Shoals Technologies Group (SHLS) Barclays 40th Annual Energy-Power Conference summary

Market evolution and growth strategy

• Focus on expanding from core solar EBOS into BESS and data center markets, with strong demand across all segments.

• Solar market projected to remain robust through the decade, with high 30s to low 40s GW annual installations domestically.

• AirLink product targets a $2B market opportunity, expected to double by decade's end, offering power delivery directly to data center racks.

• BESS business is in early stages but showing growth, with partnerships and bookings expected to stabilize as the market matures.

• Diversification into new end markets aims to create a more durable and sustainable business.

Competitive landscape and product differentiation

• AirLink offers a modular, custom-configurable solution with faster installation and higher power density than traditional busway systems.

• Few competitors can match the scale and customization capabilities, especially for large data center and BESS projects.

• Recent IP litigation victories have strengthened market position and attracted new customers.

• Ongoing commitment to defend intellectual property signals seriousness to competitors and customers.

• Potential to capture additional market share if competitors exit due to IP rulings.

Product development and operational milestones

• AirLink leverages existing manufacturing processes, with only minor adjustments needed for production.

• Key milestones for AirLink include internal and third-party testing, beta site deployments, and UL certification, targeted for Q1 next year.

• Product mix and operational efficiencies in the new facility are expected to drive sequential gross margin improvements.

• Gross profit percentages are highly dependent on product mix, with a focus on growing gross profit dollars and EBITDA.

• BESS revenue reached $20M last quarter, with a growing backlog and new partnerships supporting future growth.