Shoals Technologies Group, Inc. (NASDAQ:SHLS) shares fell 11.21% in pre-market trading Tuesday after the company reported mixed fourth-quarter results, with weaker-than-expected earnings overshadowing a revenue beat and upbeat forward guidance.
The electrical balance-of-system solutions provider posted adjusted earnings per share of $0.10, missing analyst forecasts of $0.13 for the quarter.
Revenue, however, rose strongly, climbing 39% year over year to $148.3 million, ahead of the $145.5 million consensus estimate and up from $107.0 million in the same period last year. The increase was driven by higher sales volumes tied to continued demand for utility-scale solar projects.
Gross profit improved to $46.9 million from $40.2 million a year earlier, although gross margin narrowed to 31.6% from 37.6%.
The company attributed the margin pressure to higher material costs, $3.3 million in duties and tariffs, and $1.5 million in amortization related to right-of-use assets associated with a new operations facility in Portland, Tennessee.
“I’m pleased with our performance in the fourth quarter, delivering more than $148 million of revenue, an increase of 39% from the prior year,” said CEO Brandon Moss. “The commercial team drove continued strength in bookings, resulting in record backlog and awarded orders, or BLAO, of $747.6 million, an increase of 18% from year-end 2024.”
Looking ahead, Shoals forecast first-quarter 2026 revenue between $125 million and $135 million, with the midpoint of $130 million above analyst expectations of $118.8 million. The company also issued full-year 2026 revenue guidance of $560 million to $600 million.
General and administrative expenses rose to $27.3 million from $21.5 million in the prior-year period, largely reflecting $7.9 million in higher professional services costs related to wire insulation shrinkback matters, intellectual property issues, and securities litigation.