Shoals Technologies (US:SHLS)2021-11-09 16:00Revenue and Growth - For the nine months ended September 30, 2021, approximately 75% of the company's revenue was derived from the sale of system solutions, with a backlog of $270.7 million, representing a 101% increase year-over-year [136]. - Revenue for the three months ended September 30, 2021, increased by $7.2 million, or 14%, compared to the same period in 2020, driven by a $5.6 million increase in solar component revenue [164]. - Revenue for the nine months ended September 30, 2021, increased by $28.4 million, or 21%, driven by a $31.9 million increase in system solutions revenue [172]. - The company reported that its revenue growth is dependent on the continued growth of solar energy projects and its ability to innovate and commercialize new products [152]. Product Development and Acquisitions - The company is developing four new product families for the electric vehicle charging market, including skid solutions and quad chargers, with expected introductions in Q4 2021 [137]. - On August 26, 2021, the company acquired 100% of ConnectPV for $13.8 million in cash and 209,437 shares of Class A Common stock valued at $6.5 million [143]. Financial Performance - For the nine months ended September 30, 2021, net income was $6.1 million, a decrease from $29.5 million in the same period of 2020 [192][193]. - Adjusted EBITDA for the nine months ended September 30, 2021, was $51.6 million, compared to $46.8 million for the same period in 2020, reflecting a 10% increase [186]. - Gross profit as a percentage of revenue decreased from 39.3% in 2020 to 36.4% in 2021, attributed to changes in product mix with lower-margin solar components [165]. - General and administrative expenses rose by $6.5 million, or 185%, for the three months ended September 30, 2021, primarily due to increased professional fees and acquisition-related expenses [167]. - Interest expense, net increased by $3.5 million, or 3344%, for the three months ended September 30, 2021, due to higher borrowings under the Senior Secured Credit Facility [169]. Cash Flow and Financing - Cash used in operating activities was $6.7 million for the nine months ended September 30, 2021, compared to cash provided of $38.1 million in the same period of 2020 [190][192]. - Net cash used in investing activities was $15.4 million for the nine months ended September 30, 2021, primarily due to the acquisition of ConnectPV [194]. - Net cash provided by financing activities was $26.2 million for the nine months ended September 30, 2021, including $144.9 million in net proceeds from the IPO [195]. - As of September 30, 2021, cash and cash equivalents were $14.2 million, with outstanding borrowings of $257.9 million [190]. - The company had $39.9 million available for additional borrowings under its $100.0 million Revolving Credit Facility as of September 30, 2021 [190][200]. Tax and Liabilities - The company recognized a deferred tax asset of $73.5 million in Q3 2021, with a corresponding increase in tax receivable agreement liability of $62.5 million [142]. - The company reported an effective income tax rate for Adjusted Net Income of 24.0% for the three months ended September 30, 2021 [187]. - The company recognized $107.9 million of liabilities under the Tax Receivable Agreement (TRA), concluding it is probable to generate sufficient future taxable income to utilize the related tax benefits [209]. - The company estimates TRA payments expected to be paid within the next 12 months and classifies this amount as current on its balance sheets [210]. Employee Growth and Market Expansion - The number of full-time employees in general and administrative departments increased from 42 to 68 from September 30, 2020, to September 30, 2021, indicating a focus on growth [154]. - The company expects to expand its sales presence beyond the U.S. into additional countries, enhancing its market reach [156]. Risks and Market Conditions - The impact of COVID-19 continues to pose risks to the company's operations and financial results, with ongoing uncertainties regarding market conditions [144]. - There have been no material changes regarding market risk since the Annual Report for the year ended December 31, 2020 [211].