Shoals Technologies Group, Inc.

across our focus markets through 2026 in addition our relationships with large global developers with ties to the u.s export import bank are opening doors and growing our pipeline and developing markets outside our targets of australia latin america and europe our community commercial and industrial or ccni business is performing well we are engaged with large well-respected electrical distributors that are driving meaningful quote volume increases. While this market remains small as compared to our core utility scale opportunity, it is one that provides us a path to create lasting relationships and future growth with new customers. Our OEM business is tracking ahead of expectations as our partner continues to see strong demand for their panels. Our deep engineering and manufacturing relationship with the largest domestic module provider is a strategic advantage for Shoals and one we're committed to maintain and expand. The opportunity we've received the most questions about this year is our battery energy storage solutions or BESS offering. So I'd like to provide a little bit more detail today. Last year, we introduced a BESS solution targeting the solar plus storage market. specifically when new solar plants are built with attached storage systems. That opportunity remains exciting for us today since it builds upon our relationships with existing customers and developers. In addition to that opportunity, there are also two additional use cases that we are now pursuing, grid firming and data centers. Let's start with grid firming solutions. Utilities are very interested in providing more reliable and consistent power to their customers. One method is to add grid-scale battery storage solutions to their existing grids in order to provide real-time balance between supply and demand. Shoal's product offerings can play a part in providing solutions to system integrators in this area, and we are actively quoting opportunities in this space. In addition to grid firming, there are emerging use cases with data centers. Once again, consistent and dependable energy is critical to operations. Battery storage solutions can provide uninterrupted power, as well as to help regulate power demand spikes and troughs created by artificial intelligence processing. This is an area that has significant market potential in the coming years, and we are actively engaged with system integrators in this market as well. This is an exciting time in a relatively young market, but one we are investing heavily in. I'm pleased to share with you today that we have already signed two MSAs to deliver products in these emerging best markets and are in conversation with several others about providing Schultz systems and their unique solutions. At the end of Q3, we had approximately $18 million of bests in our backlog and awarded orders. In summary, our domestic utility scale market is healthy and growing. We are executing our strategic framework of market diversification as anticipated, and we are leveraging our expertise, engineering, and manufacturing capabilities to pursue new opportunities with speed and purpose. It is an exciting time to be at Shoals. With that, I'll now turn it over to Dominic, who will discuss our third quarter financial results in more detail and our outlook for the fourth quarter. Dominic?

Thanks, Brandon, and greetings to everyone on the call. Turning to our third quarter financial results, Revenue increased by 32.9% year-over-year to $135.8 million. The increase in revenue was primarily driven by higher domestic project volume from both new and existing customers. In addition, as Brandon mentioned earlier, our strategic growth channels of international, CCNI, and OEM contributed to year-over-year revenue growth in the quarter. Gross profit increased to $50.3 million compared to $25.4 million in the prior year period. Our GAAP gross profit percentage was 37.0% compared to 24.8% in the prior year period within our expected percentage range of mid to upper 30s. There are a few dynamics worth mentioning with regards to gross profit percentage. First, I'd like to discuss product mix. Certain eBoss solutions drive more value for customers than others. As such, those custom and engineered solutions typically carry higher margins than other product lines. Some new products, such as Long Tail BLA, drive incremental revenue in our share wallet, but do not carry the same gross profit percentage as our traditional BLA solution. Long Tail BLA does, however, provide incremental gross profit dollars and has allowed us to capture additional share while meeting customer needs. Second, I'd like to provide some color regarding tariffs. Our supply chain team is constantly working to drive material costs out of our products. Months of work to test new raw materials, negotiate terms, and onboard new suppliers can be undone in a moment as trade policies change without notice. Unfortunately, like many others, Shoals has been impacted by these policy shifts this year, and as a result, some margin-enhancing savings could not be realized as expected. Moving on to general and administrative expenses. G&A was $29.4 million, which is $10.7 million higher than the prior year period. Our legal expenses, which accounted for approximately $5.7 million of the increase, remain elevated while we make our way through ongoing litigation matters. Approximately $6.8 million of legal expense was specifically related to the ongoing wire insulation shrinkback litigation. Income from operations or operating profit was $18.7 million compared to $4.5 million during the prior year period. Operating profit margin was 13.7% compared to 4.4% a year ago. Net income was $11.9 million compared to a net loss of $300,000 during the prior year period. Adjusted net income was $21.0 million compared to $13.9 million in the prior year period. Adjusted EBITDA was $32.0 million compared to $24.5 million in the prior year period, representing 30% growth. Adjusted EBITDA margin was 23.5% compared to 24.0% a year ago, driven primarily by lower gross margin flow through. Adjusted diluted earnings per share of 12 cents was approximately 50% higher than the prior year period. During the third quarter, we spent $11.9 million on wire insulation shrink-back remediation and had a remaining warranty liability on our balance sheet of $7.2 million as of September 30th. The current portion of the remaining liability related to shrink-back is now $4.2 million. Operationally, we generated $19.4 million of cash in the third quarter, driven by higher net income, an increase in accounts payable, and higher accrued expenses. These increases were partially offset by a higher accounts receivable balance driven by strong sales volumes and increased spend on warranty remediation. On a year-to-date basis, we have generated $21.2 million in operating cash flow. Free cash flow was $9.0 million in the third quarter, reflecting both the $11.9 million impact of remediation costs and elevated capital expenditures related to our new facility. These two items impacted free cash flow by a total of $22.4 million in the quarter. We received our certificate of occupancy for our new facility in Portland, Tennessee, and we began moving into the new facility in September. We expect to begin consolidating operations from our three existing facilities in the fourth quarter and expect to complete the entire consolidation by mid-2026. Our balance sheet remains high quality, and we ended the quarter with cash and equivalents of $8.6 million and net debt to adjusted EBITDA of 1.2 times. Our net debt was $118.2 million, a slight decrease over the prior quarter. We paid an additional $5.0 million down on our revolver during the period, which had an outstanding balance of $126.8 million at the end of the quarter. With regards to capital allocation, given a number of competing priorities for our cash this year, including shrink-back remediation and factory consolidation, we did not purchase any shares in the third quarter under our share repurchase program. Backlog and awarded orders ended the third quarter at a record $721 million, a sequential increase of $50 million. Backlog constitutes $298 million of the total BLAO, providing us with confidence that the growth projections we have for the upcoming periods can be achieved. As of September 30th, $575 million of our backlog and awarded orders have planned delivery dates in the coming four quarters, with the remaining $146 million beyond that. Turning now to the outlook. Quarterly pacing within the year has continued to follow the strong back half we've been communicating since February. For the quarter ending December 31st, 2025, the company expects revenue now to be in the range of $140 to $150 million, representing 36% year-over-year growth at the midpoint, and adjusted EBITDA to be in the range of $35 to $40 million. This will result in full year 2025 revenue between $467 to $477 million, and adjusted EBITDA in the range of $105 to $110 million. In addition, for the full year, we expect cash flow from operations to remain in the range of $15 to $25 million, capital expenditures to remain in the range of $30 to $40 million, and interest expense to remain in the range of $8 to $12 million. With that, I'll turn it back over to Brandon for closing remarks.

Thank you, Dominic. The demand environment over the last few years has been volatile, driven not only by the macroeconomic and political backdrop, but also labor availability, supply chain disruptions, and permitting. That said, 2025 appears to be playing out slightly better than we had anticipated when we provided guidance in February. The changes we've implemented, which span both commercial and operational process improvements and shifts in strategic correction and focus, are enabling exciting and visible improvements across the company. The transformation from a company with a narrow customer mix product offering, and geographic footprint to a diversified, multinational energy solutions provider is beginning to take shape. These changes do not occur overnight, but through the deployment of repeatable processes that improve productivity, visibility, and scale. Through the hiring of seasoned business leaders who can execute with consistency, through the focus on developing new, innovative product solutions for customers facing real-world problems, and through an unyielding focus on improving the customer experience from start to finish. We are building the next version of Shoals, one that will deliver attractive returns for our shareholders through profitable growth and strong cash flow generation. I'm very encouraged about the progress we've made and how well we're set to continue the journey in 2026 and beyond. We want to thank our shareholders and customers for their continued trust in our employees for their hard work and dedication. Operator, we are now ready for questions.