Gross margins have contracted significantly from a 42.5% peak in 2023Q4 to 29.2% in 2026Q1, reflecting persistent headwinds from rising input costs and operational inefficiencies.
| Sales/Revenue | 535.53M | 475.33M | 399.21M | 488.94M | 326.94M | 213.21M | 175.52M | 144.5M | 103.75M |
| Revenue Growth % | 37.75% | 19.07% | -18.35% | 49.55% | 53.34% | 21.48% | 21.47% | 39.27% | - |
| Cost of Goods Sold | 356.15M | 308.82M | 257.19M | 320.63M | 195.63M | 130.57M | 108.97M | 100.28M | 75.58M |
| COGS % of Revenue | - | 64.97% | 64.43% | 65.58% | 59.84% | 61.24% | 62.09% | 69.4% | 72.85% |
| Gross Profit | 179.38M | 166.51M | 142.02M | 168.3M | 131.31M | 82.64M | 66.55M | 44.21M | 28.17M |
| Gross Margin % | 33.5% | 35.03% | 35.57% | 34.42% | 40.16% | 38.76% | 37.91% | 30.6% | 27.15% |
| Gross Profit Growth % | - | 17.25% | -15.62% | 28.17% | 58.89% | 24.19% | 50.52% | 56.96% | - |
| Operating Expenses | 119.59M | 110.12M | 90.84M | 89.27M | 64.98M | 46.41M | 29.27M | 17.28M | 17.08M |
| OpEx % of Revenue | - | 23.17% | 22.76% | 18.26% | 19.88% | 21.77% | 16.68% | 11.96% | 16.46% |
| Selling, General & Admin | 110.84M | 101.52M | 82.25M | 80.72M | 55.91M | 37.89M | 21.01M | 9.06M | 8.9M |
| SG&A % of Revenue | - | 21.36% | 20.6% | 16.51% | 17.1% | 17.77% | 11.97% | 6.27% | 8.58% |
| Research & Development | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| R&D % of Revenue | - | - | - | - | - | - | - | - | - |
| Other Operating Expenses | 2M | 8.6M | 8.59M | 8.55M | 9.07M | 8.52M | 8.26M | 8.22M | 8.18M |
| Operating Income | 59.79M | 56.38M | 51.17M | 79.03M | 66.33M | 36.23M | 37.28M | 26.93M | 11.09M |
| Operating Margin % | 11.16% | 11.86% | 12.82% | 16.16% | 20.29% | 16.99% | 21.24% | 18.64% | 10.69% |
| Operating Income Growth % | - | 10.19% | -35.25% | 19.15% | 83.07% | -2.8% | 38.42% | 142.9% | - |
| EBITDA | 72.75M | 64.98M | 63.8M | 89.56M | 76.84M | 46.28M | 46.68M | 36.09M | 20.08M |
| EBITDA Margin % | 13.59% | 13.67% | 15.98% | 18.32% | 23.5% | 21.71% | 26.6% | 24.98% | 19.35% |
| EBITDA Growth % | 28.07% | 1.86% | -28.77% | 16.56% | 66.01% | -0.85% | 29.34% | 79.77% | - |
| D&A (Non-Cash Add-back) | 12.96M | 8.6M | 12.63M | 10.53M | 10.51M | 10.05M | 9.4M | 9.16M | 8.99M |
| EBIT | 61.76M | 58.51M | 51.69M | 79.03M | 170.54M | 18.58M | 37.28M | 26.93M | 11.09M |
| Net Interest Income | -10.24M | -9.69M | -13.31M | -24.1M | -18.54M | -14.55M | -3.51M | -1.79M | -2.44M |
| Interest Income | 208K | 305K | 518K | 0 | 0 | 0 | 0 | 0 | 0 |
| Interest Expense | 10.44M | 9.99M | 13.83M | 24.1M | 18.54M | 14.55M | 3.51M | 1.79M | 2.44M |
| Other Income/Expense | -13.67M | -7.87M | -13.31M | -24.1M | 85.67M | -32.2M | -3.51M | -1.79M | -2.44M |
| Pretax Income | 46.12M | 48.52M | 37.86M | 54.94M | 152M | 4.03M | 33.77M | 25.14M | 8.65M |
| Pretax Margin % | 8.61% | 10.21% | 9.48% | 11.24% | 46.49% | 1.89% | 19.24% | 17.4% | 8.33% |
| Income Tax | 12.56M | 14.94M | 13.74M | 12.27M | 8.99M | 86K | 0 | 0 | 0 |
| Effective Tax Rate % | 27.23% | 30.8% | 36.28% | 22.34% | 5.91% | 2.13% | 0% | 0% | 0% |
| Net Income | 33.56M | 33.57M | 24.13M | 39.97M | 127.61M | 2.35M | 33.77M | 25.14M | 8.65M |
| Net Margin % | 6.27% | 7.06% | 6.04% | 8.18% | 39.03% | 1.1% | 19.24% | 17.4% | 8.33% |
| Net Income Growth % | 49.3% | 39.16% | -39.64% | -68.68% | 5334.88% | -93.05% | 34.3% | 190.77% | - |
| Net Income (Continuing) | 33.56M | 33.57M | 24.13M | 42.66M | 143.01M | 3.94M | 33.77M | 25.14M | 8.65M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 9.62M | -10.05M | 0 | 0 | 0 |
| EPS (Diluted) | 0.20 | 0.20 | 0.14 | 0.24 | 0.85 | 0.02 | 0.21 | 0.15 | 0.05 |
| EPS Growth % | 49.03% | 42.86% | -41.67% | -71.76% | 3947.62% | -90% | 40% | 189.02% | - |
| EPS (Basic) | - | 0.20 | 0.14 | 0.24 | 1.11 | 0.02 | 0.21 | 0.15 | 0.05 |
| Diluted Shares Outstanding | 167.56M | 168.38M | 168.72M | 164.5M | 167.63M | 112.05M | 160.28M | 166.59M | 166.59M |
| Basic Shares Outstanding | 167.56M | 167.26M | 168.57M | 164.16M | 114.5M | 112.05M | 160.28M | 160.28M | 160.28M |
| Dividend Payout Ratio | - | - | - | - | - | - | 1113.68% | 55.64% | 123.29% |
Margin compression and liquidity
As reported in recent financial filings, Shoals experienced a 74.9% year-over-year revenue surge in 2026Q1, yet this follows a period of significant inconsistency where quarterly growth rates fluctuated wildly between -23.9% and 74.9%, suggesting that project-based revenue recognition remains highly sensitive to utility-scale construction timing.
The extreme variance in quarterly revenue growth highlights the company's dependence on the lumpy nature of utility-scale solar project commencements. Investors should monitor whether this volatility reflects genuine demand shifts or merely the timing of product shipments, as the lack of consistent sequential growth complicates long-term forecasting.
Based on the provided income statement data, gross margins have compressed from a peak of 42.5% in 2023Q4 to 29.2% in 2026Q1, indicating that the company's premium pricing strategy is facing significant headwinds from rising input costs and potential product quality remediation expenses.
The consistent decline in gross margin suggests that Shoals may be losing its ability to pass through raw material costs or is being forced to offer concessions to maintain market share. This trend warrants further investigation into whether the recent wire insulation issues are creating a permanent drag on profitability through increased warranty reserves.
According to the latest quarterly figures, operating income plummeted to $7.7M in 2026Q1 from a high of $31.9M in 2023Q4, demonstrating that SG&A expenses are not scaling efficiently relative to the company's gross profit, which has failed to provide sufficient coverage for rising overhead costs.
The inability to maintain operating margins during periods of revenue growth suggests that the company's cost structure is becoming increasingly rigid. This lack of operating leverage implies that management may be struggling to control fixed costs, which could lead to further earnings volatility if revenue growth decelerates.
As indicated by the financial statements, net income swung from a $16.6M profit in 2023Q4 to a $297K loss in 2026Q1, a trend exacerbated by persistent stock-based compensation expenses that continue to dilute shareholder value despite the lack of consistent bottom-line growth.
The frequent oscillation between profitability and losses suggests that the company's earnings are highly sensitive to non-operating items and potential legal or warranty-related charges. Investors should be cautious of the quality of these earnings, as the reliance on stock-based compensation during periods of negative net income may indicate an unsustainable approach to talent retention.
While the bull case rests on the proprietary nature of the BLA system, the recent margin contraction to 29.2% suggests that the market may be overestimating the company's pricing power, as competitive pressures and labor market shifts threaten the long-term viability of its premium-priced hardware model.
Short-sellers may focus on the potential for further margin compression if the labor-saving value proposition of Shoals' products becomes less relevant in a cooling construction market. The combination of declining margins and limited liquidity suggests that the company's competitive moat may be narrower than previously assumed by the market.
Quick answers to the most common questions about buying SHLS stock.
For fiscal year 2025, Shoals Technologies Group, Inc. (SHLS) reported total revenue of $475.3M. This represents a 358.2% increase compared to $103.8M in 2018.
Shoals Technologies Group, Inc. (SHLS) is profitable, generating $33.6M in net income for the fiscal year ending 2025 with a net profit margin of 7.1%.
Shoals Technologies Group, Inc. (SHLS) reported an operating income of $56.4M, resulting in an operating profit margin of 11.9%. This margin reflects the operational efficiency of the business before interest and taxes.
Shoals Technologies Group, Inc. (SHLS) generated $166.5M in gross profit for the year, representing a gross profit margin of 35.0%. This demonstrates the company's core pricing power and production efficiency.