Shoals Technologies Group (NASDAQ:SHLS) reported fourth-quarter 2025 revenue of $148.3 million, up 38.6% year over year, as management pointed to higher domestic project volume and contributions from international, community/commercial/industrial (CC&I), and OEM channels. The company said quarterly revenue was in line with its expectations, while profitability came in “softer than anticipated” due to cost pressures that included tariffs, logistics, labor, shipping, product mix, and higher legal expenses.
Quarterly results and margin drivers
In the fourth quarter, Shoals generated gross profit of $46.9 million, up from $40.2 million a year earlier, but GAAP gross margin declined to 31.6% from 37.6%. CFO Dominic Bardos said the company estimated Q4 gross profit dollars were impacted by:
- $2.1 million of incremental tariffs and logistics costs
- $2.5 million of additional labor to support new products, packaging, and delivery requirements
- $0.5 million of additional plant overhead expenses
Selling, general, and administrative expenses rose to $27.3 million, up $5.8 million from the prior-year period, driven by increased legal expenses and partly offset by lower stock-based compensation. Management said legal spending was elevated in 2025, with $30 million of legal professional services for the year, double the prior year. Bardos noted that $18.3 million of 2025 legal expense tied to the Prysmian defective wire case was adjusted out of adjusted EBITDA, and that in 2026 the company will also adjust EBITDA for spending on shareholder class action and derivative lawsuits.
Operating profit was $17.4 million versus $16.5 million a year ago, while net income was $8.1 million compared with $7.8 million. Adjusted EBITDA increased to $30.3 million from $26.4 million, with adjusted EBITDA margin of 20.4% versus 24.7% a year earlier. Adjusted diluted EPS was $0.10, up 22% year over year.
Backlog growth and demand commentary
Shoals said its commercial team added about $175 million in new orders in Q4, helping lift backlog in awarded orders (BLAO) to a record $747.6 million, up 18% year over year and up $26.7 million sequentially. Management cited a seasonally strong book-to-bill of 1.2 for the quarter. As of year-end, the company said $603.4 million of BLAO had planned delivery dates in the coming four quarters, with $144.2 million beyond that.
CEO Brandon Moss said quote volume in the quarter exceeded $700 million of unique projects, which he characterized as supporting revenue opportunities in 2027 and beyond. On the call, management emphasized that underlying demand drivers remain strong, while also signaling a more “flexible and agile approach” to project and customer selection as the company adds capacity at its new consolidated facility.
Business line updates: international, OEM, CC&I, and BESS
For full-year 2025, Moss said Shoals grew top-line revenue 19% and that U.S. utility-scale solar revenue rose nearly 11% for the year, accelerating in the back half. He also highlighted growth and diversification initiatives:
- International: Revenue expanded from less than $1 million in 2024 to approximately $13 million in 2025. The company ended the year with a record $90 million of international BLAO.
- OEM: The OEM business grew 47% for the full year, which management attributed to strong demand at its partner.
- CC&I: Management said CC&I is performing well and seeing higher quote volume via engagement with electrical distributors. On backlog composition, the company said CC&I is largely “book-and-turn,” with very little included in BLAO.
- BESS: Shoals said BESS BLAO rose to $67 million at year-end from $18 million at the end of Q3, and management expected more than half to be recognized as revenue in 2026. The company expects its first new BESS production line to become operational “within the coming weeks” and said the line is designed for scale, capable of producing “hundreds of millions of dollars” of product.
Moss also announced a partnership with ON.Energy focused on solutions for grid-safe data centers. He said ON.Energy will pair its medium-voltage uninterruptible power supply systems with Shoals’ DC recombiners to address backup power and grid-interactive capabilities for AI data centers. In Q&A, management said part of the company’s backlog and awarded orders is attributed to ON.Energy, while noting that order patterns in BESS can be “lumpy,” with revenue recognition expected to become more consistent once production ramps.
Tariffs, facility transition, and legal developments
Management said tariffs continued to pressure results in 2025 and are expected to be a similar headwind in 2026. Bardos estimated tariffs added $3.7 million to cost of goods sold in 2025, an 80-basis-point impact on full-year gross margin, weighted to the second half. He said Shoals had not been able to fully pass tariffs through to customers in several cases.
On manufacturing, the company began moving into a new consolidated facility in late 2025. Bardos said the company expects to be fully operational in the new facility by the middle of 2026, and in response to an analyst question, management said current projections call for being fully in the building operationally by the end of the second quarter. Management said initial inefficiencies from operating multiple facilities are included in 2026 guidance, with operational savings and synergies expected to build in the back half of the year.
On legal matters, Moss said Shoals brought a second patent infringement case against Voltage at the U.S. International Trade Commission in early 2025 and that the court recently issued an initial determination in Shoals’ favor, with a final ruling expected in early June.
Cash flow and 2026 outlook
In Q4, Shoals said it used $4.1 million of cash from operations due to higher accounts receivable and inventory, partially offset by higher accounts payable and deferred revenue. For the full year, the company generated $17.1 million in operating cash flow. Free cash flow was negative $11.3 million in Q4, which management said reflected $7 million of remediation costs and elevated capital expenditures tied to the new facility.
Shoals ended the quarter with $7.3 million in cash and equivalents and net debt of $129.4 million, with net leverage of 1.3x net debt to adjusted EBITDA.
For the first quarter of 2026, management guided for revenue of $125 million to $135 million and adjusted EBITDA of $16 million to $21 million. For full-year 2026, Shoals guided to revenue of $560 million to $600 million and adjusted EBITDA of $110 million to $130 million. Bardos also provided expectations for 2026 cash flow from operations of $65 million to $85 million, capital expenditures of $20 million to $30 million, and interest expense of $8 million to $12 million.
In Q&A, management said it remains prudent about “book-and-turn” assumptions given uncertainty and changing order patterns from new customers. The company also described its current gross margin framework as “low to mid-30s” for the foreseeable future, with Q1 expected to be the lowest margin quarter of the year and improvement expected as facility efficiencies increase. Bardos said the company is “taking off the table” discussion of reaching 40% gross margin in the near term, while expecting margins to be higher in 2027 than in 2026.
About Shoals Technologies Group (NASDAQ:SHLS)
Shoals Technologies Group, Inc is a leading provider of electrical balance-of-system (BOS) solutions for the solar energy industry. The company designs, engineers and manufactures a comprehensive portfolio of products, including junction boxes, combiner boxes, cable assemblies, power distribution units and monitoring systems. These components are critical to interconnecting photovoltaic modules, optimizing energy output and ensuring safe, reliable performance across solar installations.
Founded in 1996 and headquartered in Portland, Tennessee, Shoals has grown its manufacturing and operations footprint to serve customers around the globe.
