False0001831651--12-31Q32025xbrli:sharesiso4217:USDiso4217:USDxbrli:sharesshls:subsidiaryxbrli:pureshls:voteshls:patentshls:segment00018316512025-01-012025-09-300001831651us-gaap:CommonClassAMember2025-10-290001831651us-gaap:CommonClassBMember2025-10-2900018316512025-09-3000018316512024-12-310001831651us-gaap:CommonClassAMember2024-12-310001831651us-gaap:CommonClassAMember2025-09-3000018316512025-07-012025-09-3000018316512024-07-012024-09-3000018316512024-01-012024-09-300001831651us-gaap:CommonClassAMember2025-07-012025-09-300001831651us-gaap:CommonClassAMember2024-07-012024-09-300001831651us-gaap:CommonClassAMember2025-01-012025-09-300001831651us-gaap:CommonClassAMember2024-01-012024-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-12-310001831651us-gaap:AdditionalPaidInCapitalMember2024-12-310001831651us-gaap:TreasuryStockCommonMember2024-12-310001831651us-gaap:RetainedEarningsMember2024-12-310001831651us-gaap:RetainedEarningsMember2025-01-012025-03-3100018316512025-01-012025-03-310001831651us-gaap:AdditionalPaidInCapitalMember2025-01-012025-03-310001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-01-012025-03-310001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-03-310001831651us-gaap:AdditionalPaidInCapitalMember2025-03-310001831651us-gaap:TreasuryStockCommonMember2025-03-310001831651us-gaap:RetainedEarningsMember2025-03-3100018316512025-03-310001831651us-gaap:RetainedEarningsMember2025-04-012025-06-3000018316512025-04-012025-06-300001831651us-gaap:AdditionalPaidInCapitalMember2025-04-012025-06-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-04-012025-06-300001831651us-gaap:TreasuryStockCommonMember2025-04-012025-06-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-06-300001831651us-gaap:AdditionalPaidInCapitalMember2025-06-300001831651us-gaap:TreasuryStockCommonMember2025-06-300001831651us-gaap:RetainedEarningsMember2025-06-3000018316512025-06-300001831651us-gaap:RetainedEarningsMember2025-07-012025-09-300001831651us-gaap:AdditionalPaidInCapitalMember2025-07-012025-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-07-012025-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2025-09-300001831651us-gaap:AdditionalPaidInCapitalMember2025-09-300001831651us-gaap:TreasuryStockCommonMember2025-09-300001831651us-gaap:RetainedEarningsMember2025-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2023-12-310001831651us-gaap:AdditionalPaidInCapitalMember2023-12-310001831651us-gaap:TreasuryStockCommonMember2023-12-310001831651us-gaap:RetainedEarningsMember2023-12-3100018316512023-12-310001831651us-gaap:RetainedEarningsMember2024-01-012024-03-3100018316512024-01-012024-03-310001831651us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-01-012024-03-310001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-03-310001831651us-gaap:AdditionalPaidInCapitalMember2024-03-310001831651us-gaap:TreasuryStockCommonMember2024-03-310001831651us-gaap:RetainedEarningsMember2024-03-3100018316512024-03-310001831651us-gaap:RetainedEarningsMember2024-04-012024-06-3000018316512024-04-012024-06-300001831651us-gaap:AdditionalPaidInCapitalMember2024-04-012024-06-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-04-012024-06-300001831651us-gaap:TreasuryStockCommonMember2024-04-012024-06-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-06-300001831651us-gaap:AdditionalPaidInCapitalMember2024-06-300001831651us-gaap:TreasuryStockCommonMember2024-06-300001831651us-gaap:RetainedEarningsMember2024-06-3000018316512024-06-300001831651us-gaap:RetainedEarningsMember2024-07-012024-09-300001831651us-gaap:AdditionalPaidInCapitalMember2024-07-012024-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-07-012024-09-300001831651us-gaap:TreasuryStockCommonMember2024-07-012024-09-300001831651us-gaap:CommonClassAMemberus-gaap:CommonStockMember2024-09-300001831651us-gaap:AdditionalPaidInCapitalMember2024-09-300001831651us-gaap:TreasuryStockCommonMember2024-09-300001831651us-gaap:RetainedEarningsMember2024-09-3000018316512024-09-300001831651us-gaap:SecuredDebtMember2025-01-012025-09-300001831651us-gaap:SecuredDebtMember2024-01-012024-09-300001831651us-gaap:RevolvingCreditFacilityMember2025-01-012025-09-300001831651us-gaap:RevolvingCreditFacilityMember2024-01-012024-09-300001831651shls:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2025-01-012025-09-300001831651shls:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2025-01-012025-09-300001831651shls:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2024-01-012024-09-300001831651shls:CustomerAMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2024-01-012024-09-300001831651shls:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2025-01-012025-09-300001831651shls:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2025-01-012025-09-300001831651shls:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:RevenueFromContractWithCustomerMember2024-01-012024-09-300001831651shls:CustomerBMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMember2024-01-012024-09-300001831651us-gaap:LandMember2025-09-300001831651us-gaap:LandMember2024-12-310001831651srt:MinimumMembershls:BuildingAndLandImprovementsMember2025-09-300001831651srt:MaximumMembershls:BuildingAndLandImprovementsMember2025-09-300001831651shls:BuildingAndLandImprovementsMember2025-09-300001831651shls:BuildingAndLandImprovementsMember2024-12-310001831651srt:MinimumMemberus-gaap:MachineryAndEquipmentMember2025-09-300001831651srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2025-09-300001831651us-gaap:MachineryAndEquipmentMember2025-09-300001831651us-gaap:MachineryAndEquipmentMember2024-12-310001831651srt:MinimumMemberus-gaap:FurnitureAndFixturesMember2025-09-300001831651srt:MaximumMemberus-gaap:FurnitureAndFixturesMember2025-09-300001831651us-gaap:FurnitureAndFixturesMember2025-09-300001831651us-gaap:FurnitureAndFixturesMember2024-12-310001831651us-gaap:VehiclesMember2025-09-300001831651us-gaap:VehiclesMember2024-12-310001831651us-gaap:ConstructionInProgressMember2025-09-300001831651us-gaap:ConstructionInProgressMember2024-12-310001831651us-gaap:CustomerRelationshipsMember2025-09-300001831651us-gaap:CustomerRelationshipsMember2024-12-310001831651us-gaap:DevelopedTechnologyRightsMember2025-09-300001831651us-gaap:DevelopedTechnologyRightsMember2024-12-310001831651us-gaap:TradeNamesMember2025-09-300001831651us-gaap:TradeNamesMember2024-12-310001831651us-gaap:OrderOrProductionBacklogMember2025-09-300001831651us-gaap:OrderOrProductionBacklogMember2024-12-310001831651us-gaap:NoncompeteAgreementsMember2025-09-300001831651us-gaap:NoncompeteAgreementsMember2024-12-310001831651shls:ProductsWithoutServiceMember2025-09-300001831651shls:ProductsWithoutServiceMember2024-12-310001831651shls:ProductsWithoutServiceMember2025-07-012025-09-300001831651shls:ProductsWithoutServiceMember2025-01-012025-09-300001831651shls:ProductsWithoutServiceMember2024-07-012024-09-300001831651shls:ProductsWithoutServiceMember2024-01-012024-09-300001831651shls:WireHarnessMember2025-09-300001831651shls:WireHarnessMember2025-01-012025-09-300001831651shls:WireHarnessMember2024-12-310001831651shls:WireHarnessMember2025-07-012025-09-300001831651shls:WireHarnessMember2024-07-012024-09-300001831651shls:WireHarnessMember2024-01-012024-09-300001831651us-gaap:RevolvingCreditFacilityMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2025-09-300001831651us-gaap:RevolvingCreditFacilityMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-12-310001831651us-gaap:SecuredDebtMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2025-01-012025-09-300001831651us-gaap:SecuredDebtMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-01-192024-01-190001831651us-gaap:RevolvingCreditFacilityMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-180001831651us-gaap:RevolvingCreditFacilityMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-190001831651us-gaap:RevolvingCreditFacilityMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:SecuredDebtMembershls:DebtCovenantPeriodOneMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-190001831651us-gaap:SecuredDebtMembershls:DebtCovenantPeriodTwoMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-190001831651us-gaap:SecuredDebtMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:SecuredDebtMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMembersrt:MinimumMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:SecuredDebtMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMembersrt:MaximumMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:SecuredDebtMemberus-gaap:BaseRateMembershls:SeniorSecuredCreditAgreementMembersrt:MinimumMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:SecuredDebtMemberus-gaap:BaseRateMembershls:SeniorSecuredCreditAgreementMembersrt:MaximumMemberus-gaap:LineOfCreditMember2024-03-192024-03-190001831651us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMembersrt:MinimumMemberus-gaap:LineOfCreditMember2025-01-012025-09-300001831651us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMembersrt:MaximumMemberus-gaap:LineOfCreditMember2025-01-012025-09-300001831651us-gaap:RevolvingCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrMembershls:SeniorSecuredCreditAgreementMemberus-gaap:LineOfCreditMember2025-01-012025-09-300001831651shls:RestrictedAndPerformanceStockUnitsMember2025-07-012025-09-300001831651shls:RestrictedAndPerformanceStockUnitsMember2024-07-012024-09-300001831651shls:RestrictedAndPerformanceStockUnitsMember2025-01-012025-09-300001831651shls:RestrictedAndPerformanceStockUnitsMember2024-01-012024-09-300001831651shls:A2021IncentivePlanMember2021-01-260001831651us-gaap:RestrictedStockUnitsRSUMember2025-01-012025-09-300001831651srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2025-01-012025-09-300001831651srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2025-01-012025-09-300001831651srt:DirectorMemberus-gaap:RestrictedStockUnitsRSUMember2025-01-012025-09-300001831651us-gaap:RestrictedStockUnitsRSUMember2024-12-310001831651us-gaap:RestrictedStockUnitsRSUMember2025-09-300001831651us-gaap:PerformanceSharesMember2025-01-012025-09-300001831651us-gaap:PerformanceSharesMemberus-gaap:CommonClassAMembersrt:MinimumMember2025-01-012025-09-300001831651us-gaap:PerformanceSharesMemberus-gaap:CommonClassAMembersrt:MaximumMember2025-01-012025-09-300001831651us-gaap:PerformanceSharesMember2024-12-310001831651us-gaap:PerformanceSharesMember2025-09-300001831651us-gaap:CommonClassBMember2025-09-300001831651us-gaap:CommonClassAMember2024-06-110001831651us-gaap:CommonClassAMember2024-06-1200018316512024-06-1200018316512024-06-122024-06-120001831651us-gaap:TreasuryStockCommonMember2024-06-120001831651us-gaap:AdditionalPaidInCapitalMember2024-06-120001831651us-gaap:CommonClassAMember2024-08-0500018316512024-08-0500018316512023-05-042023-05-040001831651us-gaap:SuretyBondMember2025-09-300001831651shls:SystemSolutionsMember2025-07-012025-09-300001831651shls:SystemSolutionsMember2024-07-012024-09-300001831651shls:SystemSolutionsMember2025-01-012025-09-300001831651shls:SystemSolutionsMember2024-01-012024-09-300001831651shls:ComponentsMember2025-07-012025-09-300001831651shls:ComponentsMember2024-07-012024-09-300001831651shls:ComponentsMember2025-01-012025-09-300001831651shls:ComponentsMember2024-01-012024-09-300001831651shls:ElectricalBalanceOfSystemEBOSSolutionsAndComponentsMember2025-07-012025-09-300001831651shls:ElectricalBalanceOfSystemEBOSSolutionsAndComponentsMember2024-07-012024-09-300001831651shls:ElectricalBalanceOfSystemEBOSSolutionsAndComponentsMember2025-01-012025-09-300001831651shls:ElectricalBalanceOfSystemEBOSSolutionsAndComponentsMember2024-01-012024-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-39942

Shoals Technologies Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware

85-3774438

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

1400 Shoals Way

Portland

Tennessee

37148

(Address of principal executive offices)

(Zip Code)


(615)			451-1400
(Registrant’s telephone number, including area code)


N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.00001 Par Value

SHLS

Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 29, 2025, the registrant had 167,388,418 shares of Class A common stock and no shares of Class B common stock outstanding. This number excludes 3,908,387 shares held by the registrant as Treasury Stock.

Table of Contents

TABLE OF CONTENTS


ITEM		PAGE
PART I
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	38

	SIGNATURES	40

iii

Table of Contents

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) of Shoals Technologies Group, Inc. (the “Company,” “we,” “us,” “our,” and “Shoals”) contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations; expectations regarding the utility-scale solar market; project delays; regulatory environment, including changes or potential changes to such environment; the effects of strategic pricing actions, volume discounts and customer mix in our key markets; pipeline and orders; business strategies, plans and expectations, including sales and marketing goals; technology developments; financing and investment plans; warranty and liability accruals and estimates of loss or gains; estimates of potential loss related to the wire insulation shrinkback matter (as defined in Note 8 to the notes to condensed consolidated financial statements); litigation strategy and expected benefits or results from the current intellectual property and wire insulation shrinkback litigation; potential growth opportunities, including opportunities associated with our entry into new markets; production and capacity at our plants; and potential repurchases under the Company’s Repurchase Program (as defined below in Note 12 to the notes to condensed consolidated financial statements). Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect.

Important factors that could cause actual results to differ materially from expectations are included in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Part I and Item 1A “Risk Factors” of Part II of this Form 10-Q, as well as Part I Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Some of the key factors that could cause actual results to differ from our expectations include the following:

•If demand for solar energy projects diminishes, we may not be able to grow, and our financial results, business and prospects could be materially adversely impacted;

•If we fail to accurately estimate the potential losses related to the wire insulation shrinkback matter, or fail to recover the costs and expenses incurred by us from the supplier, our profit margins, financial results, business and prospects could be materially adversely impacted;

•The interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs, retaliatory tariffs, tariff counter-measures, and other charges on imports and exports;

•Changes in, or threatened changes in, trade policies, including the imposition or threat of trade restrictions, import tariffs, anti-dumping and countervailing duties could adversely affect the amount or timing of our revenue, results of operations or cash flows;

Table of Contents

•We have modified, and in the future may modify, our business strategy to abandon lines of business or implement new lines of business. Modifying our business strategy could have an adverse effect on our business and financial results;

•Amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits;

•Defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death, and in the past have, and in the future could, result in loss of customers, reputational damage and decreased revenue, and materially adversely impact our business, financial condition and results of operations;

•We have experienced, and may experience in the future, delays, disruptions, quality control or reputational problems in our manufacturing operations in part due to our vendor concentration;

•If we fail to retain our key personnel and attract additional qualified personnel, our business strategy and prospects could suffer;

•Our products are primarily manufactured and shipped from our production facilities in Tennessee, and any damage or disruption at these facilities may harm our business;

•We may face difficulties with respect to the planned consolidation and relocation of our Tennessee-based manufacturing and distribution operations, and may not realize the benefits thereof;

•Safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover;

•The market for our products is competitive, and we face increased competition as new and existing competitors introduce EBOS system solutions and components, which could negatively affect our results of operations and market share;

•Macroeconomic conditions, including high inflation, high interest rates, and geopolitical instability impacts our business and financial results;

•We are subject to risks associated with the patent infringement complaints that we filed with the U.S. International Trade Commission (“ITC”) and District Courts;

•If we fail to, or incur significant costs in order to obtain, maintain, protect, defend or enforce our intellectual property portfolio and other proprietary rights, including the patents we are asserting in ongoing patent infringement litigation, our business and results of operations could be materially harmed;

•Acquisitions, joint ventures and/or investments and the failure to integrate acquired businesses, could disrupt our business and negatively impact our results of operations;

•A loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment could harm our business and negatively impact revenue, results of operations, and cash flow;

•A significant drop in the price of electricity may harm our business, financial condition, results of operations and prospects;

Table of Contents

•The unauthorized access to our information technology systems or the disclosure of personal or sensitive data or confidential information, whether through a breach of our computer system or otherwise, could severely disrupt our business or reduce our sales or profitability;

•Failure of our information technology systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations;

•Our expansion outside the U.S. could subject us to additional business, financial, regulatory and competitive risks;

•Our indebtedness could adversely affect our financial flexibility, restrict our current and future operations, and our competitive position;

•Existing electric utility industry, federal, state and municipal renewable energy and solar energy policies and regulations, including zoning and siting laws, and any subsequent changes, could present technical, regulatory and economic barriers to the purchase and use of solar energy systems that may significantly reduce demand for our products or harm our ability to compete;

•Changes in tax laws or regulations that are applied adversely to us, or our customers could materially adversely affect our business, financial condition, results of operations and prospects;

•The market price of our Class A common stock may decline and may continue to be subject to significant volatility;

•Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management; and

•Our amended and restated certificate of incorporation also provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Shoals Technologies Group, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except shares and par value)


	September 30, 2025		December 31, 2024
Assets
Current Assets
Cash and cash equivalents	$	8,589	$	23,511
Accounts receivable, net	117,464		78,181
Unbilled receivables	7,705		20,834
Inventory	60,350		55,977
Other current assets	7,085		9,849
Total Current Assets	201,193		188,352
Property, plant and equipment, net	49,187		28,222
Goodwill	69,941		69,941
Other intangible assets, net	35,395		41,083
Deferred tax assets	443,586		454,160
Right-of-use operating lease assets	47,079		1,786
Other assets	5,410		9,536
Total Assets	$	851,791	$	793,080

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	33,941	$	20,032
Accrued expenses and other	27,281		12,541
Warranty liability—current portion	4,556		29,602
Deferred revenue	26,099		18,737
Total Current Liabilities	91,877		80,912
Revolving line of credit	126,750		141,750
Right-of-use operating lease liabilities	39,492		1,235
Warranty liability, less current portion	3,041		11,392
Other long-term liabilities	991		991
Total Liabilities	262,151		236,280
Commitments and Contingencies (Note 13)
Stockholders’ Equity
Preferred stock, $0.00001 par value - 5,000,000 shares authorized; none issued and outstanding as of September 30, 2025 and December 31, 2024	—		—
Class A common stock, $0.00001 par value - 1,000,000,000 shares authorized; 171,294,097 and 170,670,779 shares issued; 167,385,710 and 166,762,392 outstanding as of September 30, 2025 and December 31, 2024, respectively	2		2
Additional paid-in capital	490,879		483,550
Treasury stock, at cost, 3,908,387 shares as of September 30, 2025 and December 31, 2024, respectively	(25,272)		(25,331)
Retained earnings	124,031		98,579
Total stockholders' equity	589,640		556,800
Total Liabilities and Stockholders’ Equity	$	851,791	$	793,080

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenue	$	135,804	$	102,165	$	327,006	$	292,221
Cost of revenue	85,552		76,789		207,412		190,388
Gross profit	50,252		25,376		119,594		101,833
Operating expenses
General and administrative expenses	29,423		18,743		74,180		60,733
Depreciation and amortization	2,158		2,109		6,433		6,411
Total operating expenses	31,581		20,852		80,613		67,144
Income from operations	18,671		4,524		38,981		34,689
Interest expense	(2,832)		(3,173)		(7,483)		(10,913)
Interest income	38		85		232		400
Gain (loss) on sale of assets	(7)		—		3,127		—
Income before income taxes	15,870		1,436		34,857		24,176
Income tax expense	(3,991)		(1,703)		(9,405)		(7,867)
Net income (loss)	$	11,879	$	(267)	$	25,452	$	16,309

Earnings (loss) per share of Class A common stock:
Basic	$	0.07	$ (0.00)		$	0.15	$	0.10
Diluted	$	0.07	$ (0.00)		$	0.15	$	0.10
Weighted average shares of Class A common stock outstanding:
Basic	167,369		167,318		167,206		169,190
Diluted	168,750		167,381		167,725		169,310

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(in thousands, except shares)

For the three and nine months ended September 30, 2025


	Class A Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Total Stockholders' Equity

	Shares	Amount				Shares	Amount
Balance at December 31, 2024	166,762,392	$	2	$	483,550	3,908,387	$	(25,331)	$	98,579	$	556,800
Net loss	—	—		—		—	—		(282)		(282)
Equity-based compensation	—	—		2,661		—	—		—		2,661
Activity under equity-based compensation plan	—	—		(251)		—	—		—		(251)
Vesting of restricted / performance stock units	408,010	—		—		—	—		—		—
Balance at March 31, 2025	167,170,402	$	2	$	485,960	3,908,387	$	(25,331)	$	98,297	$	558,928
Net income	—	—		—		—	—		13,855		13,855
Equity-based compensation	—	—		2,594		—	—		—		2,594
Activity under equity-based compensation plan	—	—		(29)		—	—		—		(29)
Vesting of restricted stock units	183,458	—		—		—	—		—		—
Excise taxes on treasury stock transactions	—	—		—		—	59		—		59
Balance at June 30, 2025	167,353,860	$	2	$	488,525	3,908,387	$	(25,272)	$	112,152	$	575,407
Net income	—	—		—		—	—		11,879		11,879
Equity-based compensation	—	—		2,419		—	—		—		2,419
Activity under equity-based compensation plan	—	—		(65)		—	—		—		(65)
Vesting of restricted stock units	31,850	—		—		—	—		—		—
Balance at September 30, 2025	167,385,710	$	2	$	490,879	3,908,387	$	(25,272)	$	124,031	$	589,640

Table of Contents

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (continued)

(in thousands, except shares)

For the three and nine months ended September 30, 2024


	Class A Common Stock			Additional Paid-in Capital		Treasury Stock			Retained Earnings		Total Stockholders' Equity

	Shares	Amount				Shares	Amount
Balance at December 31, 2023	170,117,289	$	2	$	470,542	—	$	—	$	74,452	$	544,996
Net income	—	—		—		—	—		4,774		4,774
Equity-based compensation	—	—		5,023		—	—		—		5,023
Activity under equity-based compensation plan	—	—		(816)		—	—		—		(816)
Vesting of restricted / performance stock units	303,020	—		—		—	—		—		—
Balance at March 31, 2024	170,420,309	$	2	$	474,749	—	$	—	$	79,226	$	553,977
Net income	—	—		—		—	—		11,802		11,802
Equity-based compensation	—	—		4,087		—	—		—		4,087
Activity under equity-based compensation plan	—	—		(49)		—	—		—		(49)
Vesting of restricted / performance stock units	91,257	—		—		—	—		—		—
Repurchase of Class A common stock	(2,202,643)	—		(10,000)		2,202,643	(15,231)		—		(25,231)
Balance at June 30, 2024	168,308,923	$	2	$	468,787	2,202,643	$	(15,231)	$	91,028	$	544,586
Net loss	—	—		—		—	—		(267)		(267)
Equity-based compensation	—	—		1,282		—	—		—		1,282
Activity under equity-based compensation plan	—	—		(305)		—	—		—		(305)
Vesting of restricted / performance stock units	93,236	—		—		—	—		—		—
Repurchase of Class A common stock	(1,705,744)	—		10,000		1,705,744	(10,100)		—		(100)
Balance at September 30, 2024	166,696,415	$	2	$	479,764	3,908,387	$	(25,331)	$	90,761	$	545,196

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Nine Months Ended September 30,
	2025		2024
Cash Flows from Operating Activities
Net income	$	25,452	$	16,309
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,984		9,332
Amortization/write off of deferred financing costs	467		2,937
Gain on sale of asset	(3,127)		—
Equity-based compensation	7,674		10,392
Provision for obsolete or slow-moving inventory	1,090		1,505
Provision for warranty expense	256		15,203
Deferred taxes	10,574		8,184
Changes in assets and liabilities:
Accounts receivable	(39,283)		11,817
Unbilled receivables	13,129		26,344
Inventory	(5,463)		(14,555)
Other assets	2,465		(2,668)
Accounts payable	12,566		9,347
Accrued expenses and other	11,661		(10,707)
Warranty liability	(33,653)		(15,374)
Deferred revenue	7,362		(1,666)
Net Cash Provided by Operating Activities	21,154		66,400
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(25,879)		(6,862)
Proceeds from sale of property, plant and equipment	5,088		—
Net Cash Used in Investing Activities	(20,791)		(6,862)
Cash Flows from Financing Activities
Employee withholding taxes related to net settled equity awards	(344)		(1,170)
Payments on term loan facility	—		(143,750)
Proceeds from revolving credit facility	50,000		148,750
Repayments of revolving credit facility	(65,000)		(47,000)
Deferred financing costs	—		(2,638)
Repurchase of Class A common stock	—		(25,331)
Excise taxes on treasury stock transactions	59		—
Net Cash Used in Financing Activities	(15,285)		(71,139)
Net Decrease in Cash and Cash Equivalents	(14,922)		(11,601)
Cash and Cash Equivalents—Beginning of Period	23,511		22,707
Cash and Cash Equivalents—End of Period	$	8,589	$	11,106

Table of Contents

Shoals Technologies Group, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited) (continued)

(in thousands)


	Nine Months Ended September 30,
Supplemental Cash Flows Information:	2025		2024
Cash paid for interest	$	6,751	$	13,452
Cash paid (refunded or received) for taxes	$	(183)	$	106
Non-cash investing and financing activities:
Purchased equipment not yet paid for	$	1,343	$	—
Right of use operating lease assets obtained in exchange for lease obligations	$	46,168	$	—
Right of use operating lease liabilities obtained in exchange for lease assets	$	41,336	$	—

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Business

Shoals Technologies Group, Inc. (the “Company”) was formed as a Delaware corporation on November 4, 2020 for the purpose of facilitating an initial public offering and other related organizational transactions to carry on the business of Shoals Parent LLC and its subsidiaries (“Shoals Parent LLC”). Shoals Parent LLC was a Delaware limited liability company.

The Company is headquartered in Portland, Tennessee and is a leading provider of electrical balance of systems (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components, for the global energy transition market.

As of September 30, 2025, the Company owns directly or indirectly five subsidiaries: Shoals Intermediate Parent Inc., Shoals Technologies Group, LLC, Shoals International, LLC, Shoals Energy Spain, S.L. and Shoals Energy Australia Pty Ltd.

2. Summary of Significant Accounting Policies

Basis of Accounting and Presentation

The condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024, the condensed consolidated statements of operations, changes in stockholders’ equity and cash flows for the three and nine months ended September 30, 2025 and 2024 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2025 and the results of its operations and its cash flows for the three and nine months ended September 30, 2025 and 2024. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2025 and 2024 are also unaudited. The results for the three and nine months ended September 30, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period. The balance sheet as of December 31, 2024 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates include revenue recognition, allowance for credit losses, useful lives of property, plant and equipment and other intangible assets, impairment of long-lived assets, allowance for obsolete or slow moving inventory, valuation allowance on deferred tax assets, equity-based compensation expense and warranty liability.

Customer Concentrations

The Company had the following revenue concentration representing approximately 10% or more of revenue for the nine months ended September 30, 2025 and 2024 and related accounts receivable concentration as of September 30, 2025 and December 31, 2024:


	2025				2024
	Revenue %		Accounts Receivable %		Revenue %		Accounts Receivable %
Customer A	18.0	%	26.1	%	30.4	%	19.0	%
Customer B	13.2	%	4.6	%	9.2	%	8.8	%

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows:

•Level 1 – Quoted prices in active markets for identical assets or liabilities.

•Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

The fair values of the Company’s cash and cash equivalents, accounts receivable, and accounts payable approximate their carrying values due to their short maturities. The carrying value of the Company’s revolving line of credit approximates fair value and is considered level 2, as it is based on current market rates at which the Company could borrow funds with similar terms.

Recent Accounting Pronouncements

Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

In November 2024, FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.

3. Accounts Receivable

Accounts receivable, net consists of the following (in thousands):


	September 30, 2025		December 31, 2024
Accounts receivable	$	117,960	$	78,677
Less: allowance for credit losses	(496)		(496)
Accounts receivable, net	$	117,464	$	78,181

4. Inventory

Inventory, net consists of the following (in thousands):


	September 30, 2025		December 31, 2024
Raw materials	$	61,906	$	55,703
Work in process	2,876		2,316
Finished goods	267		2,415
Allowance for obsolete or slow-moving inventory	(4,699)		(4,457)
Inventory, net	$	60,350	$	55,977

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

5. Property, Plant and Equipment

Property, plant, and equipment, net consists of the following (in thousands):


	Estimated Useful Lives (Years)

		September 30, 2025		December 31, 2024
Land	N/A	$	610	$	840
Building and land improvements	5-40	11,333		13,687
Machinery and equipment	3-5	22,274		19,959
Furniture and fixtures	3-7	2,861		2,705
Vehicles	5	125		125
Construction in progress		28,091		3,968
		65,294		41,284
Less: accumulated depreciation		(16,107)		(13,062)
Property, plant and equipment, net		$	49,187	$	28,222

Depreciation expense for the three months ended September 30, 2025 and 2024 was $1.5 million and $1.3 million, respectively. During the three months ended September 30, 2025 and 2024, $1.2 million and $1.1 million, respectively, of depreciation expense was allocated to cost of revenue and $0.3 million and $0.2 million, respectively, of depreciation expense was allocated to operating expenses.

Depreciation expense for the nine months ended September 30, 2025 and 2024 was $4.3 million and $3.6 million, respectively. During the nine months ended September 30, 2025 and 2024, $3.6 million and $2.9 million, respectively, of depreciation expense was allocated to cost of revenue and $0.7 million, of depreciation expense was allocated to operating expenses in each period.

6. Goodwill and Other Intangible Assets

Goodwill

There were no changes in the carrying amount of goodwill during the nine months ended September 30, 2025. Goodwill totaled $69.9 million as of September 30, 2025 and December 31, 2024.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Other Intangible Assets

Other intangible assets, net consists of the following (in thousands):


	Estimated Useful Lives (Years)	September 30, 2025		December 31, 2024
Amortizable:
Costs:
Customer relationships	13	$	53,100	$	53,100
Developed technology	13	34,600		34,600
Trade names	13	11,900		11,900
Backlog	1	600		600
Noncompete agreements	5	2,000		2,000
Total amortizable intangibles		102,200		102,200
Accumulated amortization:
Customer relationships		34,216		31,179
Developed technology		22,179		20,183
Trade names		7,810		7,155
Backlog		600		600
Noncompete agreements		2,000		2,000
Total accumulated amortization		66,805		61,117
Total other intangible assets, net		$	35,395	$	41,083

Amortization expense related to intangible assets amounted to $1.9 million for each of the three months ended September 30, 2025 and 2024, and $5.7 million for each of the nine months ended September 30, 2025 and 2024.

7. Accrued Expenses and Other

Accrued expenses and other consists of the following (in thousands):


	September 30, 2025		December 31, 2024
Accrued compensation	$	6,993	$	5,005
Accrued interest	524		259
Accrued rebates	4,429		3,058
Accrued professional fees	10,004		1,448
Other accrued expenses	5,331		2,771
Total accrued expenses and other	$	27,281	$	12,541

8. Warranty Liability

General Warranty

The Company offers an assurance-type warranty for its products against manufacturer defects which does not contain a service element. For these assurance-type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable. As of September 30, 2025 and December 31, 2024 our estimated general warranty liability was approximately $0.4 million and $1.1 million, respectively. The Company recorded total warranty expense related to general

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

warranty matters of zero and $0.3 million for the three and nine months ended September 30, 2025, respectively, and $0.5 million and $1.9 million for the three and nine months ended September 30, 2024, respectively.

Wire Insulation Shrinkback Warranty

The Company has been notified by certain customers that a subset of wire harnesses used in its EBOS solutions is presenting unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”). Based upon the Company’s ongoing assessment, the Company currently believes the wire insulation shrinkback is related to defective wire manufactured by Prysmian Cables and Systems USA, LLC (“Prysmian”). Based on the Company’s continued analysis of information available as of the date of this Quarterly Report, the Company determined that a potential range of loss was both probable and reasonably estimable. The Company has continued to refine assumptions based on additional information obtained throughout the remediation process, and as of September 30, 2025, the estimate of potential losses remains unchanged from the estimate provided as of December 31, 2024. As no amount within the current range of loss appears to be a better estimate than any other amount, the Company recorded a warranty liability and related expense representing the low-end of the range of potential loss of $73.0 million. The high-end of the range of potential loss is $160.0 million, which is $87.0 million higher than the amount recorded. As of September 30, 2025 and December 31, 2024, the remaining estimated warranty liability related to this matter was $7.2 million and $39.9 million, respectively.

The estimated range, continues to be based on several assumptions, including the potential magnitude of engineering, procurement and construction firm’s labor cost to identify and perform the repair and replacement of impacted harnesses, estimated failure rates, materials replacement cost, planned remediation method, inspection costs, and other various assumptions. Our wire insulation shrinkback warranty liability represents our best estimate of the range of expected losses at any given time. The Company may further increase or decrease, its estimated warranty liability from its current estimate based on available information. Such increase or decrease may be material. The Company does not maintain insurance for product warranty issues and has commenced a lawsuit against Prysmian, as discussed in more detail under Wire Insulation Shrinkback Litigation section of Note 13 - Commitments and Contingencies. Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in ASC 450, and has not been considered in our estimate of the warranty liability as of December 31, 2024 or September 30, 2025.

The Company recorded zero and $13.3 million of warranty expense related to this matter for the three and nine months ended September 30, 2025 and 2024, respectively.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Warranty liability, which includes both general warranty and wire insulation shrinkback warranty, is estimated as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Warranty liability, beginning of period	$	19,785	$	47,330	$	40,994	$	54,914
Warranty expense	—		13,809		256		15,203
Payments	(12,188)		(6,396)		(33,653)		(15,374)
Warranty liability, end of period	7,597		54,743		7,597		54,743
Less: current portion	4,556		34,743		4,556		34,743
Warranty liability, net of current portion	$	3,041	$	20,000	$	3,041	$	20,000

9. Long-Term Debt

Long-term debt consists of the following (in thousands):


	September 30, 2025		December 31, 2024
Revolving Credit Facility	$	126,750	$	141,750
Less: current portion	—		—
Long-term debt, net of current portion	$	126,750	$	141,750

Senior Secured Credit Agreement

The Company entered into a senior secured credit agreement (as amended, the “Senior Secured Credit Agreement”), which consisted of (i) a senior secured six-year term loan facility (the “Term Loan Facility”) and (ii) a revolving credit facility (the “Revolving Credit Facility”).

On January 19, 2024, the Company used proceeds from the Revolving Credit Facility to make a $100.0 million voluntary prepayment of outstanding borrowings under the Term Loan Facility.

On March 19, 2024, the Company entered into an amendment to the Senior Secured Credit Agreement. The amendment, among other things, (i) increased the amount available for borrowing under the Revolving Credit Facility from $150.0 million to $200.0 million, (ii) reduced the interest rate margin applicable to the Revolving Credit Facility by at least 0.25%, with additional 0.25% step-downs if the consolidated first lien secured leverage ratio does not exceed certain thresholds (which step-downs will step back up if such leverage ratio exceeds those thresholds), (iii) reduced the commitment fee applicable to the undrawn amount of the Revolving Credit Facility by at least 0.10% with additional 0.05% step-downs if the consolidated first lien secured leverage ratio does not exceed certain thresholds (which step-downs will step back up if such leverage ratio exceeds such thresholds), (iv) lowered the maximum consolidated leverage ratio permitted under the Senior Secured Credit Agreement to (a) 4.25:1.00 from April 1, 2024 through March 31, 2025 and (b) thereafter, 4.00:1.00 (with temporary increases to the maximum consolidated first lien secured leverage ratio in the event a material acquisition closes), (v) extended the maturity date applicable to the Revolving Credit Facility to March 19, 2029, the fifth anniversary of the amendment’s effective date, and (vi) amended certain covenants under the Senior Secured Credit Agreement in a manner customary for facilities of this type.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

On March 19, 2024, the Company made a $43.8 million voluntary prepayment of all the outstanding term loans under the Term Loan Facility, thereby terminating all term loan commitments under the Term Loan Facility.

Beginning March 19, 2024 and until the delivery of the Company’s compliance certificate for the second quarter of 2024 pursuant to the Senior Secured Credit Agreement, the Revolving Credit Facility bore interest at a rate equal to, at the Company’s election, either adjusted term Secured Overnight Financing Rate (“SOFR”) or base rate (each, as defined in the Senior Secured Credit Agreement) plus (i) in the case of SOFR rate loans, 2.50% per annum and (ii) in the case of base rate loans, 1.50% per annum.

Following the delivery of the Company’s compliance certificate for the second quarter of 2024, pursuant to our Senior Secured Credit Agreement, the Revolving Credit Facility bears interest at a rate equal to, at the Company’s election, either adjusted term SOFR or base rate (each, as defined in the Senior Secured Credit Agreement) plus an applicable interest rate margin, based upon the consolidated first lien secured leverage ratio. The applicable interest rate margin varies from 2.25% to 3.00% per annum for term benchmark loans and 1.25% to 2.00% per annum for base rate loans.

As of September 30, 2025, the interest rate on the Revolving Credit Facility ranged from 7.10% to 7.43%, which represented SOFR plus 3.00%. As of September 30, 2025, there were $126.8 million of outstanding borrowings, $1.7 million of outstanding letters of credit, and $71.5 million of availability under the Revolving Credit Facility.

The Senior Secured Credit Agreement contains affirmative and negative covenants that are customary for financings of this type, including covenants that restrict our incurrence of indebtedness, incurrence of liens, dispositions, investments, acquisitions, restricted payments, and transactions with affiliates. The Senior Secured Credit Agreement also includes customary events of default, including the occurrence of a change of control.

As discussed above, the Revolving Credit Facility also includes a consolidated leverage ratio financial covenant that is tested on the last day of each fiscal quarter. As of September 30, 2025, the Company was in compliance with all the required covenants.

10. Earnings (Loss) per Share ("EPS")

Basic EPS of Class A common stock is computed by dividing net income by the weighted average number of shares of Class A common stock outstanding during the period (which does not include treasury stock). Diluted EPS of Class A common stock is computed similarly to basic EPS except that the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents using the treasury stock method, if dilutive. The Company’s restricted/performance stock units are considered common stock equivalents for this purpose.

Basic and diluted EPS of Class A common stock have been computed as follows (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Numerator:
Net income (loss) - basic and diluted	$	11,879	$	(267)	$	25,452	$	16,309
Denominator:

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)


	Three Months Ended September 30,			Nine Months Ended September 30,
	2025		2024	2025		2024
Weighted average shares of Class A common stock outstanding - basic	167,369		167,318	167,206		169,190
Effect of dilutive securities:
Restricted / performance stock units	1,381		63	519		120
Weighted average shares of Class A common stock outstanding - diluted	168,750		167,381	167,725		169,310

Earnings (loss) per share of Class A common stock - basic	$	0.07	$ (0.00)	$	0.15	$	0.10
Earnings (loss) per share of Class A common stock - diluted	$	0.07	$ (0.00)	$	0.15	$	0.10

11. Equity-Based Compensation

2021 Long-Term Incentive Plan

The Shoals Technologies Group, Inc. 2021 Long-Term Incentive Plan (the “2021 Incentive Plan”) became effective on January 26, 2021. The 2021 Incentive Plan authorized 8,768,124 new shares, subject to adjustment pursuant to the 2021 Incentive Plan.

Restricted Stock Units

During the nine months ended September 30, 2025, the Company granted 2,032,169 restricted stock units (“RSUs") to certain employees, officers and directors of the Company. The RSUs granted during 2025 have grant date fair values ranging from $3.26 to $6.05 per unit and vest ratably over 2 or 3 years, except director grants, which vest over 1 year.

Activity under the 2021 Incentive Plan for RSUs was as follows:


	Nine Months Ended September 30, 2025

	Restricted Stock Units	Weighted Average Price
Outstanding, December 31, 2024	1,842,356	$	12.21
Granted	2,032,169	$	4.49
Vested	(660,072)	$	17.39
Forfeited	(198,236)	$	7.84
Outstanding, September 30, 2025	3,016,217	$	6.16

Performance Stock Units

During the nine months ended September 30, 2025, the Company granted an aggregate of 941,257 Performance Stock Units ("PSUs") to certain executives. The PSUs granted during 2025 cliff vest after 3 years upon meeting certain revenue and adjusted diluted EPS targets and contain a total shareholder return modifier which could increase or decrease the ultimate number of Class A common stock issued to the executives. The

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

PSUs were valued using the market value of the Class A common stock on the grant dates with values ranging from $4.59 to $5.34.

Activity under the 2021 Incentive Plan for PSUs was as follows:


	Nine Months Ended September 30, 2025

	Performance Stock Units	Weighted Average Price
Outstanding, December 31, 2024	472,666	$	18.77
Granted	941,257	$	4.63
Vested	(37,678)	$	14.43
Forfeited	(54,725)	$	9.65
Outstanding, September 30, 2025	1,321,520	$	9.20

The Company recognized equity-based compensation of $2.4 million and $1.3 million, respectively, for the three months ended September 30, 2025 and 2024 and $7.7 million and $10.4 million, respectively, for the nine months ended September 30, 2025 and 2024. As of September 30, 2025, the Company had $16.5 million of unrecognized compensation costs which is expected to be recognized over a weighted average period of 2.0 years.

12. Stockholders’ Equity

Common Stock Economic and Voting Rights

Holders of Class A common stock are entitled to one vote per share. As of September 30, 2025, there were no shares of Class B common stock outstanding, and no shares of Class B common stock are currently issuable.

Share Repurchase Program

On June 11, 2024, the Company announced a share repurchase program (the “Repurchase Program”) authorizing the repurchase of up to $150.0 million of the Company’s Class A common stock, with an estimated completion date of December 31, 2025. Under the Repurchase Program, the Company is authorized to repurchase shares of Class A common stock through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Repurchase Program does not obligate the Company to repurchase shares of Class A common stock and the specific timing and amount of repurchases will vary based on available capital resources and other financial and operational performance metrics, market conditions, securities law limitations, and other factors. The shares repurchased pursuant to the Repurchase Program are held as treasury shares of the Company (“Treasury Stock”).

In connection with the Repurchase Program, on June 11, 2024, the Company entered into an accelerated share repurchase agreement (the “ASR”) with Jefferies LLC to repurchase $25.0 million of the Company’s Class A common stock. Under the terms of the ASR, the Company paid $25.0 million to Jefferies LLC on June 12, 2024, and received 2,202,643 shares of Class A common stock, representing approximately 60% of the notional amount of the ASR, based on the closing price of $6.81 on June 10, 2024.

As of June 12, 2024, the $25.0 million payment to Jefferies LLC was recognized as a reduction to stockholders’ equity, consisting of a $15.0 million increase in Treasury Stock, which reflected the value of the

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

initial 2,202,643 shares received upon initial settlement, and a $10.0 million decrease in Additional Paid-in Capital, which reflected the value of the shares then held by Jefferies LLC and pending final settlement of the ASR.

On August 5, 2024, in final settlement of the ASR, Jefferies LLC delivered an additional 1,705,744 shares of the Company’s Class A common stock to the Company. Final settlement was based on a repurchase price of $6.40 per share, which was based on the average of the daily volume weighted average price per share of the Company’s Class A common stock during the term of the ASR, less a discount. Upon final settlement the value of the shares was reclassified from Additional Paid-in Capital to Treasury Stock.

The Company did not repurchase any shares of its common stock under the Repurchase Program during the nine months ended September 30, 2025. As of September 30, 2025, the Company was authorized to repurchase up to $125.0 million of the Company's common stock under the Repurchase Program.

13. Commitments and Contingencies

Litigation

The Company is from time to time subject to legal proceedings and claims, which arise in the normal course of its business. In the opinion of management and legal counsel, except as disclosed below, the amount of losses or gains that may be sustained, if any, would not have a material effect on the financial position, results of operations or cash flows of the Company. The Company records legal costs associated with loss contingencies, including fees and costs associated with preservation of evidence in connection with the wire insulation shrinkback litigation, as incurred.

Intellectual Property Litigation

The 2023 IP Litigations. On May 4, 2023, the Company filed a patent infringement complaint with the U.S. International Trade Commission (“ITC”) against Hikam America, Inc., a corporation based in Chula Vista, California, and its related foreign entities (together, “Hikam”), and Voltage LLC, a limited liability company based in Chapel Hill, North Carolina, and a related foreign entity (together, “Voltage”). The complaint primarily requests that the ITC (i) investigate unlawful imports of certain photovoltaic connectors and components that the Company alleges infringe on two valid and enforceable patents owned by the Company related to improved connectors for solar panel arrays and (ii) issue a limited exclusion order and a cease and desist order against the Hikam respondents and the Voltage respondents to bar them from importing, marketing, distributing, selling, offering for sale, licensing, advertising, transferring, or otherwise using the infringing photovoltaic connectors and components in and into the United States. Also on May 4, 2023, the Company filed complaints against Hikam in the U.S. District Court for the Southern District of California, and against Voltage in the U.S. District Court for the Middle District of North Carolina on the same subject matter. The District Court actions seek injunctive relief and monetary damages. The District Court actions have been stayed pending the final disposition of the ITC investigation. On August 30, 2024, the Administrative Law Judge issued a Final Initial Determination finding that Voltage violated Section 337 of the Tariff Act of 1930, as amended, by importing infringing LYNX trunk bus products into the United States. However, on January 14, 2025, the ITC reversed the Administrative Law Judge’s Final Initial Determination and issued a Notice of a Commission Final Determination Finding No Violation of Section 337. The Company appealed the ITC’s decision to the Federal Circuit on February 11, 2025. The appeal is pending.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The 2025 IP Litigations. On January 9, 2025, the Company filed a patent infringement complaint at the ITC against Voltage. This complaint cites two new patents (the ‘375 and ‘376 Patents) that cover the Company’s BLA solutions. Also on January 9, 2025, the Company filed a complaint against Voltage in the U.S. District Court for the Middle District of North Carolina on the same subject matter. These complaints seek injunctive relief and, in district court, damages for reasonable royalty and lost profits. These cases are pending. A bench trial on certain equitable defenses is scheduled for the first quarter of 2026. A jury trial to resolve any remaining matters is scheduled for the third quarter of 2026.

The Company is vigorously pursuing these 2023 IP Litigations and the 2025 IP Litigations. However, at this stage, the Company is unable to predict the outcome or impact on its business and financial results. The Company is accounting for these matters as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450, Contingencies.

Wire Insulation Shrinkback Litigation

On October 31, 2023, the Company filed a complaint against Prysmian in the U.S. District Court for the Middle District of Tennessee, Nashville Division. The Company filed an amended complaint on December 4, 2024. The amended complaint alleges that the Company suffered damages caused by defective wire Prysmian sold to the Company from approximately 2019 through approximately 2022. The amended complaint alleges that the wire at issue in the litigation has presented unacceptable levels of wire insulation shrinkback. The amended complaint includes, among other causes of action, product liability, breach of contract, breach of warranty, indemnity, and negligence claims. Court-ordered mediation in this case is scheduled for late 2025.

The Company seeks compensatory and punitive damages, recovery of all costs and expenses incurred by the Company in connection with the identification, repair and replacement of the Prysmian wire alleged to be defective, and other legal and equitable relief. The Company is vigorously pursuing its amended complaint, and as the Company continues to assess this matter, it may, from time to time, amend, update or supplement the amended complaint to, among other things, increase the damages sought for various purposes, including in accordance with increases to the Company’s estimated warranty liability and related expenses related to this matter. At this stage, the Company is unable to predict the outcome of this litigation or the impact on its business and financial results. The Company is accounting for this matter as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450, Contingencies.

Securities Litigation

On March 21, 2024, a purported stockholder filed a putative securities class action against the Company and certain of its current and former executive officers in the United States District Court for the Middle District of Tennessee, Nashville Division, captioned Westchester Putnam Counties Heavy & Highway Laborers Local 60 Benefits Fund v. Shoals Technologies Group, Inc., et al. The complaint alleges violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, based on allegedly false and misleading statements and omissions relating to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, recovery of fees and costs, and other relief that the court may find appropriate. On May 8, 2024 and May 15, 2024, respectively, similar class action complaints were filed in the same court against the Company and certain current and former officers, but these complaints also named as defendants the Company’s Board of Directors, and the selling stockholders and underwriters of the Company’s secondary public offering. While the allegations are largely similar to the first complaint, these new complaints also alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. These cases were

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

captioned Oklahoma Police Pension and Retirement System v. Shoals Technologies Group, Inc. and Kissimmee Utility Authority Employees Retirement Plan v. Shoals Technologies Group, Inc.

On May 24, 2024, all of these cases were consolidated into one action captioned In re Shoals Technologies Group, Inc. Securities Litigation. Plaintiff Erste Asset Management GmbH has been appointed Lead Plaintiff. On December 9, 2024, Lead Plaintiff and plaintiff Kissimmee Utility Authority Employees’ Retirement Plan filed a consolidated complaint, and on February 4, 2025, Plaintiffs filed an amended complaint. The Company filed a motion to dismiss the amended complaint on February 18, 2025. Plaintiffs filed an opposition to the motion to dismiss on April 21, 2025. On September 30, the court issued its ruling on the motion to dismiss, granting it in part and denying it in part.

Although the Company intends to continue to vigorously defend against these claims, there is no guarantee that the Company will prevail. Accordingly, the Company is unable to determine the ultimate outcome of this consolidated lawsuit or determine the amount or range of potential losses associated with the consolidated lawsuit.

Derivative Litigation

On May 16, 2024, a derivative shareholder action was filed against certain current and former officers and directors of the Company in the United States District Court for the Middle District of Tennessee, Nashville Division, captioned Corwin v. Forth, et al. The complaint asserts claims for breach of fiduciary duty relating to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On July 24, 2024, another derivative shareholder action was filed against certain current and former officers and directors of the Company in the same court, captioned Ouellet v. Whitaker et al. The complaint asserts, among others, claims for breach of fiduciary duty, gross mismanagement, abuse of control, waste of corporate assets, unjust enrichment, and violations of Section 14(a) of the Exchange Act, and insider trading, all of which relate to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On August 21, 2024, these derivative shareholder actions were consolidated into a single action captioned In re Shoals Technologies Group, Inc. Derivative Litigation.

On March 26, 2025, another derivative shareholder action was filed against certain current and former officers and directors of the Company in the same court as the consolidated action, captioned Norman v. Whitaker, et al. The complaint asserts, among others, claims for violations of Sections 14(a) and 20(a) of the Exchange Act, breach of fiduciary duty, insider trading, and unjust enrichment, all of which relate to the wire insulation shrinkback matter. The complaint seeks unspecified monetary damages, restitution, the adoption of certain governance reforms, recovery of fees and costs, and other relief that the court may find appropriate. The Company is named as a nominal defendant only. On April 11, 2025, the Norman action was consolidated with the action In re Shoals Technologies Group, Inc. Derivative Litigation. With the September 30, 2025 resolution of the motion to dismiss in the aforementioned securities class action litigation, this consolidated case will now proceed.

Although the Company intends to continue to vigorously defend against these claims, there is no guarantee that the Company will prevail. Accordingly, the Company is unable to determine the ultimate outcome of the derivative litigation or determine the amount or range of potential losses associated with the lawsuit.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Guarantees and Surety Bonds

The Company has provided financial guarantees to support payment obligations of a vendor. The Company has not recorded any liabilities for these financial guarantees in its consolidated balance sheets, because the Company has calculated the estimated fair value of the guarantee and determined it to be immaterial based upon the current facts and circumstances that would trigger a payment obligation.

The Company provides surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations. As of September 30, 2025, the maximum potential payment obligation with regard to surety bonds was $25.5 million.

14. Income Taxes

In calculating the provision for interim income taxes, in accordance with ASC Topic 740, an estimated annual effective tax rate is applied to year-to-date ordinary income. The resulting provision is adjusted for the tax effect of discrete items required to be recorded during the period. At the end of each interim period, the Company adjusts its estimate of the effective tax rate expected to be applicable for the full fiscal year.

In the nine months ended September 30, 2025 and 2024, our effective tax rate for continuing operations was 27.0% and 32.5%, respectively. The difference between the effective tax rate and the statutory tax rate is primarily attributable to nondeductible compensation under Section 162(m) and discrete adjustments for RSU and PSU shortfalls. The change in our effective tax rate for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024 was due to the increase of the discrete amounts for RSU and PSU shortfalls and an adjustment for a state tax refund.

15. Revenue Recognition

Disaggregation of revenue

Based on ASC Topic 606 provisions, the Company disaggregates its revenue from contracts with customers based on product type. Revenue by product type is disaggregated between system solutions and components. System solutions are contracts under which the Company provides multiple products typically in connection with the design and specification of an entire EBOS system. Components represents sales of individual components.

The following table presents the Company’s revenue disaggregated by product type (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
System solutions	$	110,402	$	78,587	$	252,181	$	222,937
Components	25,402		23,578		74,825		69,284
Total revenue	$	135,804	$	102,165	$	327,006	$	292,221

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, retainage, and deferred revenue on the condensed consolidated balance sheets, recorded on a contract-by-contract basis at the end of each reporting period.

The Company’s contract balances consist of the following (in thousands):


	Location on the Condensed Consolidated Balance Sheets	September 30, 2025		December 31, 2024
Billed accounts receivable	Accounts receivable, net	$	108,248	$	70,882
Retainage	Accounts receivable, net	$	9,216	$	7,299
Contract assets	Other assets	$	133	$	4,251
Unbilled receivables	Unbilled receivables	$	7,705	$	20,834
Deferred revenue	Deferred revenue	$	26,099	$	18,737
Accrued rebates	Accrued expenses and other	$	4,429	$	3,058

The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. Billing sometimes occurs subsequent to revenue recognition, resulting in unbilled receivables. The changes in unbilled receivables relate to fluctuations in the timing of billings for the Company’s revenue recognized over time.

Certain contracts contain retainage provisions. Retainage represents a contract asset for the portion of the contract price earned by the Company for work performed but held for payment by the customer as a form of security until the Company obtains specified milestones. The Company typically bills retainage amounts as work is performed. Retainage provisions are not considered a significant financing component because they are intended to protect the customer in the event that some or all of the obligations under the contract are not completed. The changes in retainage relate to fluctuations in the timing of retainage billings and achievement of specified milestones.

For certain contracts, we provide customers with incentives upon entering into multi-year agreements or volume specific commitments. Any up-front incentives to customers that are not made in exchange for distinct goods and services are capitalized as a contract asset within other assets, which are subsequently recognized as a reduction to revenue over the term of the customer arrangements.

The Company also receives deferred revenue in the form of customer deposits. The customer deposits are short term as the related performance obligations are typically fulfilled within 12 months. The changes in deferred revenue relate to fluctuations in the timing of customer deposits and completion of performance obligations. During the three and nine months ended September 30, 2025, $1.2 million and $13.3 million of deferred revenue recorded as of December 31, 2024 was recognized in revenue. During the three and nine months ended September 30, 2024, $3.4 million and $19.4 million, respectively, of deferred revenue recorded as of December 31, 2023 was recognized in revenue.

Accrued rebates are recorded based on sales volumes from agreed upon rebate terms. Rebates are typically paid after project completion and following the payment of all retainage.

Table of Contents

Shoals Technologies Group, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

16. Segment Reporting

The Company is organized and operates as one operating and reportable segment, which carries out business activities related to the design, development, manufacture and marketing of products and services for EBOS solutions and components. The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews operating results including discrete financial information and profitability metrics at a consolidated entity level for purposes of making resource allocation decisions and for evaluating financial performance. This structure is reflected in our organizational and reporting model.

The accounting policies of the consolidated segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance of the Company and decides how to allocate resources based on income from operations and net income that is also reported on the consolidated income statement. The CODM is involved in determining and reviewing projected net income and income from operations as part of the annual operating plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the Company.

The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2025 and 2024:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Revenue	$	135,804	$	102,165	$	327,006	$	292,221
Cost of revenue	85,552		76,789		207,412		190,388
Gross profit	50,252		25,376		119,594		101,833
Operating expenses
General and administrative expenses	29,423		18,743		74,180		60,733
Depreciation and amortization	2,158		2,109		6,433		6,411
Total operating expenses	31,581		20,852		80,613		67,144
Income from operations	18,671		4,524		38,981		34,689
Non-operating income/(expense) (1)	(2,801)		(3,088)		(4,124)		(10,513)
Income tax expense	(3,991)		(1,703)		(9,405)		(7,867)
Net income (loss)	$	11,879	$	(267)	$	25,452	$	16,309

(1) Consists of non-operating expenses included on the consolidated income statements which includes interest expense and interest income.

All of the Company's long-lived tangible assets, as well as the Company's operating lease right-of-use assets recognized on the Condensed Consolidated Balance Sheets are located within the United States.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Form 10-K”) and this Quarterly Report on Form 10-Q (“Form 10-Q”). In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections of our 2024 Form 10-K and this Form 10-Q captioned “Forward-Looking Statements” and “Risk Factors”.

This MD&A contains the presentation of Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share, which are not presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share are being presented because management believes they provide investors and readers of this Form 10-Q with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to be substitutes for any GAAP financial information. Readers of this Form 10-Q should use Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share only in conjunction with Gross Profit, and Net Income, the most closely comparable GAAP financial measures, as applicable. Reconciliations of Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to the respective most closely comparable GAAP measure, as well as a calculation of Adjusted Gross Profit Percentage and Adjusted Diluted Weighted Average Shares Outstanding, are provided below, in “—Non-GAAP Financial Measures.”

Overview

We are a leading provider of electrical balance of system (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components, for the global energy transition market. EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels to an inverter and ultimately to the power grid. EBOS components are mission-critical products that have a high consequence of failure, including lost revenue, equipment damage, fire damage, and even serious injury or death. As a result, we generally believe customers prioritize reliability and safety over price when selecting EBOS solutions.

We design, manufacture and sell a variety of products used by the solar and battery storage industries, including Solar BLA Solutions; Homeruns, Interconnection and Extension Solutions; Combiners and Re-Combiners; Load Break Disconnects and Transition Solutions; Wireless Performance Monitoring; and BESS. We refer to complete EBOS solutions that use products manufactured by us, typically in connection with the design and specification of an entire EBOS system, as “system solutions”. When we sell a system solution, we work with our customers to design, specify and engineer their system solution to provide a complete customized EBOS solution consisting of individualized products that maximizes reliability and energy production while minimizing cost. We also provide technical support during installation and the transition to operations and maintenance. We refer to individual, often custom and proprietary, products we sell as “components”. We believe our system solutions are unique in our industry because they integrate design and engineering support, proprietary components and innovative installation methods into a single offering that

would otherwise be challenging for a customer to obtain from a single provider or at all. The custom nature of our system solutions and the long development cycle for solar energy projects typically gives us 12 months or more of lead time to quote, engineer, produce and ship each order we receive, and we do not stock large amounts of finished goods.

Traditionally, and for the three and nine months ended September 30, 2025, we primarily sold our EBOS solutions and components and OEM components to customers in the United States. Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt (“MW”) or greater (“utility-scale solar”). These EPCs work with owners and developers of solar assets to build solar energy projects. However, given the mission critical nature of EBOS, the decision to use our products typically involves input from both the EPC and the owner/developer of the solar energy project. We are proud of the breadth of EPCs we have worked with. We believe that as of September 30, 2025, we have worked with 14 of the top 15 U.S. solar EPCs, per Wood Mackenzie data from 2022-2024.

In the third quarter of 2024, we announced our strategic decision to expand our reach and capitalize on international, BESS, data centers, and Commercial, Community, and Industrial (“CC&I”) markets, while also maintaining our focus on domestic utility-scale solar and OEM markets. This decision is aimed at capitalizing on the growing global demand for renewable energy solutions and diversifying our market presence. By entering new geographic regions, markets, and applications we aim to enhance our competitive position and drive long-term growth.

We derived 77.1% of our revenue from the sale of system solutions for the nine months ended September 30, 2025. For the same period, we derived substantially all of our revenue from customers in the U.S. As of September 30, 2025, we had $720.9 million of backlog and awarded orders, backlog of $297.8 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $423.1 million are orders we are in the process of documenting a contract for but for which a contract has not yet been signed. As of September 30, 2025, we believe approximately $297.8 million of backlog and $277.1 million of awarded orders have delivery dates in the next twelve months. Additionally, more than 11.5% of our September 30, 2025 backlog and awarded orders related to international projects. As of September 30, 2025, backlog and awarded orders increased by 21.0% relative to the same date last year and increased by 7.4% relative to June 30, 2025.

Trends and Uncertainties

Trade Regulation and Import Tariffs

Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate. Particularly, our exports and imports are subject to complex trade and customs laws, tax requirements and tariffs set by governments through mutual agreements or unilateral actions. Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, including reciprocal tariffs, could have an adverse effect on our business and results of operations.

Beginning in March 2025, the current U.S. Presidential Administration (the “Administration”) unveiled broad actions related to tariffs with global trading partners. Subsequently, the Administration has imposed a series of significant tariffs, including a 10% tariff on most imports from other trading partners, as well as additional reciprocal tariffs on specific countries. Administration activity related to changes in tariff percentages and qualifying products, including active negotiations with trading partners and internal trade policy development, is ongoing. Future changes in tariff policies are possible. The Administration’s imposition of tariffs

has led to retaliatory tariffs and tariff countermeasures, and the Administration and U.S. trading partners have threatened further restrictions on trade.

As a result, the global trade environment has experienced extreme uncertainty and volatility and is rapidly evolving. In recent years, we have expanded our domestic capabilities, supply chain resiliency, and manufacturing capacity, which helps offset some of the volatility we face due to trade policies and regulations.

To date, these tariff actions have not materially impacted our business or results of operations. However, as the implementation and scope of these proposed tariffs is still uncertain, any significant new tariffs or the threat thereof, which may last for an indefinite period of time, may make it more difficult for us to source raw materials and could result in increased prices for certain of our raw materials including steel, copper and aluminum. Retaliatory tariffs imposed by trading partners could impact the export of our manufactured projects and cause our customers to seek alternatives. The implementation of these proposed tariffs, any future increases in existing tariff rates, additional tariffs on other goods, or further retaliatory actions from other governments, or the threat thereof, may result in higher costs for us, and there can be no assurance we will be able to pass on any of the increases in raw material costs directly resulting from the tariffs to our customers. Such actions may also result in more difficulty or the inability to obtain needed materials. In addition, the threat of increased tariffs alone has caused market uncertainty.

Beyond the most recent tariffs, over the past few years, escalating trade tensions between the United States and China and other jurisdictions led to increased tariffs and trade restrictions, including tariffs applicable to some of our products. We have been assessing and monitoring the potential impact of tariffs on our supply chain and proactively seeking to mitigate the impact such may have on our operations, including working on alternative sourcing strategies and preparing our trade partners to absorb potential increases in their costs due to tariffs. However, we cannot be certain that we would not experience negative effects in the remainder of 2025, particularly given the Administration’s positions concerning trade and tariffs and the fluctuating nature of such actions to date.

We also continue to monitor the condition of our supply chain and evaluate our procurement strategy to reduce any negative impact on our business, financial condition, and results of operations. During the period ended September 30, 2025, we continued to monitor and optimize our inventory levels.

Federal, state, local and foreign government bodies provide incentives to owners, end users, distributors and manufacturers of solar energy systems to promote the development of solar electricity. The range and duration of these incentives varies widely by geographic market.

The 2022 Inflation Reduction Act (“IRA”) in the U.S. made significant changes to the U.S. tax code to incentivize the development and use of solar-generated electricity to meet the country’s growing demand for power. The IRA offered tax incentives to companies who provide goods connected to the development and use of solar energy. The IRA allowed U.S. taxpayers making capital investments in solar projects to claim certain Investment Tax Credits (“TC”) for the installation of these solar projects. The IRA also generally allowed U.S. taxpayers to elect to receive a production tax credit (“PTC”) in lieu of the TC for qualified solar facilities if the construction began before January 1, 2025, among other requirements.

On July 4, 2025, President Donald Trump signed H.R. 1, which significantly modifies certain energy tax provisions aforementioned, in the IRA. Changes to the IRA made by H.R. 1 include an accelerated phaseout or termination of the PTC and TC for solar projects placed in service after 2027. There are also rules related to foreign entities of concern that make any solar projects owned or controlled by a prohibited foreign entity ineligible for certain tax credits. The removal of the incentives that drive demand for solar energy production could reduce the financial attractiveness of solar projects, leading to decreased demand for our products.

Additionally, the uncertainty surrounding the future of these incentives could cause delays in project financing and execution, further impacting our sales volume and growth rate.

The Solar Market

The domestic utility scale solar market has experienced volatility that has had an impact on our business. Industry trends are impacted by a variety of factors, including: permitting issues; supply chain disruptions; labor availability; project financing; anti-dumping and countervailing duties; interconnection complications; and uncertainty regarding changes in public policy and the U.S. trade environment. Amidst the volatility, the U.S. solar industry has shown demonstrated levels of growth in 2025, with recorded expansion in new solar module manufacturing capacity according to the Solar Energy Industries Association. As a result, we believe the industry is poised for continued growth across both our core and new markets, driven by the continued and increasing need for energy around the world.

We will continue to navigate the uncertainties in our industry, including those relating to project delays, as well as strategic pricing actions, volume discounts, and impacts to customer mix in our key markets, which so far have immaterially impacted our results of operations.

U.S. Government Shutdown

The U.S. federal government’s new fiscal year began October 1, 2025, without the passage of appropriation acts or a continuing resolution (“CR”) and the government began its shutdown procedures, to include furloughing government civilian employees. It is unclear at this time when either a CR or appropriations act will be enacted. Federal agencies have published guidance for identifying those functions that may continue to be carried out in the absence of available appropriations. At this time, we do not anticipate the shutdown as having a material effect on our business. However, we are closely monitoring the known and potential impact of any short-term or extended shutdown.

Other Macroeconomic Pressures

Global inflationary pressures persisted during the first three quarters of 2025 and are expected to persist to a lesser extent during the remainder of 2025; however, the impact of inflation remains uncertain for the rest of 2025. Interest rates have remained generally higher when compared to historical rates, causing the interest rates associated with our Senior Secured Credit Agreement to be generally higher; however, interest rates did decline from their historically high levels during the course of 2024. Should interest rates rise, when combined with the implications of higher government deficits and debt, evolving monetary policy, political instability, and volatility and uncertainty in global trade, the Company’s costs for accessing capital are uncertain and may rise during our forecasted period.

Our ability to obtain the raw materials required to manufacture our components and system solutions from domestic and international suppliers, as well as our ability to secure inbound logistics to and from our facilities, remained challenging during the first three quarters of 2025, complicated by volatility in government policies and regulation concerning trade and ongoing political conflict. While the Company does not directly source a significant amount of raw materials from Europe, the Russia-Ukraine war has reduced the availability of certain materials that can be sourced in Europe and, as a result, increased global logistics costs for the procurement of some inputs and materials used in our products. We expect these trends to persist as challenges and conflicts remain in 2025.

Key Components of Our Results of Operations

The following discussion describes certain line items in our condensed consolidated statements of operations.

Revenue

We generate revenue from the sale of EBOS solutions and components for homerun and plug-and-play architectures, battery storage, and OEM offerings. Our customers include EPCs, utilities, solar developers, independent power producers, and solar module manufacturers. We derive the majority of our revenue from selling solar system solutions. When we sell a solar system solution, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things. Our contractual delivery period for solar system solutions can vary from one to three months whereas manufacturing typically requires a shorter time frame. Contracts for solar system solutions can range in value from several hundred thousand to several million dollars.

Our revenue is affected by changes in the geography, price, volume and mix of EBOS system solutions and components purchased by our customers. The price and volume of our EBOS system solutions and components is driven by the demand for our solar system solutions and components, volume based discounts and rebate incentives, changes in product mix between homerun and plug-and-play EBOS, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.

Our revenue growth depends on continued growth in the number of solar energy projects constructed each year and our ability to increase our share of demand in the geographies where we currently compete and plan to compete in the future, as well as our ability to continue to develop and commercialize new and innovative products that address the changing technology and performance requirements of our customers.

Cost of Revenue and Gross Profit

Cost of revenue consists primarily of EBOS system solutions and components costs, including purchased raw materials, as well as costs related to shipping, customer support, product warranty, personnel and depreciation of manufacturing and testing equipment. Personnel costs in cost of revenue include both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer. Our product costs are affected by the underlying cost of raw materials, including copper and aluminum; component costs, including fuses, resin, enclosures, and cable; technological innovation; economies of scale resulting in lower component costs; and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials. Some of these costs, primarily indirect personnel and depreciation of manufacturing and testing equipment, are not directly affected by sales volume. Gross profit may vary from year to year and is primarily affected by our sales volume, product prices, product costs, product mix, customer mix, geographical mix, shipping method and warranty expense.

Operating Expenses

Operating expenses consist of general and administrative expenses as well as depreciation and amortization expense. Personnel-related costs are the most significant component of our operating expenses and include salaries, equity-based compensation, benefits, payroll taxes and commissions. The number of our full-time employees increased from 165 to 186 from September 30, 2024 to September 30, 2025, and we expect to hire new employees in the future to support our growth. The timing of these additional hires could materially affect our operating expenses in any particular period, both in absolute dollars and as a percentage of revenue.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, equity-based compensation expense, employee benefits and payroll taxes; our sales, finance, human resources, information technology, engineering and legal organizations; travel expenses; facilities costs; marketing expenses; insurance; bad debt expense; and, fees for professional services. Professional services consist of audit, tax, accounting, legal, internal controls, information technology, investor relations and other costs. We expect to increase our sales

and marketing personnel as we expand into new geographic markets. Substantially all of our sales are currently in the U.S. We currently have a sales presence in the U.S., Asia-Pacific, Europe, Latin America, and Africa. We intend to grow our sales presence and marketing efforts in current geographic markets and expand to additional countries in the future.

Depreciation

Depreciation in our operating expenses consists of costs associated with property, plant and equipment (“PP&E”) not used in manufacturing our products. We expect that as we increase both our revenue and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation expense.

Amortization

Amortization of intangibles consists of amortization of customer relationships, developed technology, trade names, backlog and noncompete agreements over their expected period of use.

Non-operating Expenses

Interest Expense

Interest expense consists of interest and other charges paid in connection with our Senior Secured Credit Agreement.

Interest income

Interest income is related to interest on bank deposits.

Gain on sale of asset

Gain on sale of asset represents consideration received in excess of the net book value of assets sold.

Income Tax Expense

Shoals Technologies Group, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions.

Results of Operations

The following table summarizes our results of operations (dollars in thousands):


	Three Months Ended September 30,				Increase / (Decrease)				Nine Months Ended September 30,				Increase / (Decrease)
	2025		2024						2025		2024
Revenue	$	135,804	$	102,165	$	33,639	32.9	%	$	327,006	$	292,221	$	34,785	11.9	%
Cost of revenue	85,552		76,789		8,763		11.4	%	207,412		190,388		17,024		8.9	%
Gross profit	50,252		25,376		24,876		98.0	%	119,594		101,833		17,761		17.4	%
Operating expenses
General and administrative expenses	29,423		18,743		10,680		57.0	%	74,180		60,733		13,447		22.1	%
Depreciation and amortization	2,158		2,109		49		2.3	%	6,433		6,411		22		0.3	%
Total operating expenses	31,581		20,852		10,729		51.5	%	80,613		67,144		13,469		20.1	%
Income from operations	18,671		4,524		14,147		312.7	%	38,981		34,689		4,292		12.4	%
Interest expense	(2,832)		(3,173)		(341)		(10.7)	%	(7,483)		(10,913)		(3,430)		(31.4)	%
Interest income	38		85		(47)		(55.3)	%	232		400		(168)		(42.0)	%
Gain (loss) on sale of assets	(7)		—		(7)		100.0	%	3,127		—		3,127		100.0	%
Income before income taxes	15,870		1,436		14,434		1005.2	%	34,857		24,176		10,681		44.2	%
Income tax expense	(3,991)		(1,703)		2,288		134.4	%	(9,405)		(7,867)		1,538		19.6	%
Net income (loss)	$	11,879	$	(267)	$	12,146	4549.1	%	$	25,452	$	16,309	$	9,143	56.1	%

Comparison of the Three Months Ended September 30, 2025 and 2024

Revenue

Revenue increased by $33.6 million, or 32.9%, for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024, driven by increased volume of products produced to meet utility scale solar project demands.

Cost of Revenue and Gross Profit

Cost of revenue increased by $8.8 million, or 11.4%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, driven by the increase in revenue. Gross profit as a percentage of revenue was 37.0% during the three months ended September 30, 2025, and 24.8% during the three months ended September 30, 2024. The increase in gross profit as a percentage of revenue was driven by an additional $13.3 million of expense for wire insulation shrinkback warranty expense recorded in the prior year.

Operating Expenses

General and Administrative

General and administrative expenses increased $10.7 million, or 57.0%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The increase in general and administrative expenses was the result of a $5.7 million increase in general legal expenses for wire

insulation shrinkback, intellectual property, and shareholder litigation matters along with a $3.5 million increase in expenses related to cash and stock-based incentive compensation.

Depreciation and Amortization

Depreciation and amortization expenses increased by less than $0.1 million, or 2.3%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Levels of intangible assets and property, plant, and equipment associated with operating expenses remained consistent period over period.

Interest Expense

Interest expense, decreased by $0.3 million, or 10.7%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. This decrease was due to a decrease in the total weighted average outstanding balance of the Revolving Credit Facility during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, and decreases in the federal funds effective rate as compared to the prior period.

Income tax expense

Income tax expense totaled $4.0 million for the three months ended September 30, 2025, as compared to income tax expense of $1.7 million for the three months ended September 30, 2024. Our effective income tax rate for the three months ended September 30, 2025 and 2024 was 25.1% and 118.6%, respectively. The change in our effective income tax rate was due to various discrete items, particularly RSU and PSU shortfalls and changes in return to provision adjustments, during the three months ended September 30, 2025.

Comparison of the Nine Months Ended September 30, 2025 and 2024

Revenue

Revenue increased by $34.8 million, or 11.9%, for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024, driven by increased volume of products produced to meet utility scale solar project demands.

Cost of Revenue and Gross Profit

Cost of revenue increased by $17.0 million, or 8.9%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, driven by the increase in revenue and increased costs of materials. Gross profit as a percentage of revenue was 36.6% during the nine months ended September 30, 2025, and 34.8% during the nine months ended September 30, 2024. The increase in gross profit as a percentage of revenue was driven by an additional $13.3 million of expense for wire insulation shrinkback warranty expense recorded in the prior year along with some strategic pricing actions, volume discounts, and customer and product mix.

Operating Expenses

General and Administrative

General and administrative expenses increased $13.4 million, or 22.1%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The increase in general and administrative expenses was the result of a $7.7 million increase in general legal expenses for wire insulation shrinkback, intellectual property, and shareholder litigation matters along with an increase of $3.5 million in expenses related to incentive compensation.

Depreciation and Amortization

Depreciation and amortization expenses increased by less than $0.1 million, or 0.3%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. Levels of intangible assets and property, plant, and equipment associated with operating expenses remained consistent period over period.

Interest Expense

Interest expense, decreased by $3.4 million, or 31.4%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. This decrease was due to a decrease in the total weighted average outstanding balance of the Term Loan Facility and Revolving Credit Facility during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, as well as a decrease in borrowing rates applicable to the Senior Secured Credit Agreement and decreases in the federal funds effective rate as compared to the prior period.

Gain on sale of asset

Gain on sale of asset increased $3.1 million from the previous period due to the sale of owned land and building assets to consolidate operations into new facilities.

Income tax expense

Income tax expense totaled $9.4 million for the nine months ended September 30, 2025, as compared to income tax expense of $7.9 million for the nine months ended September 30, 2024. Our effective income tax rate for the nine months ended September 30, 2025 and 2024 was 27.0% and 32.5%, respectively. The change in our effective income tax rate was due to various discrete items, particularly RSU and PSU shortfalls and a state tax refund, during the nine months ended September 30, 2025.

Non-GAAP Financial Measures

Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share (“EPS”)

We define Adjusted Gross Profit as gross profit plus wire insulation shrinkback expenses. We define Adjusted Gross Profit Percentage as Adjusted Gross Profit divided by revenue. We define Adjusted EBITDA as net income plus/(minus) (i) interest expense, (ii) interest income, (iii) income tax expense, (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) gain on sale of asset (viii) wire insulation shrinkback expenses, (ix) wire insulation shrinkback litigation expenses, and (x) plant optimization expenses. We define Adjusted Net Income as net income plus (i) amortization of intangibles, (ii) amortization / write-off of deferred financing costs, (iii) equity-based compensation, (iv) gain on sale of asset (v) wire insulation shrinkback expenses, (vi) wire insulation shrinkback litigation expenses, and (vii) plant optimization expenses, all net of applicable income taxes. We define Adjusted Diluted EPS as Adjusted Net Income divided by the diluted weighted average shares of Class A common stock outstanding for the applicable period.

Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted Gross

Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation, as applicable; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants.

Among other limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures.

Because of these limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. You should review the reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage, net income Adjusted EBITDA, and net income to Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business.

Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Revenue	$	135,804		$	102,165		$	327,006		$	292,221
Cost of revenue	85,552			76,789			207,412			190,388
Gross profit	$	50,252		$	25,376		$	119,594		$	101,833
Gross profit percentage	37.0		%	24.8		%	36.6		%	34.8		%

Wire insulation shrinkback expenses (a)	$	—		$	13,298		$	—		$	13,765
Adjusted gross profit	$	50,252		$	38,674		$	119,594		$	115,598
Adjusted gross profit percentage	37.0		%	37.9		%	36.6		%	39.6		%

Reconciliation of Net Income to Adjusted EBITDA (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income (loss)	$	11,879	$	(267)	$	25,452	$	16,309
Interest expense	2,832		3,173		7,483		10,913
Interest income	(38)		(85)		(232)		(400)
Income tax expense	3,991		1,703		9,405		7,867
Depreciation expense	1,466		1,254		4,296		3,643
Amortization of intangibles	1,909		1,897		5,710		5,689
Equity-based compensation	2,421		1,282		7,675		10,392
(Gain) loss on sale of asset	7		—		(3,127)		—
Wire insulation shrinkback expenses (a)	—		13,298		—		13,765
Wire insulation shrinkback litigation expenses (b)	6,831		2,278		11,906		4,499
Plant optimization expenses (c)	676		—		676		—
Adjusted EBITDA	$	31,974	$	24,533	$	69,244	$	72,677

Reconciliation of Net Income to Adjusted Net Income (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Net income (loss)	$	11,879	$	(267)	$	25,452	$	16,309
Amortization of intangibles	1,909		1,897		5,710		5,689
Amortization / write-off of deferred financing costs	156		156		467		2,937
Equity-based compensation	2,421		1,282		7,675		10,392
(Gain) loss on sale of asset	7		—		(3,127)		—
Wire insulation shrinkback expenses (a)	—		13,298		—		13,765
Wire insulation shrinkback litigation expenses (b)	6,831		2,278		11,906		4,499
Plant optimization expenses (c)	676		—		676		—
Tax impact of adjustments (d)	(2,880)		(4,709)		(5,594)		(9,209)
Adjusted Net Income	$	20,999	$	13,935	$	43,165	$	44,382

(a) For the three and nine months ended September 30, 2025, represents no wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, nor any inventory write-downs of wire in connection with wire insulation shrinkback. For the three and nine months ended September 30, 2024, represents (i) $13.3 million of wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, (ii) zero and $0.5 million, respectively, of inventory write-downs of wire in connection with wire insulation shrinkback. We consider expenses incurred in connection with the identification, repair and replacement of the impacted wire harnesses distinct from normal, ongoing service identification, repair and replacement expenses that would be reflected under ongoing warranty expenses within the operation of our business, which we do not exclude from our non-GAAP measures. In the future, we also intend to exclude from our non-GAAP measures the benefit of liability releases, if any. We believe excluding expenses from these discrete liability events provides investors with a better view of the operating performance of our business and allows for comparability through periods. See Note 8 - Warranty Liability, in our condensed consolidated financial statements included in this Form 10-Q for more information.

(b) For the three and nine months ended September 30, 2025, represents $6.8 million and $11.9 million, respectively, of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. For the three and nine months ended September 30, 2024, represents $2.3 million and $4.5 million of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. We consider this litigation distinct from ordinary course legal matters given the expected magnitude of the expenses, the nature of the allegations in the Company’s complaint, the amount of damages sought, and the impact of the matter underlying the litigation on the Company’s financial results. In the future, we also intend to exclude from our non-GAAP measures the benefit of recovery, if any. We believe excluding expenses from these discrete litigation events provides investors with a better view of the operating performance of our business and allows for comparability through periods. See Note 13 - Commitments and Contingencies, in our condensed consolidated financial statements included in this Form 10-Q for more information.

(c) For the three and nine months ended September 30, 2025, represents $0.7 million of expenses incurred in connection with actions taken to consolidate our operations into a newly constructed facility, including

items such as professional fees, relocation, facility set-up and other costs. We believe excluding expenses from these events provides investors with a better view of the operating performance of our business and allows for comparability through periods.

(d) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes. Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax. The adjustment to the provision for income tax reflects the effective tax rates below.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Statutory U.S. Federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Permanent adjustments	0.6	%	1.0	%	0.6	%	0.9	%
State and local taxes (net of federal benefit)	2.4	%	2.9	%	2.4	%	2.8	%
Effective income tax rate for Adjusted Net Income	24.0	%	24.9	%	24.0	%	24.7	%

Calculation of Adjusted Diluted Earnings per Share (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Diluted weighted average shares outstanding	168,750		167,381		167,725		169,310

Adjusted Net Income	$	20,999	$	13,935	$	43,165	$	44,382
Adjusted Diluted EPS	$	0.12	$	0.08	$	0.26	$	0.26

Liquidity and Capital Resources

We finance our operations primarily with operating cash flows and short and long-term borrowings. Our ability to generate positive cash flow from operations is dependent on the strength of our gross profits as well as our ability to quickly turn our working capital. Based on our past performance and current expectations, we believe that operating cash flows and availability under our Revolving Credit Facility will be sufficient to meet our near and long-term future cash needs.

We generated cash from operating activities of $21.2 million during the nine months ended September 30, 2025, as compared to cash provided by operating activities of $66.4 million during the nine months ended September 30, 2024. As of September 30, 2025, our cash and cash equivalents were $8.6 million, a decrease from $23.5 million as of December 31, 2024. As of September 30, 2025 we had outstanding borrowings of $126.8 million, a $15.0 million decrease from outstanding borrowings of $141.8 million as of December 31, 2024. As of September 30, 2025, we also had $71.5 million available for additional borrowings under our $200.0 million Revolving Credit Facility.

On December 27, 2023 and January 19, 2024, we used borrowings under the Revolving Credit Facility and cash on hand to make voluntary prepayments of outstanding borrowings under the Term Loan Facility of $50.0 million and $100.0 million, respectively. Following the amendment to the Senior Secured Credit Agreement on March 19, 2024, which, among other things, increased the amount available for borrowing under the Revolving Credit Facility from $150.0 million to $200.0 million, we made a $43.8 million voluntary prepayment of all the outstanding term loans under the Senior Secured Credit Agreement, thereby terminating the Term Loan Facility.

On June 11, 2024, the Company announced the Repurchase Program authorizing the repurchase of up to $150.0 million of the Company’s Class A common stock, with an estimated completion date of December 31, 2025. Under the Repurchase Program, the Company is authorized to repurchase shares of Class A common stock through open market purchases, privately-negotiated transactions, accelerated share repurchases or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act.

The Company did not repurchase any shares of its common stock under the Repurchase Program during the nine months ended September 30, 2025. As of September 30, 2025, the Company was authorized to repurchase up to $125 million of the Company’s common stock under the Repurchase Program.

During the nine months ended September 30, 2025, we also used approximately $32.6 million of cash to pay for expenses related to the identification, repair and replacement of the wire harnesses impacted in connection with the wire insulation shrinkback matter. We expect to continue spending significant amounts of cash in connection thereof. For more information, see Note 8 - Warranty Liability in our condensed consolidated financial statements.


	Nine Months Ended September 30,
	2025		2024
Net Cash Provided by Operating Activities	$	21,154	$	66,400
Net Cash Used in Investing Activities	(20,791)		(6,862)
Net Cash Used in Financing Activities	(15,285)		(71,139)
Net Decrease in Cash and Cash Equivalents	$	(14,922)	$	(11,601)

Operating Activities

For the nine months ended September 30, 2025, cash provided by operating activities was $21.2 million, primarily due to operating results that included $25.5 million of net income, which included $26.9 million of non-cash expense, along with cash inflows in unbilled receivables of $13.1 million, accounts payable of $12.6 million, accrued expenses of $11.7 million, deferred revenue of $7.4 million, and other assets of $2.5 million. These cash inflows were offset by cash outflows of $39.3 million related to accounts receivable, $33.7 million of warranty liability, and $5.5 million in inventory.

For the nine months ended September 30, 2024, cash provided by operating activities was $66.4 million, primarily due to operating results that included $16.3 million of net income, which included $47.6 million of non-cash expense, along with decreases in accounts receivable and unbilled receivables of $38.2 million. These cash inflows were offset by cash outflows of $15.4 million related to the warranty liability as well as an increase in inventory of $14.6 million, an increase in other assets of $2.7 million, a decrease in accounts payable and accrued expenses of $1.4 million, and a decrease of $1.7 million in deferred revenue.

Investing Activities

For the nine months ended September 30, 2025, net cash used investing activities was $20.8 million, which was attributable to the purchase of $25.9 million in property and equipment, offset by the proceeds from the sale of property and equipment of $5.1 million.

For the nine months ended September 30, 2024, net cash used in investing activities was $6.9 million, which was primarily attributable to the purchase of property and equipment.

Financing Activities

For the nine months ended September 30, 2025, net cash used in financing activities was $15.3 million, due to $65.0 million in payments on the Revolving Credit Facility, offset by $50.0 million in borrowings, and $0.3 million in taxes paid related to net share settled equity awards.

For the nine months ended September 30, 2024, net cash used in financing activities was $71.1 million, primarily due to $143.8 million in principal payments on the Term Loan Facility, $25.3 million paid to repurchase the Company’s Class A Common Stock under the ASR, $2.6 million of deferred financing costs paid in connection with the amendment to the Senior Secured Credit Agreement, and $1.2 million in taxes related to net share settled equity awards. These cash outflows are offset by $101.8 million in net proceeds on the Revolving Credit Facility.

Debt Obligations

For a discussion of our debt obligations see Note 9 - Long-Term Debt in our condensed consolidated financial statements included in this Form 10-Q.

Surety Bonds

For a discussion of our surety bond obligations see Note 13 - Commitments and Contingencies in our condensed consolidated financial statements included in this Form 10-Q.

Product Warranty

For a discussion of our product warranties see Note 8 - Warranty Liability in our condensed consolidated financial statements included in this Form 10-Q.

Critical Accounting Policies and Accounting Estimates

For a description of the application of our critical accounting policies or estimation procedures, see our 2024 Form 10-K. There were no material changes to the information previously disclosed, with the exception of the item discussed below.

Goodwill Considerations

We perform an annual assessment of our goodwill during the fourth quarter of each calendar year or more frequently if indicators of potential impairment exist, such as an adverse change in business climate, declines in market capitalization or a decline in the overall industry demand, that would indicate it is more likely than not that the fair value of our single reporting unit is less than the carrying value. If we determine that it is more likely than not that the fair value of our single reporting unit is less than the carrying value, we measure the amount of impairment as the amount the carrying value of our single reporting unit exceeds the fair value, up to the carrying value of goodwill, by using a quantitative approach.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates, and market factors. Estimating the fair value of individual reporting units requires us to evaluate market indicators, such as stock price and market capitalization, and make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include estimated future annual net cash flows, income tax rates, growth rates, and other market factors.

Although our market capitalization declined in the first quarter of 2025, we do not believe that it is more likely than not that the fair value of our single reporting unit is less than the carrying value. Throughout the second and third quarters of 2025, our stock price and market capitalization remained at levels that support this conclusion.

The estimated fair value of our single reporting unit is sensitive to the volatility in our stock price. If our market capitalization continues to decline or future performance falls below our current expectations, assumptions, or estimates, including assumptions related to current macroeconomic uncertainties, this may trigger a future material non-cash goodwill impairment charge, which could have a material adverse effect on our business, financial condition, and results of operations in the reporting period in which a charge would be

necessary. We will continue to monitor developments, including updates to our forecasts and market capitalization. An update of our assessment and related estimates may be required in the future.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

During the nine months ended September 30, 2025, there were no material changes in our market risk exposure. For a description of our analysis of quantitative and qualitative market risk, see Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our 2024 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be involved in litigation relating to claims that arise out of our operations and businesses and that cover a wide range of matters, including, among others, intellectual property matters, contract and employment claims, personal injury claims, product liability claims and warranty claims. Except as described under Litigation in Note 13 - Commitments and Contingencies, there are no claims or proceedings to which we are party that we believe would have a material adverse effect on our business, financial condition, results of operations or cash flows. However, the results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of litigation.

Item 1A. Risk Factors

For a discussion of the material factors that affect our business, financial condition or results of operations, please see the risk factors disclosed in our 2024 Form 10-K and the other information set forth in this Form 10-

Q. You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us may also materially adversely affect our business, financial condition and/or results of operations.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the nine months ended September 30, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended).

Item 6. Exhibits

EXHIBIT INDEX

Incorporated by Reference

Number

Description of Document

Form

Filing Date

Exhibit No.

3.1

Amended and Restated Certificate of Incorporation of Shoals Technologies Group, Inc., dated January 28, 2021

8-K

1/29/2021

3.1

3.2

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Shoals Technologies Group, Inc., dated January 28, 2021

10-Q

8/6/2024

3.2

3.3

Second Amended and Restated Bylaws of Shoals Technologies Group, Inc., dated February 20, 2025

10-K

2/25/2025

3.3

31.1*

Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

31.2*

Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

32.1**

Certification of the Chief Executive Officer and Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002

EXHIBIT INDEX

Incorporated by Reference

Number

Description of Document

Form

Filing Date

Exhibit No.

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

________

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Shoals Technologies Group, Inc.

Date:

November 4, 2025

By:

/s/ Brandon Moss

Name:

Brandon Moss

Title:

Chief Executive Officer

Date:

November 4, 2025

By:

/s/ Dominic Bardos

Name:

Dominic Bardos

Title:

Chief Financial Officer

Shoals Technologies Group, Inc. 10-Q