U.S.-headquartered Shoals Technologies Group, a manufacturer of electrical balance of systems (EBOS) for solar, energy storage and emobility, reported a 23.9% year-over-year (YoY) dip in revenue to $102.2 million during the third quarter (Q3) of 2024, primarily due to project delays and supply chain issues.

Shoals reported a net loss of $300,000, an improvement from the $9.8 million net loss in Q3 2023, while adjusted net income was $13.9 million, down 58.2% YoY.

Adjusted EBITDA was $24.5 million, down 48.9% from the previous year, with a margin of 24%, down from 35.8% in Q3 2023.

As of September 30, 2024, the company’s backlog and awarded orders totaled $596.6 million, a decrease of 5.8% YoY. About $455.2 million worth of orders is expected to be fulfilled over the next four quarters.

Shoals reported an earnings per share (EPS) of $0.08, missing expectations by $0.02.

General and administrative expenses declined 17% YoY to $18.7 million due to reduced stock-based and incentive compensation expenses.

Shoals’ cash flow from operations for the first nine months of 2024 rose to $66.4 million, up 1.4% from $65.5 million in 2023.

Market Landscape

CEO Brandon Moss acknowledged the challenges of the current market conditions but said the long-term outlook for utility-scale solar remains positive.

Shoals employs over 1,000 people across the U.S. and does not receive any 45X tax credits. The company noted that project timelines have been extended as developers take longer to award projects to EPCs, who then bring Shoals into the process.

The delay is attributed to various factors, including developers renegotiating Power Purchase Agreements (PPAs) due to shifting financial conditions, prolonged permitting processes, some projects being placed further back in the interconnection queue, and rising labor costs leading to economic reassessments.

The company said it is navigating through these challenges by improving relationships with existing customers and establishing new ones, focusing on product innovation, including introducing 2 kV systems and expanding into new markets such as commercial, community, and industrial solar and battery energy storage solutions.

Shoals received a favorable initial determination from the International Trade Commission regarding its patent infringement case against a competitor. The company plans to continue protecting its intellectual property and pursue damages in pending district court cases.

Despite the challenges in 2024, management expressed confidence in returning to growth in the upcoming year, supported by a strong backlog and awarded orders.

The company reported a revenue of $99.2 million in Q2 2024, a 17%YoY decrease from $119 million. The fall in revenue was triggered by project pushouts, which resulted in lower demand for the company’s products in domestic utility-scale solar projects.

In Q1 2024, Shoals reported a net income of $4.8 million, a YoY decline of 72% from $17 million.