 2021 | 2272 | 8651 | 8352 |
| Amortization of deferred financing costs | 342 | 277 | 1365 | 1230 |

---

------

**Shoals Technologies Group, Inc.**

**Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share ("EPS") (Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Payable pursuant to the TRA adjustment<sup>(c)</sup> | 6675 | (2015) | 6675 | 1663 |
| Gain on termination of TRA | (110883) |  | (110883) |  |
| Loss on debt repayment |  |  |  | 15990 |
| Equity-based compensation | 4221 | 4382 | 16108 | 11286 |
| Acquisition-related expenses | 10 | 652 | 42 | 2349 |
| COVID-19 expenses <sup>(d)</sup> |  | 70 |  | 339 |
| Non-recurring and other expenses <sup>(e)</sup> |  | 777 |  | 2598 |
| Tax impact of adjustments <sup>(f)</sup> | 5779 | (3409) | 1158 | (11381) |
| Adjusted Net Income | $25034 | $874 | $62403 | $35914 |

---

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(a)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Reflects net income to Class A common stock from assumed exchange of corresponding shares of our Class B common stock held by our Founder and management.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(b)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes with respect to its allocable share of any net taxable income of Shoals Parent LLC. The adjustment to the provision for income tax reflects the effective tax rates below, assuming Shoals Technologies Group, Inc. owns 100% of the units in Shoals Parent LLC.

---

| | | |
|:---|:---|:---|
| | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** |
| Statutory U.S. Federal income tax rate | 21.0% | 21.0% |
| State and local taxes (net of federal benefit) | 3.0% | 6.4% |
| Permanent adjustments | 0.2% | 1.2% |
| Effective income tax rate for Adjusted Net Income | 24.2% | 28.6% |

---

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(c)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents an adjustment to eliminate the adjustment of the payable pursuant to the TRA.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(d)&nbsp;&nbsp;&nbsp;&nbsp;</sup>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 and direct legal costs associated with the pandemic.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(e)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents certain costs associated with non-recurring professional services, our prior private equity owners' expenses and other costs.

&nbsp;&nbsp;&nbsp;&nbsp;<sup>(f)&nbsp;&nbsp;&nbsp;&nbsp;</sup>Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.

Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share):

------

**Shoals Technologies Group, Inc.**

**Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted Earnings per Share ("EPS") (Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended December 31,** | **Three Months Ended December 31,** | **Year Ended December 31,** | **Year Ended December 31,** |
| | **2022** | **2021** | **2022** | **2021** |
| Diluted weighted average shares of Class A common stock outstanding, excluding Class B common stock | 120998 | 106606 | 114803 | 99507 |
| Assumed exchange of Class B common stock to Class A common stock | 47633 | 60611 | 52828 | 67429 |
| Adjusted diluted weighted average shares outstanding | 168631 | 167217 | 167631 | 166936 |
| Adjusted Net Income <sup>(a)</sup> | $25034 | $874 | $62403 | $35914 |
| Adjusted Diluted EPS | $0.15 | $0.01 | $0.37 | $0.22 |

---

<sup>(a)</sup> Represents Adjusted Net Income for the full period in 2021.

## Exhibit 99.2

**Exhibit 99.2**

**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

**Operator**

Good afternoon, and welcome to Shoals Technologies Group Fourth Quarter 2022 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, Chief Legal Officer for Shoals Technologies Group. Thank you. You may begin.

**Mehgan Peetz, Chief Legal Officer, Shoals Technologies Group, Inc.**

Thank you, operator and thank you everyone for joining us today. Hosting the call with me are CEO Jason Whitaker, President Jeff Tolnar, and CFO Dominic Bardos.

On this call, management will be making projections or other forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. As you listen and consider these comments, you should understand that these statements, including the guidance regarding full year 2023, are not guarantees of performance or results. Actual results could differ materially from our forward-looking statements if any of our assumptions are incorrect or because of other factors. These factors include, among other things, the risk factors described in our filings with the Securities and Exchange Commission, as well as economic and market circumstances, decreased demand for our products, policy and regulatory changes, industry conditions, current macroeconomic events, supply chain disruptions and availability and price of our components and materials.

Although we may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. We caution that any forward-looking statement included in this discussion is made as of the date of this discussion and do not undertake any duty to update any forward-looking statements.

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

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 Jason.

**Jason Whitaker, CEO, Shoals Technologies Group, Inc.**

Thank you very much, Mehgan, and good afternoon, everyone.

Before I make my formal remarks, I would like to thank our employees, customers, vendors and shareholders who have each have played a role in the tremendous success that Shoals has achieved over the past several years. Without your contributions and support, we would not have the company that we do today.

I'll start off with some key highlights from our fourth quarter and full year results and then discuss the progress on our CEO transition. Following that, I'll turn it over to Jeff who will provide an update on our business, growth initiatives, current market conditions and operational focus areas for this year. Dominic will then wrap up with an overview of our financial results for the fourth quarter and outlook for 2023 before we open the lines for questions.

Shoals set new records for revenue, gross profit, adjusted EBITDA and adjusted net income in both the fourth quarter and full year. Compared to the prior-year periods, fourth quarter and full year revenue grew 97% and 53%, respectively. The increase in revenue was driven by growing demand for solar and EVs and continued share gains by our products. The strength of demand for our products is underscored by the fact that Shoals' annual revenue growth rate has increased each year since we have been public, despite having more than doubled revenue over the past three years.

Versus the same period last year, fourth quarter gross margin increased more than 950 basis points to 42.7% and adjusted EBITDA margin increased approximately 840 basis points to 31.8%. The margin expansion we achieved in

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

the fourth quarter was the result of greater leverage on fixed costs, driven by higher sales volumes and increased proportion of revenues attributable to our combine-as-you-go solution.

Now turning to an update on our CEO transition. In November, Shoals announced that I would be stepping down from my role as CEO this year for health reasons. My last day with the Company will be March 15.

As previously announced, the Company has appointed Shoals' President Jeff Tolnar as interim CEO. Jeff was previously SVP of EV Solutions and led the successful launch of our EV solutions business. Prior to Shoals, Jeff held senior management positions with Fortune 100 companies and co-founded or led several startups, including Greenlots, which was acquired by Shell. In his new role as President, Jeff is responsible for global sales, product development, engineering and operations. He and his team are accountable for ensuring the operational milestones required to achieve the company's strategic goals are met.

The Board is currently working with Spencer Stuart to vet several highly qualified candidates and intends to select a permanent CEO following completion of an extensive search and vetting process.

With that update, I'll turn it over to Jeff.

**Jeff Tolnar, President, Shoals Technologies Group, Inc.** 

Thank you, Jason. And, good afternoon, everyone. It's a pleasure to be with you all today.

I'll start with a review of the performance of our core combine-as-you-go solutions in the quarter, then discuss the status of our new product introductions for 2023. Following that, I'll provide an update on our international expansion efforts, review conditions in our core solar and EV markets and then close with an overview of some new operational initiatives that we are implementing.

System Solutions revenue grew 150% in the fourth quarter of 2022 versus the fourth quarter of 2021, reflecting strong growth in U.S. utility scale solar demand

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

and continued share gains by our products. During the quarter, we converted three additional EPCs and developers to our combine-as-you-go system, bringing the total number of BLA customers to 36, with an additional 14 in transition. We believe that the majority of EPCs and developers in the U.S. will be using our system in 2023.

Our new wire management product line contributed to growth in the quarter. Our wire management products' attach rate to BLA has continued to grow, as customers increasingly recognize that they install faster and are more reliable than conventional solutions. We recently surpassed 800 MW of deliveries for projects using our clips and we expect continued growth throughout 2023.

Our battery storage products also contributed to growth, as we began shipments during the fourth quarter for the 1 GWdc storage project awarded to Shoals in the third quarter of 2022. More solar projects are incorporating battery storage and our sales team is actively quoting battery storage products for our solar customers. We recently added dedicated sales resources for energy storage, which we believe will help drive higher sales volumes. Our team also plans to launch an eMobility energy storage offering in the second half of this year.

Our EV solutions business grew significantly in the fourth quarter, as our team continued to fulfill orders received in Q3 for Q4 deliveries. The primary end uses for those orders were fleet and school bus electrification. As our EV business is still early in its evolution growth may be uneven with outsized contribution in certain quarters and smaller contribution in others depending on when we receive orders and ship products.

Turning to our new product introductions planned for 2023. We expect to generate revenues from our new high capacity plug-n-play wire harness and BLA 2.0 this year.

UL certification of the high capacity plug-n-play harnesses was delayed slightly, while development of the high capacity connectors is progressing. We are now expecting prototypes to be deployed mid-2023, with UL certification and full market launch to follow later in the year.

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

We recently began quoting our BLA 2.0 bundled solution and expect to record our first revenues in the second quarter. BLA 2.0 combines our BLA with all the components required to attach the BLA to the racking system, including wire management, support wire and tensioning systems, to create a single integrated offering. This comprehensive solution further reduces the amount of installation labor required in the field and enables EPCs and developers to procure all of their EBOS components from Shoals, rather than Shoals and at least one other vendor. Because BLA 2.0 includes additional components, it has a higher average selling price than BLA. We believe migrating customers to the BLA 2.0 bundle will enable us to growth revenue through both increased volume ***and*** higher ASPs.

We are making progress on our international expansion, with quoting volume continuing to grow, led by Latin America, Australia and EMEA activity. We are evaluating regional production and fulfillment options as quote and order volumes approach a critical mass. Notably, the 53 MW project we were awarded in Honduras in the third quarter of 2022 received the Renewable Energy Deal of the Year by the Export-Import Bank of the United States.

Moving to an overview of solar and EV market conditions. Overall solar market conditions are favorable, both for the industry as a whole and for Shoals specifically.

We are beginning to see early benefits from the Inflation Reduction Act in the form of increasing demand for both solar and storage offerings, while funds from the 2021 Infrastructure Bill are generating significant demand for EV charging products. We see increasing quote volume related to "on-the-go" fast charging solutions, which is largely driven by the flow of Infrastructure Bill funds.

At the same time, the combination of persistent wage inflation and the prevailing wage provision of the IRA is driving the cost of field labor higher. Rising labor costs cause our customers to seek solutions that install faster and do not require skilled labor. The environment is nearly ideal for our products given their demonstrated ability to reduce the number of labor hours required to install a solar project.

I'll wrap up by speaking about some of the operational initiatives that we are working on.

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

One of my jobs as President of Shoals is to ensure that we have the people, processes and systems in place to support our continued growth. We have already built an organization capable of supporting $500 million of annual revenue. Our focus now is building an organization that can support the *next* $500 million and take us to $1 billion a year in revenue.

To do that, I am working with our leaders to implement three initiatives: increasing the efficiency of our manufacturing operations, strengthening our sales infrastructure, and focusing our new product development efforts.

We are increasing the efficiency of our manufacturing operations by deploying production automation and carefully reviewing every step in our manufacturing process, establishing process-level KPIs and using that data to identify areas where we can increase throughput or reduce waste. We saw early dividends from our efforts when we achieved record levels of daily production in the fourth quarter. We are confident that by driving deeper automation and process efficiencies that we will be well-positioned to replicate the success we have achieved in our existing plants should we decide to open new manufacturing facilities in other locations.

We are strengthening our sales infrastructure in two key ways. First, our new CRO, Ben Macias, is building a sales operations team with systems to help us better assess when to add new sales resources and how to deploy them more efficiently. Our sales team is already delivering record revenue per account manager, but we see the potential to grow revenues even faster by adding salespeople in growing markets and specific segments. Sales Operations will provide the information we need to make those decisions faster.

Second, we are building a dedicated customer care organization focused on Shoals' installed and growing customer base. Their goal is not only to ensure our customers are satisfied with our products well beyond initial installation, but also to identify opportunities to sell replacements or upgrades for existing installations.

We are focusing our innovation and new product development by embracing agile concepts including "engineering velocity." Implementing agile principles with

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

results driven KPI's will improve predictability of new product development timelines while continuing to drive the innovation that Shoals is known for.

I'm thrilled to be the President of Shoals and very excited about our future. I'll now turn it over to Dominic who will discuss fourth quarter 2022 financial results.

**Dominic Bardos, CFO, Shoals Technologies Group, Inc.**

Thanks, Jeff, and good afternoon to everyone on the call.

Fourth quarter revenue grew 97% versus the prior-year period to $94.7 million. The higher sales volume was primarily driven by increased demand for our solar solutions, but also benefitted from EV charging solutions that were launched earlier in the year. System Solutions revenue increased 150% year-over year and represented 86% of total revenue versus 68% in the prior-year period, reflecting continued market share gains for our solar combine-as-you-go system.

Gross profit increased 154% to $40.4 million, compared to $15.9 million in the prior-year period. Gross profit as a percentage of net revenue grew more than 950 basis points to 42.7% compared to 33.1% in the prior-year period, driven primarily by increased leverage on fixed costs and a higher proportion of revenue from System Solutions.

Fourth quarter general and administrative expenses were $14.9 million, compared to $11.0 million during the same period in the prior year. The year-over-year increase in general and administrative expenses was largely driven by higher payroll expense in connection with incentive compensation and planned new hires.

Net income was $118.3 million in the fourth quarter compared to a net loss of $2.2 million in the prior-year period. Net income benefitted significantly from the $110.9 million non-cash gain we recorded in the quarter in connection with the termination of the tax receivable agreement, or TRA, that Shoals had with Oaktree and our founder, Dean Solon. Over its life, the TRA could have required us to make more than $500 million in cash payments to Oaktree and Mr. Solon, so

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

terminating the agreement eliminated a significant future liability for the company.

Adjusted EBITDA increased 167% to $30.1 million compared to $11.3 million in the prior-year period. Adjusted EBITDA margin increased by approximately 840 basis points year-over-year to 31.8% reflecting the impact of higher gross margins, partially offset by higher the general and administrative expenses I discussed earlier.

Adjusted net income grew to $25.0 million in the fourth quarter compared to $0.9 million in the prior-year period.

During the quarter we generated cash from operations of $34.4 million, which allowed us to reduce the amount of debt outstanding under our revolver. We expect our cash generation to continue improving as investments in working capital and capital expenditures moderate and we are no longer subject to cash distributions or restrictions associated with the TRA.

As of December 31, 2022, we had $428.6 million dollars in backlog and awarded orders, an increase of 43% year-over-year and a decrease of 9% quarter-over-quarter. The consecutive quarterly decline was the result of slower conversion of pipeline projects into awarded orders and higher than expected shipment volume we had in the quarter. Following the slower pace of customer activity during the holidays, our backlog and awarded orders rose to all-time record levels in the first few weeks of January.

Turning now to our full year outlook. Based on current market conditions and input from our customers, we expect 2023 revenue to be in the range of $470 million to $510 million, up 44% to 56% year-over-year. We expect adjusted EBITDA to be in the range of $140 million to $155 million, and adjusted net income to be in the range of $87 million to $97 million.

For the full year 2023, we are targeting gross margin in the 40% range, consistent with full year 2022, although gross margin may be higher or lower in any given quarter due to product mix in that particular period.

We will continue to invest in SG&A in 2023 to position ourselves for scalable, long-term growth. This will include investments in talent to support our growth

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

initiatives as well as the continued build out of our HR, Finance and Customer Care teams as we scale. We anticipate SG&A will grow roughly $1 million per quarter sequentially throughout 2023, starting with a larger step-up in the first quarter due to higher stocked based compensation.

As you are likely aware, we do not provide quarterly guidance. That said, I want to provide a bit more information to help set expectations around pacing in 2023. Similar to our 2022 results, we expect the majority of our revenue will be generated in the second half of 2023. For 2023, we expect that approximately 40% of our revenue, adjusted EBITDA and adjusted net income will be generated in the first half of the year, with the remaining 60% in the second half. Further, we anticipate that quarterly year-over-year revenue growth will roughly fall in line with the annual growth rate implied by our outlook.

Full year 2023 interest expense is expected to increase to $22 to $26 million as a result of higher interest rates.

Finally, we expect capital expenditures for the full year in the range of $8 million to $12 million.

Now back to Jason for closing remarks.

**Jason Whitaker, CEO, Shoals Technologies Group, Inc.** 

Thanks, Dominic. I would like to close by again thanking all our customers for their confidence in Shoals, our employees for enabling us to effectively serve our customers, and our shareholders for their continuous support.

As we move on from a record performance in 2022, we could not be more excited about the opportunity ahead. Furthermore, beyond our still growing core BLA products, we have only started to penetrate the opportunity for our new solar and EV products. With the product line building, demand is increasing as we extend our global reach. Importantly, we believe we have only started to realize the full power of the Shoals platform. I am incredibly proud of what Shoals has accomplished over the past several years and that I will leave the Company

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**Shoals Technologies Group, Inc.**

**4Q22 Earnings Conference Call Script**

**February 28, 2023**

commercially, operationally and financially stronger than it has ever been. There is no question that the future is extremely bright.

And with that, thank you everyone, I appreciate your time today. We will now open the line for questions.