Shoals Technologies Group, Inc. ((SHLS)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Shoals Technologies Group’s recent earnings call painted a picture of robust growth and strategic expansion, tempered by some challenges. The company reported record revenue growth and a strong backlog, underscoring its successful quarter. However, increased legal expenses and the impact of tariffs on margins were notable hurdles that the company faced.
Record Revenue Growth
Shoals Technologies Group announced a remarkable revenue achievement, reaching $135.8 million in Q3 2025. This figure marks a 32.9% increase compared to the previous year and a 22.5% rise from the second quarter of 2025, highlighting the company’s strong financial performance.
Strong Backlog and Order Growth
The company reported a record backlog and awarded orders totaling $720.9 million, representing a 21% year-over-year increase. With a book-to-bill ratio of 1.4, Shoals demonstrated strong demand for its products and services, indicating a healthy pipeline of future business.
Expansion in International Markets
Shoals made significant strides in international markets, recognizing over $6 million in revenue from projects in Latin America and Australia during Q3. The company anticipates completing these projects in Q4 2025 and boasts an international pipeline exceeding 20 gigawatts, showcasing its global growth ambitions.
Progress in Strategic Growth Initiatives
The company reported progress in its strategic growth initiatives, particularly in the utility-scale solar market, CC&I business, and OEM business. Shoals also advanced its Battery Energy Storage Systems (BESS) offerings by signing two Master Service Agreements in emerging BESS markets, highlighting its commitment to innovation and market expansion.
Increased Legal Expenses
Shoals faced increased legal expenses, which contributed to a sequential rise in SG&A costs. The expenses, totaling approximately $6.8 million, were associated with ITC hearings and ongoing litigation related to wire insulation shrinkback, posing a financial challenge for the company.
Impact of Tariffs on Margins
Tariffs posed a challenge to Shoals’ margins, negating expected material cost savings and impacting the company’s ability to improve margins by 100 to 200 basis points. The company had to navigate policy shifts affecting supply chain costs, which added complexity to its financial management.
Forward-Looking Guidance
Looking ahead, Shoals Technologies Group provided optimistic guidance for the future. The company expects Q4 2025 revenue to range between $140 million and $150 million, with adjusted EBITDA between $35 million and $40 million. For the full year, Shoals anticipates revenue growth of 17-20% year-over-year, surpassing previous expectations. The company remains confident in its growth prospects, driven by strong demand in the utility-scale solar market and emerging opportunities in BESS and international markets.
In summary, Shoals Technologies Group’s earnings call highlighted a quarter of impressive growth and strategic advancements, despite facing some challenges. The company’s record revenue, strong backlog, and international expansion underscore its robust performance, while increased legal expenses and tariff impacts present areas for caution. With optimistic forward-looking guidance, Shoals is poised for continued success in the evolving energy landscape.