Shoals Technologies Group, Inc.

What they do

Shoals designs and manufactures electrical balance of systems (EBOS) components and system solutions for utility-scale solar, BESS, and data center power applications. Its product line includes Solar BLA Solutions, homeruns, interconnection and extension solutions, combiners and recombiners, load break disconnects, wireless performance monitoring, and BESS offerings. The company sells primarily to EPCs in the U.S., often with 12+ months of lead time for custom-engineered projects.

Revenue drivers

• System solutions — 74.0% of revenue came from bundled, custom-engineered EBOS solutions for solar and BESS projects.
• Solar EBOS components — Individual custom and proprietary components sold to solar and BESS customers, including OEMs.
• BESS solutions — Battery energy storage system offerings, cited as a growth area contributing to increased backlog and awarded orders.
• Data center and mission-critical infrastructure — Expanding into data center power systems, a newer market opportunity tied to AI-driven energy demand.

Recent performance

For Q2 2026, revenue was $163.4 million, up 47.4% from $110.8 million a year ago. Net income was $12.1 million, down from $13.9 million, and diluted EPS was $0.07 versus $0.08. Gross margin fell to 30.3% from 37.2%, due to facility transition inefficiencies, product mix, and costs related to product quality matters. Backlog and awarded orders reached $801.4 million as of June 30, 2026, up 19.4% year-over-year.

Strategy

Shoals is focused on strengthening its core solar and BESS business while expanding into data center and mission-critical power infrastructure. The company completed the move into a new manufacturing facility and is working to improve productivity there. Management highlights market share capture initiatives and innovation as key growth drivers. The company also sees growth from emerging battery energy storage markets.

Risks

• Demand cyclicality in solar — The domestic utility-scale solar market experienced significant project delays in 2023 and 2024, and a similar slowdown could hurt revenue.
• Long lead times and project-specific orders — Most sales are custom-engineered with 12+ months of lead time, making the company vulnerable to delays or cancellations.
• Operational inefficiencies in new facility — Gross margin declined in Q2 2026 partly due to ramp-up and transition into the new manufacturing facility, which could persist.
• Product quality costs — The company incurred costs for rework and corrective actions related to product quality matters, which pressured margins.

Outlook

Management expects Q3 2026 revenue between $150 million and $170 million and Adjusted EBITDA between $32 million and $37 million. For the full year, the company reaffirmed its previous outlook. The record backlog and awarded orders support near-term confidence.