Shoals Revenue Jumps 43.8% To $195.3 Million, But Gross Margin Falls To 31.9%
The solar and battery wiring maker raised its 2026 outlook as net income rose to $17.9 million, even as plant-move costs squeezed margins.
Shoals Technologies Group, which makes electrical equipment that carries power from solar panels and battery systems to inverters and the grid, said third-quarter revenue rose 43.8% to $195.3 million from $135.8 million a year earlier. The company raised its 2026 outlook in the same release, and said it had also signed a merger agreement with ARRAY Technologies, according to an 8-K filed Wednesday.
Sales surge, margin slips
The company credited strong underlying demand, market share capture initiatives and a larger volume of projects for the sales gain. Gross profit rose to $62.4 million from $50.3 million, but gross profit as a share of revenue slid to 31.9% from 37.0%.
Shoals blamed the squeeze on inefficiencies from ramping up and moving into its new factory, product mix, rework and corrective actions on product quality matters, and added lease accounting amortization.
Income from operations reached $29.0 million, up from $18.7 million. Net income rose to $17.9 million, or $0.11 a share, from $11.9 million, or $0.07. Adjusted EBITDA, the company's own earnings measure that strips out items such as stock pay and litigation costs, was $39.8 million against $32.2 million.
A higher 2026 forecast
For the full year, Shoals now expects revenue of $665 million to $685 million and adjusted EBITDA of $129 million to $133 million. It also guided to cash flow from operations of $55 million to $65 million, capital spending of $20 million to $30 million and interest expense of $11 million to $13 million.
For the fourth quarter, it expects revenue of $165 million to $185 million and adjusted EBITDA of $36 million to $40 million.
Backlog and awarded orders stood at $791.7 million at September 30, up 9.8% from a year earlier but down 1.2% from June 30. The company tied the annual gain to growth in emerging battery storage markets.
Cash strain and the ARRAY deal
For the first nine months, operations used $5.8 million of cash, versus $21.2 million provided a year earlier, as inventory grew by $61.5 million. The revolving credit line stood at $163.75 million at September 30, up from $136.75 million at the end of 2025.
CEO Brandon Moss said productivity improvements pushed revenue and adjusted EBITDA above the company's expected range, and that with the move into the new facility complete, "our focus today is on the customer."
The ARRAY deal is a merger agreement that still needs stockholder and regulatory approvals. Shoals replaced its usual earnings call with a joint analyst call with ARRAY at 8:00 a.m. EDT on Wednesday.
Shoals booked $0.7 million of litigation expense tied to its suit against the supplier of defective wire in the quarter, down from $6.8 million a year earlier.
Sources
- 8-K Filing — Shoals Technologies Group, Inc. (SHLS) — SEC EDGAR
- Exhibit exhibit991earningsrelease2.htm — Shoals Technologies Group, Inc. 8-K exhibit — SEC EDGAR
