Shoals Technologies Group, Inc. had a successful year in 2025, marked by a 19% increase in revenue as the company rebounded from a challenging 2024. The management’s strategic shift towards a diversified product portfolio, even at the expense of lower gross margins, proved to be a wise decision as it allowed them to tap into a larger market.
The U.S. utility-scale solar business experienced significant growth in the latter half of 2025, expanding by 30% compared to the previous year. Shoals’ engineered solutions were in high demand, driving this momentum. Additionally, the company’s international expansion efforts paid off, with revenue soaring from under $1 million in 2024 to $13 million in 2025, supported by a record $90 million international order book.
To enhance long-term productivity and scalability, Shoals is consolidating its operations into a new state-of-the-art facility. While this move is expected to improve efficiency in the long run, the company is currently facing temporary inefficiencies due to redundant plant overhead.
A strategic pivot towards Battery Energy Storage Systems (BESS) and AI data center infrastructure is underway, with a new partnership with ON Energy aimed at providing resilient power solutions. The company’s full-year 2026 revenue guidance ranges from $560 million to $600 million, with a focus on converting the $603 million backlog scheduled for delivery within the year.
Shoals has adjusted its gross margin expectations to a low to mid-thirties range to accommodate new customer acquisitions and market entries. The company anticipates the first BESS production line to be operational soon, with more than half of the $67 million BESS backlog expected to be recognized as revenue in 2026.
While legal expenses are expected to remain elevated in 2026 due to ongoing litigation, Shoals projects a significant decline in these expenses in 2027. Tariffs continue to impact gross margins, and the company is cautious about potential tariff refunds in 2026.
The company has made progress in remedying instances of defective Prysmian wire and is awaiting a final ruling in the ITC patent infringement case against Voltage. Adjusted EBITDA will now exclude legal spend related to class action and derivative lawsuits to provide better insight into the underlying business performance.
As Shoals navigates through various challenges and opportunities, it remains focused on innovation and growth. The company’s commitment to adapting to market dynamics and evolving customer needs positions it well for sustained success in the future.
