Shoals’ first quarter results were shaped by robust demand in the core U.S. utility-scale solar market and a notable increase in orders, but the market reacted negatively as margin pressures weighed on sentiment. CEO Brandon Moss cited strong quote activity and a record backlog, driven by both new and existing customers, as key drivers behind revenue growth. Management acknowledged that gross margins were impacted by product mix, higher freight costs, tariffs, and temporary labor inefficiencies associated with the move to a new production facility. Moss stated, “We believe that this is the low point of gross margin and that it will improve as we make our way through the year.”
Is now the time to buy SHLS? Find out in our full research report (it’s free for active Edge members).
Shoals (SHLS) Q1 CY2026 Highlights:
- Revenue: $140.6 million vs analyst estimates of $129.4 million (74.9% year-on-year growth, 8.7% beat)
- Adjusted EPS: $0.07 vs analyst estimates of $0.06 (in line)
- Adjusted EBITDA: $21.11 million vs analyst estimates of $19.82 million (15% margin, 6.5% beat)
- The company lifted its revenue guidance for the full year to $620 million at the midpoint from $580 million, a 6.9% increase
- EBITDA guidance for the full year is $125 million at the midpoint, above analyst estimates of $117.3 million
- Operating Margin: 5.5%, in line with the same quarter last year
- Backlog: $758 million at quarter end, up 17.5% year on year
- Market Capitalization: $1.56 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Shoals’s Q1 Earnings Call
- Philip Shen (ROTH Capital Partners) asked whether tax equity financing slowdowns were impacting bookings. CEO Brandon Moss responded that Shoals has not seen a material effect, citing a consistent and robust quote log.
- Julien Dumoulin-Smith (Jefferies) pressed for detail on BESS adoption cadence and margin trajectory. Moss and CFO Dominic Bardos explained that BESS momentum is strongest in data center and grid firming, while margin improvement will be gradual as facility transition disruptions ease.
- Praneeth Satish (Wells Fargo) inquired about the specific drivers of margin compression and the outlook for the new data center product. Bardos clarified the split among tariffs, freight, and facility moves, and Moss confirmed that new product bookings will be minimal in 2026 but ramp in 2027.
- Colin Rusch (Oppenheimer & Co.) asked about international traction and OpEx optimization via AI. Moss cited growing bookings in Australia, and Bardos stated that AI efforts would focus on enabling scale rather than immediate cost reduction.
- Brian Lee (Goldman Sachs) queried the more modest increase in EBITDA vs. revenue guidance and tariff exposures. Bardos attributed this to product mix, transitional disruptions, and cautious legal expense assumptions, with recent tariff changes expected to be neutral or slightly favorable.
Catalysts in Upcoming Quarters
Over the coming quarters, the StockStory team will be closely watching (1) Shoals’ ability to expand BESS volumes and secure additional AI data center projects, (2) evidence of sequential margin improvement as facility transition challenges subside, and (3) continued growth and conversion of the international backlog, particularly in Australia. Execution against these priorities will be essential for sustaining the company’s revised growth outlook.
Shoals currently trades at $9.55, up from $8.27 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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