Shoals Technologies to double manufacturing capacity as backlog soars

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Shoals’ revenues increased 22% last year to US$213.9 million. Image: Shoals Technologies.

Shoals Technologies is set to double its electrical balance of systems (BOS) manufacturing capacity with a new US facility as its backlog and awarded orders reach a record high.

The company, a provider of BOS solutions for solar, energy storage and electric vehicle (EV) charging infrastructure, said the new plant will allow it to optimise manufacturing processes and bring new innovations to market. It is expected the facility will be operational in Q2 2022.

The announcement coincides with the publication of Shoals’ 2021 financial results, with the firm revealing its backlog and awarded orders nearly doubled year-on-year to US$299 million, a new high.

“Despite the challenges posed by the COVID-19 pandemic and unprecedented supply chain disruptions, Shoals delivered record revenue and gross profit in 2021,” said CEO Jason Whitaker.

Revenue for the year was US$213.9 million, a 22% increase on 2020 but lower than the US$230 – 240 million range the company had expected.

Adjusted earnings for 2021 were also lower than forecasted, jumping 3% year-on-year to US$62.9 million. The modest increase was the result of investments made in human capital infrastructure to support the company’s growth initiatives, including its new EV unit and international expansion.

Shoals has made significant progress on its international growth plan, Whitaker said during a call with investors. The company last month received IEC certification in Europe, which was the last regulatory hurdle before it could sell its products across the EU, where it now expects to grow its backlog this year. Beyond Europe, the firm has also started building a sales team in Latin America.

Whitaker said Shoals is also starting to see synergies between its EV unit and core solar business as its customers are increasingly active sectors. Earlier this year, the firm formed a partnership with commercial and industrial solar developer Luminace to pursue distributed renewables and EV charging solutions across the US.

In November, Shoals revealed it was shifting some of its projected revenues for Q4 into 2022 because several of its customers changed product specifications or delayed shipments due to supply chain issues.

While Whitaker said that shift played out largely as predicted, the company didn’t expect to see such a large growth in orders. “Demand is incredible, but the exact timing of projects remains very dynamic because customers are contending with so many moving pieces within their supply chain,” he said.

“What that means for us in 2022 is that while we know our revenue growth rate is going to increase significantly compared to last year, it’s challenging to predict exactly how significantly.”

Management forecasts 2022 revenues will grow by between 40 – 64% year-on-year, reaching US$300 – US$350 million, while adjusted earnings are expected to be US$79 – 97 million, representing an increase of between 26 – 54%.

Conference call transcript from the Motley Fool.

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