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What changed in Shoals Technologies Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Shoals Technologies Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+328 added−426 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-25)

Top changes in Shoals Technologies Group, Inc.'s 2025 10-K

328 paragraphs added · 426 removed · 230 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

38 edited+22 added−61 removed19 unchanged
Biggest changeRather than making individual wire runs from each string to combiner boxes, plug-and-play architecture connects multiple strings within each row using specialized wire harnesses with integrated fuses that we refer to as “interconnect harnesses.” The copper interconnect harnesses are then connected to a proprietary above ground aluminum feeder cable that we refer to as the Big Lead Assembly (“BLA”), which feed directly into disconnect boxes, which are connected to the inverter.
Biggest changeWe have eliminated the need for individual wire runs from each string of a solar panel to combiner boxes. Our products connect multiple strings within each row of a solar field using specialized wire harnesses with integrated fuses. These harnesses are connected to a proprietary above-ground aluminum feeder cable which is the BLA.
Seasonality We have experienced seasonal and quarterly fluctuations in the past as a result of seasonal fluctuations in our customers’ business. Our end users’ ability to install solar energy systems is affected by weather, as installation and construction projects slow during the colder winter months in the U.S. Such installation delays can impact the timing of orders for our products.
Seasonality We have experienced seasonal and quarterly fluctuations in the past as a result of seasonal fluctuations in our customers’ business. Our end users’ ability to install energy systems is affected by weather, as installation and construction projects slow during the colder winter months in the U.S. Such installation delays can impact the timing of orders for our products.
Given the custom nature of both our system solutions and individual components and the long development cycle for solar energy projects, we typically have 12 months or more of lead time to quote, engineer, produce and ship orders we receive, and we do not stock large amounts of finished goods.
Given the custom nature of both our system solutions and individual components and the long development cycle for solar energy and BESS projects, we typically have 12 months or more of lead time to quote, engineer, produce and ship orders we receive, and we do not stock large amounts of finished goods.
We believe it is the responsibility of every person in leadership – be it a Team Lead, Supervisor, or Manager – to serve as a resource and support for each of our team members. Compensation and Benefits We provide a comprehensive suite of rewards and benefits.
We believe it is the responsibility of every person in a position of leadership – be it a team lead, supervisor, or manager – to serve as a resource and support for each of our team members. Compensation and Benefits We provide a comprehensive suite of rewards and benefits.
When patents expire, we lose the protection and competitive advantages they provided, which could negatively impact our operating results; however, we continue to pursue further intellectual property protection through U.S. and foreign patent applications, non-disclosure agreements, and under trade secret laws.
When patents expire, we lose the protection and competitive advantages they provide, which could negatively impact our operating results; however, we continue to pursue further intellectual property protection through U.S. and foreign patent applications, non-disclosure agreements, and under trade secret laws.
Item 1. Business Shoals Technologies Group, Inc. is a Delaware corporation. Unless the context otherwise requires, references to “we,” “us,” “our,” “Shoals,” the “Corporation,” the “Company” and other similar references refer to Shoals Technologies Group, Inc. and, unless otherwise stated, all of its consolidated subsidiaries.
Item 1. Business Unless the context otherwise requires or unless otherwise stated, references to “we,” “us,” “our,” “Shoals,” the “Corporation,” the “Company” and other similar references refer to Shoals Technologies Group, Inc., a Delaware corporation, and, unless otherwise stated, all of its consolidated subsidiaries.
However, given the mission critical nature of EBOS (as further described below), the decision to use our products typically involves input from both the EPC and the owner/developer of the solar energy project.
However, given the mission-critical nature of EBOS (as further described below), the decision to use our products typically involves input from both the EPC and the owner/developer of the energy infrastructure energy project.
However, we might not have entered into such agreements with all applicable personnel, and such agreements might not be self-executing. Moreover, such individuals could breach the terms of such agreements. We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our technology or business plans.
However, we might not have entered into such agreements with all applicable personnel, 6 Table of Contents and such agreements might not be self-executing. Moreover, such individuals could breach the terms of such agreements. We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our technology or business plans.
In the case of projects placed in service after 2024, each of the TC and PTC will be replaced by similar “technology neutral” tax credit incentives that mimic the TC and PTC but also require that projects satisfy a “zero greenhouse gas emissions” standard (which solar does) in order to qualify for the credits.
In the case of projects placed in service after 2024, each of the TC and PTC was replaced by similar “technology neutral” tax credit incentives that mimic the TC and PTC but also require that projects satisfy a “zero greenhouse gas emissions” standard (which solar does) in order to qualify for the credits.
Our benefits program is designed to provide coverage for our employees’ overall health and wellbeing. Our program includes medical and dental coverage, life, and disability insurance. We also offer retirement saving plans through our 401(k) plan, which is available to all full-time employees.
Our benefits program is designed to provide coverage for our employees’ overall health and wellbeing. Our program includes medical and dental coverage, life, and disability insurance. We also offer retirement saving plans through our 401(k) plan, which is available to all full-time employees on their hire date.
The duration of patents outside of the U.S. varies in accordance with provisions of applicable local law, but typically 6 Table of Contents is also 20 years from the earliest effective filing date.
The duration of patents outside of the U.S. varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date.
Our project management team supports the process after a sale is completed by providing the customer submittals for 4 Table of Contents approval, real-time shipping information, and any additional items that may be needed to complete the installation and commissioning.
Our project management team supports the process after a sale is completed by providing the customer submittals for approval, real-time shipping information, and any additional items that may be needed to complete the installation and commissioning.
Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt (“MW”) or greater (“utility-scale solar”). These EPCs work with owners and developers of solar assets to build solar energy projects.
Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar and BESS projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt or greater. These EPCs work with owners and developers of solar assets to build energy infrastructure projects.
Our customer care continues after a project’s completion, with our team providing technical and maintenance support for the life of the project. We believe that our consultative top-down and bottoms-up approach fosters brand loyalty with all stakeholders and results in retention of our customers. We have manufacturing facilities located in Tennessee and Alabama.
Our customer care continues after a project’s completion, with our team 4 Table of Contents providing technical and maintenance support for the life of the project. We believe that our consultative top-down and bottom-up approach fosters brand loyalty with all stakeholders and results in customer retention. We have manufacturing facilities located in Tennessee and Alabama.
For the year ended December 31, 2024, our largest customer contributed approximately 26.4% of our total revenue and was one of two customers contributing 10% or greater of total revenue. Competition Our offerings are highly specialized and patented products that are specific to the solar industry.
For the year ended December 31, 2025, our largest customer contributed approximately 19.1% of our total revenue and was one of two customers contributing 10% or greater of total revenue. Competition Our offerings are highly specialized and patented products that are specific to the solar industry.
Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, could have an adverse effect on our business and results of operations. Our Human Capital As of December 31, 2024, we had approximately 1,290 full-time and temporary employees.
Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, could have an adverse effect on our business and results of operations. Our Human Capital and Culture 7 Table of Contents As of December 31, 2025, we had approximately 1,480 full-time and temporary employees.
Government Regulation Environmental Laws and Regulations We are subject to a variety of environmental, health and safety, and pollution-control laws and regulations in the jurisdictions in which we operate. We do not believe the costs of compliance with these laws and regulations will be material to the business or our operations.
Government Regulation Environmental Laws and Regulations We are subject to standard environmental, health and safety, and pollution‑control laws and regulations in the jurisdictions where we operate. We do not believe the costs of complying with these requirements will be material to our business or operations.
Any document Shoals files may be inspected, without charge, at the SEC’s website at http://www.sec.gov. In addition, through our corporate website at www.shoals.com, Shoals provides a hyperlink to a third-party SEC filing website which posts these filings as soon as reasonably practicable, where they can be reviewed without charge.
In addition, through our corporate website at www.shoals.com, Shoals provides a hyperlink to a third-party SEC filing website which posts these filings as soon as reasonably practicable, where they can be reviewed without charge.
We rely primarily on patent, trademark, copyright and trade secret laws in the U.S., confidentiality agreements and procedures and other contractual arrangements to protect our technology. As of December 31, 2024, we had 21 U.S. trademark registrations, 5 pending U.S. trademark applications, 36 issued U.S. patents, 32 issued non-U.S. patents, and 58 global patent applications pending examination.
We rely primarily on patent, trademark, copyright and trade secret laws in the U.S., confidentiality agreements and procedures and other contractual arrangements to protect our technology. As of December 31, 2025, we had 25 U.S. trademark registrations, 3 pending U.S. trademark applications, 39 issued U.S. patents, 4 issued non-U.S. patents, and 49 global patent applications pending examination.
We measure the effectiveness of our R&D using a number of metrics, beginning with a market requirements definition, which includes a program budget, financial payback, resource requirements, and time required to launch the new product, system, or service into the market.
Our development strategy is to identify features that bring value to our customers and differentiate us from our competitors. We measure the effectiveness of our R&D using a number of metrics, beginning with a market requirements definition, which includes a program budget, financial payback, resource requirements, and time required to launch the new product, system, or service into the market.
We compete on the basis of product performance and features, installation cost, reliability and duration of product warranty, sales and distribution capabilities, and training and customer support, as well as the ability to provide system solutions rather than individual components.
(via acquisition of Bentek), Premier PV, TerraSmart, LLC (formerly SolarBOS, Inc.), and Voltage, LLC. We compete on the basis of product performance and features, installation cost, reliability and duration of product warranty, sales and distribution capabilities, packaging and transportation, and training and customer support, as well as the ability to provide system solutions rather than individual components.
Our sales process is a highly consultative approach that involves working with developers, engineers, EPC’s, subcontractors, and OEM firms. We work collaboratively with all project stakeholders to understand the complexities and goals of each project to ensure continuity throughout the decision-making process. This involves us collaborating on site design, product selection, value engineering and optimization.
We work collaboratively with all project stakeholders to understand the complexities and goals of each project to ensure continuity throughout the decision-making process. This involves us collaborating on site design, product selection, value engineering and optimization.
The unique expertise required to design EBOS, BESS, data centers, and OEM solutions, including system solutions and individual component products, as well as customers’ reluctance to try unproven products, has confined the number of companies that produce such EBOS, BESS and OEM products to a relatively small number.
The unique expertise required to design EBOS, BESS, data center, and OEM solutions, as well as customers’ reluctance to try unproven products, has confined the number of companies that produce such EBOS, BESS and OEM products to a relatively small number. Our principal competitors include Construction Innovation, Hikam America, Inc., Nextpower Inc.
The key to preventing injuries begins with establishing the risk profile in our facilities through effective risk assessment and incident reporting and analysis processes. This process enables the organization to implement proactive safety measures, including ergonomic improvements, behavioral and unsafe condition audits, and near miss reporting and assessments, as leading indicators towards our journey to zero accidents.
This process enables the organization to implement proactive safety measures, including ergonomic improvements, behavioral and unsafe condition audits, and near miss reporting and assessments, as leading indicators towards our journey to zero accidents.
The information found on our website is not a part of this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. 10 Table of Contents FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management.
The information found on our website is not a part of this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. 9 Table of Contents
We believe our system solutions are unique in our industry because they integrate design and engineering support, proprietary components and innovative installation methods into a single offering that would otherwise be challenging for a customer to obtain from a single provider or at all.
We believe our system solutions are unique in our industry because they integrate design and engineering support, proprietary components and innovative installation methods into a single offering.
Research and Development We continually devote resources to research and development (“R&D”), with the objective of developing innovative new products that reduce the cost and improve the reliability and safety of renewable energy.
During the second half of 2025, we received a certificate of occupancy, and began to move operations to the new facility. 5 Table of Contents Research and Development We continually devote resources to research and development (“R&D”), with the objective of developing innovative new products that reduce the cost and improve the reliability and safety of renewable energy.
Our occupational health and safety program is designed to drive a proactive safety culture beginning with our management setting the tone for our safety culture and ensuring that everyone feels a sense of ownership for each other’s safety and well-being.
Our occupational health and safety program is designed to drive a proactive safety culture beginning with our management setting the tone for our safety culture and ensuring that everyone feels a sense of ownership for each other’s safety and well-being. 8 Table of Contents The key to preventing injuries begins with establishing the risk profile in our facilities through effective risk assessment and incident reporting and analysis processes.
When we sell a system solution, we work with our customers to design, specify and engineer their system solution to provide a complete customized EBOS solution consisting of individualized products that maximizes reliability and energy production while minimizing cost. We also provide technical support during installation and the transition to operations and maintenance.
The result is a customized system that maximizes reliability and energy production while minimizing cost and accelerating installation. We also provide technical support during installation and the transition to operations and maintenance.
In 2024, we announced our intention to invest substantial capital over the next five years to expand and consolidate our existing Tennessee-based manufacturing and distribution operations to a new, larger facility in Portland, Tennessee. As part of the expansion, we are in the process of relocating our Tennessee-based manufacturing operations to a single, larger facility.
Manufacturing Our manufacturing facilities are located in Tennessee and Alabama. Our Alabama facility is Internation Organization for Standardization 9001:2015 certified. In 2025, we invested substantial capital as part of the process to expand and consolidate our existing Tennessee-based manufacturing and distribution operations to a new, larger facility in Portland, Tennessee.
The vast majority of our employees are located in the United States. We foster a collaborative, team-oriented culture that values open communication and candor among all our employees. We consider these elements crucial to our pursuit of operational excellence and lead to success.
The vast majority of our employees are located in the United States. We foster a collaborative, team-oriented culture that values open communication and candor among all our employees. We also focus on listening, learning, and responding to our employees’ concerns to help ensure that we can provide a world-class workplace today and into the future.
EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels to an inverter and ultimately to the power grid. We refer to complete EBOS solutions that use products manufactured by us, typically in connection with the design and specification of an entire EBOS system, as “system solutions”.
EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels or stored by a BESS solution to an inverter and ultimately to the power grid.
As part of this reorganization, Shoals Parent LLC merged with and into Shoals Intermediate Parent, with Shoals Intermediate Parent as the surviving corporation. 9 Table of Contents Available Information Shoals files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments of such reports with the Securities and Exchange Commission (“SEC”).
Available Information Shoals files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments of such reports with the Securities and Exchange Commission (“SEC”). Any document Shoals files may be inspected, without charge, at the SEC’s website at http://www.sec.gov.
We actively seek individuals who share our passion, dedication and entrepreneurial mind set to contribute to a dynamic work environment.
Our goal is to cultivate a company culture where everyone feels welcomed, valued, treated fairly and respected. We consider these elements crucial to our pursuit of operational excellence and lead to success. We actively seek individuals who share our passion, dedication and entrepreneurial mind set to contribute to a dynamic work environment.
Traditionally, and for the year ended December 31, 2024, we primarily sold our EBOS solutions and components and OEM components to customers in the United States.
These sales representatives are supported by our engineering teams in the United States to ensure that we comply with local codes and regulations. Our Customers Traditionally, and for the year ended December 31, 2025, we primarily sold our EBOS solutions and OEM components to customers in the United States, while also fulfilling orders for international utility-scale solar projects.
Additionally, given the change in U.S. presidential administrations, the future of the IRA and any federal solar incentives remains uncertain; however, direct changes to the IRA would require new legislation. Trade Regulation and Import Tariffs Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate.
Additional guidance around FEOC provisions is still forthcoming and expected to be finalized in 2026. Future federal solar and energy incentives remain uncertain. Trade Regulation and Import Tariffs Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate.
Shares of our Class A common stock trade on the Nasdaq Global Market (“Nasdaq”) under the symbol, “SHLS”. Overview Shoals is a leading provider of electrical balance of system (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components, for the global energy transition market.
Shares of our Class A common stock trade on the Nasdaq Global Market under the symbol, “SHLS”. Overview Shoals Technologies Group is a leading design-engineering company and manufacturer of advanced electrical infrastructure solutions for mission‑critical applications across solar photovoltaic (PV), BESS, and data center power systems. Our solutions also support original equipment manufacturers (“OEMs”).
The BLA is our core plug-and-play product. The direct connection between the interconnect harness and the BLA and the integration of fuses into the interconnect harness dramatically reduces the number of wire runs required compared to a conventional homerun system and eliminates the need for combiner boxes.
The BLA and the integration of fuses dramatically reduces the number of wire runs required compared to other infrastructures and eliminates the need for combiner boxes. Our patented design includes connection points that incorporate a double molding system, permanently sealing out any moisture or particulates that would otherwise compromise the system.
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We refer to individual, often custom and proprietary, products we sell as “components”.
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Since its founding in 1996, the Company has introduced innovative technologies and systems solutions that allow its customers to substantially increase installation efficiency and safety while improving system performance and reliability at scale. In the solar industry, electrical infrastructure is referred to as electrical balance of systems (EBOS).
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Since EBOS components are mission-critical products that have a high consequence of failure, which may result in lost revenue, equipment damage, fire, and even serious injury or death, we generally believe customers prioritize reliability and safety over price when selecting EBOS solutions.
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We refer to complete EBOS solutions that use products manufactured by us, typically in connection with the design and specification of an entire EBOS system, as “system solutions”. When we sell one of our patented system solutions, we work closely with our customers to design, specify and engineer a complete EBOS solution tailored to their project.
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As further described below, in the third quarter of 2024, we announced our strategic shift to expand our reach and capitalize on international, BESS, data centers, and Commercial, Community, and Industrial (“CC&I”) markets, while also maintaining our focus on domestic utility-scale solar and OEM markets.
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Since electrical infrastructure is the backbone of a solar or BESS project, we believe our products play a mission-critical role in the quality, safety, reliability, and efficiency of energy projects, which we believe are key factors customers consider when selecting EBOS solutions.
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This shift is aimed at capitalizing on the growing global demand for renewable energy solutions and diversifying our market presence. By entering new geographic regions, markets, and applications, we aim to enhance our competitive position and drive long-term growth.
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We have a focus in two end-markets: (1) clean, grid connected energy and (2) data center + mission-critical electrical infrastructure. This market diversification seeks to capitalize on the growing global demand for energy and the need to accelerate electrification. The Energy Opportunity The energy landscape has changed drastically over the last decade.
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Traditional EBOS Solution The Problem 1 Table of Contents Historically, most solar energy projects used a wiring architecture known as a “homerun.” Conventional homerun EBOS has two distinguishing characteristics: first, every string of solar panels in the project is connected to a combiner box with individual positive and negative “wire runs,” and second, connections between wires are made using a process called “crimping.” The combiner box functions as a central point to “combine” the individual wire runs into a single feeder cable and contains fuses to protect each circuit.
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Solar now accounts for the majority of new generation being brought onto the grid, BESS has evolved from a “nice to have” into a necessity co-located with utility solar projects, and specialized labor shortages have become more prevalent.
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Making each wire run from the strings to the combiner boxes is a costly and laborious process, requiring expensive copper wire and licensed electricians. Each wire run must be measured, laid out and fished through conduits that are buried in trenches across the project site.
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In addition, we are seeing an acceleration of artificial intelligence (AI) adoption, driving an unprecedented increase in energy demand as each new data center gets built. While this phenomenon grows, constraints on grid capacity and interconnection remain, causing hyperscalers to rethink their energy strategy.
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Because each string is individually connected to a combiner box, the same distances are covered with multiple wire runs. Making the crimped connections between wires and interconnecting them in the combiner box is a complex, error prone process that requires special tools.
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Increasingly, those hyperscalers are building their own power plants alongside their data warehouses, making scalability, quality and speed-to-deployment critical considerations. 2 Table of Contents Our Solutions Solar We offer a full range of EBOS solutions to meet the needs of domestic and international utility scale solar projects, commercial, community and industrial (“CC&I”) projects, and other customers as an OEM of solar components.
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Each wire must be cut and have a precise amount of insulation removed; the bare end must be inserted the correct depth into a terminal; and special tools must be used to deform metal sleeves and torque lock nuts to ensure an environmental seal.
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Our solutions include homeruns, interconnection and extension solutions, combiners and recombiners, load break disconnects and transition solutions, wireless performance monitoring systems, and solar OEM components. Critical to our solar solution suite of products is our Big Lead Assembly (“BLA”) trunk bus , which introduced a foundational shift in solar project design, simplifying construction while improving safety and reliability.
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The entire installation must be performed by licensed electricians with special training and any mistake in the process can result in a catastrophic system failure. Weather, moisture, dirt, and human error all contribute to the challenges of completing a high-quality, cleanly-connected system, that is required to remain in service for decades.
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BLA delivers meaningful value to our customers which includes: • cost savings by leveraging aluminum, which is often 80% less expensive than copper; • above ground installation, which eliminates the need for conduits, trenching, environmental issues, and difficult maintenance; • installation designed for general labor, minimizing the need for licensed electricians; • reduction in the overall number of wire runs by up to 95%; • elimination of combiner boxes, which speeds installation, lowers material and shipping costs, reduces the number of failure points, and is beneficial to the environment as less copper, aluminum, and plastics are consumed; • lower maintenance costs over time; and • increased energy generation enabled by reduced electrical resistance.
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Our Proprietary Answers: The majority of solar energy projects in operation today use conventional homerun architecture. We design, manufacture and sell system solutions for homerun systems. We have developed a proprietary EBOS solution for homerun architectures that utilizes our interconnect harness.
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Battery Energy Storage and Data Center Solutions Shoals has expanded our EBOS offerings to support the growing deployment of BESS, leveraging its established experience in large-scale solar infrastructure and DC power architectures.
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Rather than the traditional approach of running a separate wire from each string to a combiner box, our interconnect harness connects multiple strings together at each row using a single wire and simple push connector, rather than a wire crimp.
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As energy storage becomes increasingly integral to renewable generation, grid stability, and system resilience, Shoals’ custom, semi-custom & standardized energy storage infrastructure solutions are designed to support efficient integration, scalability, and long-term operational performance across solar-plus-storage, standalone storage and data center projects. A core component of Shoals’ BESS portfolio is the Recombiner platform.
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Combining multiple strings together at each row reduces the number of wire runs that have to be made to combiner boxes, as well as the number of connections that have to be made in each combiner box, which reduces either the total number of combiner boxes or the size of combiner boxes required for the system.
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It is energy input agnostic and enables the aggregation of multiple DC inputs from solar arrays, battery storage systems, and other DC microgrid components into a single DC output, allowing batteries to charge and discharge consistent power to the grid.
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Using push connectors allows a large portion of the EBOS installation to be completed by general laborers, rather than requiring licensed electricians. Our homerun EBOS system solutions typically include our interconnect harness, combiners and jumpers. We have also invented a trunk-bus alternative to traditional homerun architecture which we refer to as “plug-and-play” EBOS.
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This system-level approach supports DC-coupled architectures and provides flexibility as battery technologies evolve, allowing customers to adapt system designs over time without significant infrastructure changes.
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Our patented design includes connection points which incorporate a double molding system, permanently sealing out any moisture or particulates that would otherwise compromise the system. Additionally, BLA delivers to our customers meaningful cost savings by leveraging aluminum, which is often 80% less expensive than copper.
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By reducing inverter counts and shifting labor-intensive electrical work from the field to a controlled manufacturing environment, the Recombiner contributes to improved installation efficiency, enhanced system reliability, and reduced operational complexity. 3 Table of Contents Consistent with Shoals’ “Inventing Simple” philosophy, our BESS solutions are designed to meet evolving customer challenges, offering: • configurable and modular design to adapt to project-specific needs, giving developers confidence in every system layout; • Simplified project layouts with fewer required materials and components, up to 75% reduction in number of inverters needed on a project; • accelerated installation with consolidated DC inputs and plug-and-play, easy-to-connect components; • enhanced safety for critical infrastructure and maintenance personnel; • high-quality construction reducing risks with fewer points of failure and delivering reliable power for a secure operating environment; and • modular, high-input design supports future site expansion and augmentation Shoals’ broader BESS offerings include prefabricated wiring systems, disconnect switches, and multi-load break disconnect solutions, designed to improve safety, reduce field variability, and support resilient system operation.
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We believe our plug-and-play EBOS architecture using interconnect harnesses and BLA has several competitive advantages when compared to conventional homerun EBOS, including: • Installing above ground. Wiring for conventional homerun systems is typically run through conduits that are buried in trenches. Trenching is costly and time consuming, and certain geographies have environmental limits to these types of construction actions.
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These solutions emphasize standardization and repeatability, which are increasingly important as storage deployments scale and projects face workforce, schedule, and long-term maintenance considerations. Data centers represent an emerging application for Shoals’ DC power and BESS expertise.
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Making repairs to buried wire can also be 2 Table of Contents challenging and expensive, as well as run the risk of unintentionally damaging other buried wire that did not need to be repaired. Our BLA is hung from the mounting system used for the solar panels, enabling above ground installation.
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As data center operators integrate energy storage to support resilience, manage load growth, and mitigate grid constraints, Shoals’ experience in DC power distribution and system-level EBOS design positions the company to address these requirements.
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Above ground installation is less costly and far faster than burying wire in conduits. Future maintenance is also significantly easier and less costly because our BLA is easily accessible if repairs are required. • Being installable by general labor rather than requiring electricians.
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In addition to the BESS Recombiner, the company is actively evaluating and developing additional offerings tailored to data center power systems, consistent with its strategy to extend proven EBOS platforms into adjacent mission-critical infrastructure markets. Sales and Marketing Strategy On a global scale, demand for renewable energy solutions, energy storage capabilities, and electrical infrastructure continues to grow.
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Conventional homerun systems use crimps and other specialized procedures to connect wires and install combiner boxes that must be performed by licensed electricians.
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In response, we have introduced a suite of products and continue to develop new technologies tailored to meet these evolving needs. We believe our track record as an innovator and leading developer of EBOS technologies positions us to deliver tailored solutions that enhance performance and cost-effectiveness across solar, energy storage, and data center projects.
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Because our interconnect harness and BLA use simple push connectors and do not require combiner boxes, licensed electricians (who are often expensive and in short-supply) are not needed to install the system. • Reducing the number of wire runs .
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By expanding into new geographic regions, markets, and applications, we aim to strengthen our competitive position and drive long-term growth. Our value proposition is delivering solutions that simplify installation and lower installation costs, improve safety and reliability, extend asset life, and reduce long-term maintenance costs.
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We believe using our interconnect harness and BLA reduces the number of string and inverter wire runs required for a typical utility-scale solar energy project by up to 95% when compared to a conventional homerun system.
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We use a range of marketing strategies, including direct marketing campaigns, white papers, independent third-party studies, thought-leadership content, social media, and participation in industry conferences and events. Our sales process is a highly consultative approach that involves working with developers, engineers, EPCs, subcontractors, and OEM firms.
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Reducing the number of wire runs speeds installation, lowers material and shipping costs, reduces the number of potential failure points, and is beneficial to the environment because less copper, aluminum and plastics are consumed. • Eliminating combiner boxes .
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While certain facilities may involve limited use or handling of regulated substances in connection with product development, testing, or manufacturing, these activities are not a significant part of our operations. Any failure to properly manage or address such materials, however limited, could expose us to liabilities, remediation obligations, monetary damages, fines, or operational disruptions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

80 edited+38 added−96 removed70 unchanged
Biggest changeSome of the factors outside of our control that may impact the viability and demand for solar energy projects include: (i) cost competitiveness, reliability and performance of solar energy systems compared to conventional and non-solar renewable energy sources and products, and cost competitiveness, reliability and performance of our products compared to our competitors; (ii) availability, scale and scope of government subsidies and incentives to support the development and deployment of solar energy solutions; (iii) prices of traditional carbon-based energy sources; (iv) levels of investment by end users of solar energy projects, which tend to decrease when economic growth slows; and (v) the emergence, continuance or success of, or increased government support for, other alternative energy generation technologies and products.
Biggest changeDemand for solar 10 Table of Contents energy projects may be affected by factors largely outside of our control, including the relative cost, reliability and performance of solar energy systems compared to conventional and other renewable energy sources; the availability and scope of government subsidies and incentives; energy commodity prices; levels of customer investment, particularly during periods of economic uncertainty; and the emergence or increased support of alternative energy technologies.
Further, the repurchase of our Class A common stock pursuant to our Repurchase Program could affect the price of our Class A common stock and increase its volatility and there can be no assurance that any share repurchases will enhance stockholder value because the stock price of our Class A common stock may decline below the levels at which we effected repurchases.
Further, the repurchase of our Class A common stock pursuant to the Repurchase Program could affect the price of our Class A common stock and increase its volatility and there can be no assurance that any share repurchases will enhance stockholder value because the stock price of our Class A common stock may decline below the levels at which we effected repurchases.
Further, our Repurchase Program may be suspended or discontinued at any time and may reduce the amount of cash we have available, impacting our liquidity.
Further, the Repurchase Program may be suspended or discontinued at any time and may reduce the amount of cash we have available, impacting our liquidity.
Shifts in business strategy can and have made it more difficult for us to collect data and accurately forecast our production and material needs, price our goods and services, and estimate or margins. Failure to successfully manage the risks of modifying our business strategy could have a material adverse effect on our business, financial condition and results of operations.
Shifts in business strategy can and have made it more difficult for us to collect data and accurately forecast our production and material needs, price our goods and services, and estimate our margins. Failure to successfully manage the risks of modifying our business strategy could have a material adverse effect on our business, financial condition and results of operations.
Pursuant to the Repurchase Program announced by the Company on June 11, 2024, we are authorized to repurchase up to $150 million of outstanding shares of our Class A common stock from time to time. As of December 31, 2024, we had repurchased $25 million under the program.
Pursuant to the Repurchase Program announced by the Company on June 11, 2024, we are authorized to repurchase up to $150 million of outstanding shares of our Class A common stock from time to time. As of December 31, 2025, we had repurchased $25 million under the program.
We previously abandoned efforts to penetrate the electric-vehicle market due to specific industry challenges and are currently developing solutions seeking to further penetrate the CC&I market, data centers market, the OEM market and international markets.
We previously abandoned efforts to penetrate the electric-vehicle market due to specific industry challenges and are currently developing solutions seeking to further penetrate the CC&I market, BESS market, data centers market, the OEM market and international markets.
There is no guarantee that states will continue to enact zoning and permitting laws that support the renewable energy sector. 28 Table of Contents Net metering policies for on-site solar have also promoted solar electricity by allowing solar PV system owners to only pay for power usage net of production from the solar PV system.
There is no guarantee that states will continue to enact zoning and permitting laws that support the renewable energy sector. 21 Table of Contents Net metering policies for on-site solar have also promoted solar electricity by allowing solar PV system owners to only pay for power usage net of production from the solar PV system.
In addition, results of the litigation we have commenced against Prysmian are inherently uncertain and we cannot guarantee the outcome of that litigation. Litigation can be expensive and time consuming and will divert the efforts of our management and other personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.
In addition, the results of the litigation against Prysmian are inherently uncertain and we cannot guarantee the outcome of that litigation. Litigation can be expensive and time consuming and will divert the efforts of our management and other personnel, which could harm our business, whether or not such litigation results in a determination favorable to us.
Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in Accounting Standards Codification (“ASC”) 450, and has not been considered in our estimate of the warranty liability as of December 31, 2024.
Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in Accounting Standards Codification (“ASC”) 450, and has not been considered in our estimate of the warranty liability as of December 31, 2025.
If the price of solar systems in the U.S. increases, the use of solar systems could become less economically feasible and could reduce our gross profits or reduce the demand of solar systems manufactured and sold, which in turn may decrease demand for our products.
Additionally, if the price of solar systems in the U.S. increases, its use could become less economically feasible and could reduce our gross profits or reduce the demand of solar systems manufactured and sold, which in turn may decrease demand for our products.
A failure by us to comply with the covenants or to maintain the required financial ratios contained in the Senior Secured Credit Agreement could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our 27 Table of Contents business and manage our operations.
A failure by us to comply with the covenants or to maintain the required financial ratios contained in the Senior Secured Credit Agreement could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our business and manage our operations.
The identification of suitable acquisition or joint venture candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions or joint ventures.
The identification of suitable candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions or joint ventures.
As a result, our share price has experienced significant volatility and may not necessarily reflect the value of our expected performance, which may prevent investors from being able to sell their Class A common stock at or above their purchase price.
As a result, our share price has experienced significant volatility and may not necessarily reflect the 22 Table of Contents value of our expected performance, which may prevent investors from being able to sell their Class A common stock at or above their purchase price.
The price of our stock changes in response to fluctuations in our results of operations, the wire insulation shrinkback matter, other factors specific to our Company, and in response to macroeconomic factors as well as factors specific to the solar energy industry and companies in our industry, many of which are beyond our 29 Table of Contents control.
The price of our stock changes in response to fluctuations in our results of operations, the wire insulation shrinkback matter, other factors specific to our Company, and in response to macroeconomic factors as well as factors specific to the solar energy industry and companies in our industry, many of which are beyond our control.
As of December 31, 2024, we had $141.8 million revolving loans outstanding under the Senior Secured Credit Agreement. Our indebtedness could have important consequences to you and significant effects on our business.
As of December 31, 2025, we had $136.8 million revolving loans outstanding under the Senior Secured Credit Agreement. Our indebtedness could have important consequences to you and significant effects on our business.
Risks Related to Our Business and Our Industry If demand for solar energy projects diminishes, we may not be able to grow, and our financial results, business and prospects could be materially adversely impacted. Our solutions are utilized in solar energy projects.
Risks Related to Our Business and Our Industry If demand for solar energy projects diminishes, we may not be able to grow, and our financial results, business and prospects could be materially adversely impacted.
These provisions include: (i) authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt; (ii) not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; (iii) limiting the ability of stockholders to call a special stockholder meeting; (iv) prohibiting stockholders from acting by written consent; (v) establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; (vi) the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; (vii) providing that our board of directors is expressly authorized to amend, alter, rescind or repeal our amended and restated bylaws; and (vii) requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of Class A common stock to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law 30 Table of Contents (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our amended and restated bylaws.
These provisions include: (i) authorizing “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt; (ii) not providing for cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; (iii) limiting the ability of stockholders to call a special stockholder meeting; (iv) prohibiting stockholders from acting by written consent; (v) establishing advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; (vi) the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; (vii) providing that our board of directors is expressly authorized to amend, alter, rescind or repeal our amended and restated bylaws; and (viii) requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of Class A common stock to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our amended and restated bylaws. 23 Table of Contents Our amended and restated certificate of incorporation also provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Any resulting reductions in demand for solar energy systems could harm our business, prospects, financial condition and results of operations. Chief among policies intended to promote renewable electricity generally, or solar electricity in particular, are renewable portfolio standards (“RPS”) and clean energy standards (“CES”).
Any resulting reductions in demand for solar energy systems could harm our business, prospects, financial condition and results of operations. Renewable portfolio standards (“RPS”) and clean energy standards (“CES”) are key policies intended to promote solar and renewable electricity.
Our expansion outside of the U.S. involves developing region-specific products; entering into joint-venture or licensing arrangements with companies in certain markets; expanding our relationships with value-added resellers of our products in some countries; creating 26 Table of Contents international subsidiaries to build credibility and market presence; and utilizing locally sourced components in our products in jurisdictions where locally sourced components are a regulatory or customer requirement.
Our expansion outside of the U.S. involves developing region-specific products; entering into joint-venture or licensing arrangements with companies in certain markets; expanding our relationships with value-added resellers of our products in some countries; creating 19 Table of Contents international subsidiaries to build credibility and market presence; and utilizing locally sourced components in our products in jurisdictions where it is required.
If our competitors introduce new technologies that are successful in offering price competitive and technological attractive EBOS system solutions and components, it may become more difficult for us to maintain market share.
Competition continues to intensify as new and existing competitors enter the market. If our competitors introduce new technologies that are successful in offering price competitive and technological attractive EBOS system solutions and components, it may become more difficult for us to maintain market share.
Furthermore, we are required to maintain compliance with various financial ratios in the Senior Secured Credit Agreement.
Furthermore, we are required to maintain compliance with 20 Table of Contents various financial ratios in the Senior Secured Credit Agreement.
Amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits. As of December 31, 2024, we had $634.7 million of backlog and awarded orders.
Amounts included in our backlog and awarded orders may not result in actual revenue or translate into profits. As of December 31, 2025, we had $747.6 million of backlog and awarded orders.
Further, the Company’s trade accounts receivable are from companies within the solar industry, and as such, the Company is exposed to industry credit risks. As of December 31, 2024, our largest customer and five largest customers constituted 19.0% and 50.8% of trade accounts receivable, respectively.
Further, the Company’s trade accounts receivable are from companies within the solar industry, and as such, the Company is exposed to industry credit risks. As of December 31, 2025, our largest customer and five largest customers constituted 25.2% and 46.8% of trade accounts receivable, respectively.
Backlog of $154.8 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $479.9 million are orders we are in the process of documenting a contract but for which a contract has not yet been signed. In 2024, backlog and awarded orders increased compared to 2023 and 2022.
Backlog of $326.2 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $421.4 million are orders we are in the process of documenting a contract but for which a contract has not yet been signed. In 2025, backlog and awarded orders increased compared to 2024 and 2023.
Our warranty liability for this matter is based on a several assumptions, including the potential magnitude of engineering, procurement and construction firms’ labor cost to identify and perform the repair and replacement of impacted harnesses, estimated failure rates, materials replacement cost, planned remediation method, inspection costs, and other various assumptions.
Our warranty liability for this matter is based on several assumptions, including estimated failure rates, the potential magnitude of engineering, procurement and construction firms’ labor cost to identify and perform the repair and replacement of impacted harnesses, materials replacement cost, planned remediation method, and inspection costs. We do not have a long history of making assumptions relating to warranties.
Further, our geographic concentration exposes us to increased risk with regards to natural disasters, including tornados such as the ones recently experienced in the state, fire, power interruption or other calamity at any one of our facilities, or any combination thereof.
Further, our geographic concentration exposes us to increased risk with regards to natural disasters, including tornados, fire, power interruption or other calamity at any one of our facilities, or any combination thereof.
Any of the foregoing could have a material adverse effect on our business, prospects, results of operations and financial condition and could cause our results of operations to differ materially from our projections. Safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover.
Any of the foregoing could materially adversely affect our business, financial condition, results of operations and prospects and could cause our actual results to differ materially from our expectations or projections. Safety issues may subject us to penalties, negatively impact customer relationships, result in higher operating costs, and negatively impact employee morale and turnover.
We do not have a long history of making assumptions relating to warranties. As a result, these assumptions could prove to be materially different from our current estimate, causing us to incur substantial unanticipated expenses to identify, repair or replace the defective wire or to compensate customers.
As a result, these assumptions could prove to be materially different from our current estimate, causing us to incur substantial unanticipated expenses to identify, repair or replace the defective wire or to compensate customers.
We cannot predict whether there will be additional trade restrictions imposed by the U.S. or other foreign governments such as increased border taxes, embargoes, safeguards and customs restrictions against the raw materials we use.
We cannot predict whether additional trade restrictions, including increased tariffs, border taxes, embargoes, safeguards and customs restrictions, will be imposed by the U.S. or other foreign governments.
Our principal competitors include TerraSmart, LLC (formerly SolarBOS, Inc.), Bentek Corporation, Voltage, LLC, Construction Innovation, Premier PV, and Hikam America, Inc. We compete on the basis of product performance and features, installation cost, reliability and duration of product warranty, sales and distribution capabilities, and training and customer support. Competition continues to intensify as new and existing competitors enter the market.
Our principal competitors include Construction Innovation, Hikam America, Inc., Nextpower (via acquisition of Bentek), Premier PV, TerraSmart, LLC (formerly SolarBOS, Inc.), and Voltage, LLC. We compete on the basis of product performance and features, installation cost, reliability and duration of product warranty, sales and distribution capabilities, packaging and transportation, and training and customer support.
Modifying our business strategy could have an adverse effect on our business and financial results. From time to time, we review our business strategy and, have in the past modified it, and may in the future do so again.
From time to time, we review our business strategy and, have in the past modified it, and may in the future do so again.
Achieving anticipated benefits and synergies from acquisitions is uncertain and subject to various risks, including our ability to integrate or benefit from acquired technologies or services in a profitable manner; diversion of capital and other resources, including management’s attention; unanticipated costs or liabilities related to the acquisition; failure to leverage the increased scale of the combined businesses quickly and effectively; the potential impact of the acquisition on our relationships with employees, vendors, suppliers and customers; the impairment of relationships with, or the loss of, the acquired entity’s employees, vendors, suppliers or customers; adverse changes in general economic conditions in regions in which we operate; potential litigation associated with the acquisition; difficulties in the assimilation of employees and culture; difficulties in managing the expanded operations of a larger and more complex company; and challenges in attracting and retaining key personnel.
Achieving anticipated benefits and synergies from acquisitions is uncertain and subject to various risks, including our ability to integrate or benefit from acquired technologies or services in a profitable manner; diversion of capital and other resources, including management’s attention; unanticipated costs or liabilities related to the acquisition; failure to leverage the increased scale of the combined businesses quickly and effectively; the potential impact of the acquisition on our relationships with employees, customers, suppliers and other business partners; challenges associated with integrating personnel, operations and retaining key employees; and potential litigation.
Furthermore, defective components may give rise to warranty claims (such as those related to the wire insulation shrinkback matter), or indemnity or product liability claims against us, that may exceed any revenue or profit we receive from the affected products. Our limited warranties cover defects in materials and workmanship of our products under normal use and service conditions.
Furthermore, defective components may give rise to warranty claims (such as those related to the wire insulation shrinkback matter), or indemnity or product liability claims against us, that may exceed any revenue or profit we receive from the affected products.
Our success depends to a significant degree on our ability to protect our intellectual property and other proprietary rights. We rely on a combination of patent, trademark, copyright, trade secret and unfair competition laws, as well as confidentiality and license agreements and other contractual provisions, to establish and protect our intellectual property and other proprietary rights.
Our success depends in significant part on our ability to obtain, maintain, protect, enforce and defend our intellectual property and other proprietary rights. We rely on a combination of patent, trademark, copyright, trade secret and unfair competition laws, as well as confidentiality and other contractual arrangements, to protect our technology and competitive position.
Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products.
Such outcomes could adversely affect the amount or timing of our revenue, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products. For example, on February 1, 2025, the U.S. government announced 10% tariffs on product imports from China.
As disclosed under Litigation in Note 15 - Commitments and Contingencies in our consolidated financial statements included in this Annual Report on Form 10-K, in 2023, we filed patent infringement complaints at the ITC and in U.S.
As disclosed under Litigation in Note 15 - Commitments and Contingencies to our consolidated financial statements included in this Annual Report on Form 10-K, we have filed patent infringement complaints with the U.S. International Trade Commission (“ITC”) and in U.S. District Courts against certain competitors.
A small number of customers have historically accounted for a material portion of our revenue. For the year ended December 31, 2024, our largest customer and five largest customers constituted approximately 24 Table of Contents 26.4% and 54.3% of total revenue, respectively.
A small number of customers have historically accounted for a material portion of our revenue. For the year ended December 31, 2025, our largest customer and five largest customers constituted approximately 19.1% and 53.7% of total revenue, respectively.
The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
These forum selection provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable, may discourage such lawsuits against us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers or employees, and could result in increased costs or delays associated with resolving such disputes.
Defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death, and in the past have, and in the future could, result in loss of customers, reputational damage and decreased revenue, and materially adversely impact our business, financial condition and results of operations.
Defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death, and in the past have, and in the future could, result in loss of customers, reputational damage and decreased revenue, and materially adversely impact our business, financial condition and results of operations. 13 Table of Contents EBOS components, including the wires related to the wire insulation shrinkback matter, whether manufactured by us or third party suppliers, are products and systems for which the consequences of failure are significant and can include, among other issues, equipment damage, fire damage, and even serious injury or death because of the high voltages involved and potential for fire.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternate forum, the federal district court for the District of Delaware will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws.
In addition, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the federal district court for the District of Delaware will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the federal securities laws.
Further, if tariffs increase significantly, we may be unable to source our required raw materials from alternative vendors due to increased demand, which could reduce or delay the supply of raw materials available to us.
Further, significant changes to trade policy may impact our ability to source our required raw materials from alternative vendors due to increased demand, which could reduce or delay the supply of raw materials available to us.
If we fail to recover the costs and expenses incurred by us in connection with the identification, repair and replacement of the defective Prysmian wire, our financial results, business and prospects could be materially adversely impacted. Our actual loss in this matter is uncertain and may have a material adverse effect on our business, financial condition and results of operations.
If we fail to recover the costs and expenses incurred by us 11 Table of Contents in connection with the identification, repair and replacement of the defective Prysmian wire, our financial results, business and prospects could be materially adversely impacted.
We note that there is uncertainty as to whether a court would enforce the choice of forum provision with respect to claims under the federal securities laws, and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Item 1B. Unresolved Staff Comments None.
It is uncertain whether a court would enforce this provision, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Item 1B. Unresolved Staff Comments None.
The successful assertion of a product liability claim against us, including those related to the wire installation shrinkback matter, could result in potentially significant monetary damages, penalties or fines; subject us to adverse publicity; damage our reputation and competitive position; and adversely affect sales of our products.
If one of our products, including those involved in the wire insulation shrinkback matter, causes injury or property damage, we could be exposed to product liability claims. The successful assertion of a product liability claim against us could result in significant monetary damages, penalties or fines, adverse publicity, reputational damage, loss of competitive position, and reduced sales of our products.
We do not control our vendors or suppliers or their business practices and our oversight of their actions is limited. Accordingly, we cannot guarantee that they follow quality control, ethical or other desired business practices.
Any of these developments could have a material adverse effect on our business, financial condition, and results of operations. 14 Table of Contents We do not control our vendors or suppliers or their business practices and our oversight of their actions is limited. Accordingly, we cannot guarantee that they follow quality control, ethical or other desired business practices.
It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions. 17 Table of Contents We have modified, and in the future may modify, our business strategy to abandon lines of business or implement new lines of business.
Given the global complexity of trade policy, it is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions.
We rely extensively on various information technology systems, including data centers, hardware, software and third-party applications to manage many aspects of our business, including to operate and provide our products and services, to process and record transactions, to enable effective communication systems, to track inventory flow, to manage logistics and to generate performance and financial reports.
We rely extensively on information technology systems, including data centers, hardware, software and third-party applications, to operate our business, manage logistics and inventory, process transactions, communicate internally and externally, and generate financial and operational reports.
A reduction in the availability of project debt capital in the global financial markets and government actions taken to reduce inflation make it difficult for end customers to finance the cost of a solar energy system and reduce the demand for our products.
In addition, a reduction in the availability of project debt capital or an increase in the cost of financing may make it more difficult for end customers to finance solar energy projects and could reduce demand for our products.
As previously disclosed, the Company was notified by certain customers that a subset of wire harnesses used in its EBOS solutions is presenting unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”).
As previously disclosed, the Company was notified by certain customers that a subset of wire harnesses used in its EBOS solutions presented unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”). Based upon the Company’s assessment, the Company currently believes the wire insulation shrinkback is related to defective wire manufactured by Prysmian Cables and Systems USA, LLC (“Prysmian”).
Based on the Company’s continued analysis of available information obtained throughout the remediation process, the Company determined that a potential range of loss was both probable and reasonably estimable and updated its estimate of potential losses during the quarter ended September 30, 2024 from previously provided estimates.
Based on the Company’s continued analysis of available information obtained throughout the remediation process, the Company determined that a potential loss was both probable and reasonably estimable and has continued to refine its assumptions based on additional information obtained throughout the remediation process.
Based on the Company’s continued analysis of information available as of the date of this Annual Report on Form 10-K, the estimate of potential losses remains unchanged from the estimate provided as of September 30, 2024.
Based on the Company’s continued analysis of information available as of the date of this Annual Report on Form 10-K, the estimate of potential losses is $73.0 million. The estimated liability is based on several assumptions.
Faults can result in lost production for customers, damage to the equipment, fire and injury or death depending on their severity and whether people are onsite. 18 Table of Contents Although we conduct quality assessments on our products and these products are manufactured according to stringent quality requirements, they may contain undetected errors or defects, especially when first introduced or when new generations are released.
Although we conduct quality assessments on our products and these products are manufactured according to stringent quality requirements, they may contain undetected errors or defects, especially when first introduced or when new generations are released.
Our failure to accurately estimate this liability could result in unexpected volatility to our Class A common stock and have a material adverse effect on our financial condition.
Additionally, changes to the planned remediation method and additional information about weather delays, site access, replacement scope, and vegetation management could also have a material impact on the warranty liability. Our failure to accurately estimate this liability could result in unexpected volatility to our Class A common stock and have a material adverse effect on our financial condition.
Trade restrictions could potentially increase the cost and reduce or delay the supply of raw materials available to us, and could adversely affect our business, financial condition and results of operations. The imposition of trade restrictions, import tariffs, anti-dumping and countervailing duties could adversely affect the amount or timing of our revenue, results of operations or cash flows.
We are subject to risks from changes to trade restrictions, import tariffs, anti-dumping and countervailing duties. Such changes could adversely affect the amount or timing of our revenue, results of operations or cash flows.
Any change in our processes could cause one or more production errors, requiring a temporary suspension or delay in our production line until the errors can be researched, identified and properly 19 Table of Contents addressed and rectified. This may occur particularly as we introduce new products, modify our engineering and production techniques, and/or expand our capacity.
Any vendor delay or disruption could cause a delay or disruption in our ability to meet customer requirements which may result in a loss of customers. Any change in our processes could cause one or more production errors, requiring a temporary suspension or delay in our production line until the errors can be researched, identified and properly addressed and rectified.
Similar to our other products, the defective wires associated with the wire insulation shrinkback matter expose us to potential product liability claims.
Our actual loss in this matter is uncertain and may have a material adverse effect on our business, financial condition and results of operations. Similar to our other products, the defective wires associated with the wire insulation shrinkback matter expose us to potential product liability claims.
High interest rates could lower an investor’s return on investment on a solar energy project, increase equity requirements or make alternative investments more attractive relative to solar energy projects and, in each case, could cause these end users to seek alternative investments.
Higher interest rates may also lower expected returns on solar energy investments, increase required equity contributions, or make alternative investments more attractive relative to solar energy projects, which could cause end users to delay, reduce or forego investment in solar projects.
In addition, product liability claims, injuries, defects or other problems experienced by other companies in the solar industry could lead to unfavorable market conditions for the industry as a whole and may have an adverse effect on our ability to attract new customers, thus harming our growth and financial performance.
In addition, product liability claims or defects involving other companies in the solar industry could negatively affect market perceptions of the industry , which may adversely affect our ability to attract new customers and harm our growth and financial performance.
In addition, our failure to maintain appropriate quality assurance processes could result in increased product failures, loss of customers, increased warranty reserve, increased production and logistics costs and delays. Any of these developments could have a material adverse effect on our business, financial condition, and results of operations.
This may occur particularly as we introduce new products, modify our engineering and production techniques, and/or expand our capacity. In addition, our failure to maintain appropriate quality assurance processes could result in increased product failures, loss of customers, increased warranty reserve, increased production and logistics costs and delays.
The revised estimated range is based on several assumptions, and as additional information becomes available, the Company may increase 14 Table of Contents or decrease its estimated warranty liability from its current estimate, and such increase or decrease may be material.
As additional information becomes available, which may include additional reports of wire insulation shrinkback at previously affected and reported solar projects or at projects not previously reported or otherwise identified, the Company may increase its estimated warranty liability from its current estimate, and such increase may be material.
See “Risk Factors - Defects or performance problems in our products or their parts, whether due to manufacturing, installation, or use, including those related to the wire insulation shrinkback matter, have a high consequence of failure and can lead to equipment and systems failure, physical injury or death, and in the past have, and in the future could, result in loss of customers, reputational damage and decreased revenue, and materially adversely impact our business, financial condition and results of operations.” The interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports.
For more information, see the risk factor below related to defects or performance problems in our products or their parts. The interruption of the flow of raw materials from international vendors has disrupted our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports.
We continue to navigate, monitor and evaluate our strategy to reduce the negative impact on our business of macroeconomic conditions, however, no assurance can be given that if economic conditions worsen, that our business, financial results and liquidity would not be materially adversely impacted.
While we continue to monitor and evaluate strategies to mitigate the impact of macroeconomic conditions, there can be no assurance that worsening economic conditions will not materially and adversely affect our business, financial condition, results of operations or liquidity. We are subject to risks related to our ability to protect, enforce, and defend our intellectual property.
Changes over the last few years in the international relations and tariff regimes between the U.S. and China in response to various political issues and heightened uncertainty regarding China-Taiwan relations could significantly adversely impact the availability of parts and components to us, and, correspondingly, our 15 Table of Contents ability to produce our components at targeted levels.
We source certain raw materials used to manufacture our components and system solutions from vendors outside the United States. Ongoing changes in international relations and tariff regimes, particularly between the U.S. and China, as well as uncertainty regarding China-Taiwan relations could adversely impact the availability and cost of components and our ability to produce our components at targeted levels.
Given our concentration in solar energy, if demand for solar energy and solar energy projects continues to decline and solar projects continue to be delayed, demand for our products will continue to decrease, and our financial results, business and prospects could be materially adversely impacted .
If demand for solar energy projects remains weak or projects continue to be delayed, and if our product offering expansion efforts do not develop as expected or on anticipated timelines, demand for our products could decline, which could materially adversely affect our business, financial condition, results of operations and prospects.
Our future performance will depend, in part, on the successful development, introduction and deployment of these new power consuming facilities, including market acceptance of artificial intelligence.
There is no assurance that such opportunities, or our ability to benefit from them, will materialize. Our future performance depends in part on the pace and scale of development of new power-consuming facilities, including data centers, and on market acceptance of emerging technologies such as artificial intelligence.
If we fail to retain our key personnel and attract additional qualified personnel, our business strategy and prospects could suffer.
As a result, supply disruptions or vendor issues may not be readily mitigated and could have a material adverse effect on our business, financial condition, and results of operations. If we fail to retain our key personnel and attract additional qualified personnel, our business strategy and prospects could suffer.
If we are unsuccessful with respect to the patent infringement complaints against Hikam and Voltage, our patents or other intellectual property could be at risk of being invalidated or interpreted such that the alleged infringing products may continue to be imported and sold in the U.S.
These proceedings are costly and uncertain and place our asserted patents and other intellectual property at risk of being invalidated or interpreted in a manner that permits competing products to be imported and sold in the United States. If we are unsuccessful, we could lose revenue and face increased competition from the defendants or other third parties.
Even though certain government subsidies and economic incentives are currently in place to encourage the adoption of solar energy, there is no guarantee that such incentives will remain in place and many end users still depend on financing to fund the initial capital expenditure required to construct a solar energy project.
While government subsidies and economic incentives currently support the adoption of solar energy, there is no assurance that such incentives will remain in place, be extended or be available on favorable terms.
We cannot guarantee that any of our pending patent applications or other applications for intellectual property registrations will be issued or granted or that our existing and future intellectual property rights will be sufficiently broad to protect our proprietary technology.
We have applied for patents in the U.S. and abroad, some of which have been issued, but we cannot guarantee that pending patent or other intellectual property registration applications will be granted, that our intellectual property rights will be sufficiently broad, or that our issued patents, trademarks or trade names will not be opposed, contested, challenged, invalidated, circumvented, or rendered unenforceable.
As a result, these assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial unanticipated expense to repair or replace defective products in the future or to compensate customers for defective products.
If these assumptions prove inaccurate, we may incur substantial unanticipated expenses to repair or replace defective products or to compensate customers for defective products, which could materially and adversely affect our financial condition and results of operations.
The implementation of these proposed tariffs, any future increases in existing tariff rates, additional tariffs on other goods, or further retaliatory actions from other governments may result in higher costs for us, and there can be no assurance we will be able to pass on any of the increases in raw material costs directly resulting from the tariffs to our customers.
Changes in trade policy, including retaliatory actions from governments, may result in higher costs, and we may not be able to pass such resulting increases in raw material costs to our customers.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. Failure of our information technology systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations.
Failure of our information technology systems, including those managed by third parties, or cybersecurity incidents could disrupt our operations and adversely affect our results of operations.
Item 1A. Risk Factors Summary Risk Factors The following is a summary of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations.
Item 1A. Risk Factors You should carefully consider the following discussion of significant factors, events and uncertainties in evaluating our business and the forward-looking statements contained in this Annual Report on Form 10-K. The risks described below could materially and adversely affect our business, operating results, liquidity and financial condition.
We have been and expect to continue to be the target of fraudulent calls, emails and other forms of cyberattacks and have experienced certain immaterial cybersecurity incidents.
We have been, and expect to continue to be, the target of fraudulent communications and other cyber threats, and we have experienced immaterial cybersecurity incidents. Although we maintain cybersecurity safeguards and cyber liability insurance, these measures may not be sufficient to prevent or fully mitigate all incidents or losses, and insurance coverage may be unavailable or insufficient.
Our warranty accruals are based on our assumptions and we do not have a long history of making such assumptions.
While we accrue reserves for warranty claims, our warranty accruals are based on assumptions regarding future product performance, and we have limited historical experience making such assumptions for certain products.
We may face difficulties with respect to the planned consolidation and relocation of our Tennessee-based manufacturing and distribution operations, and may not realize the benefits thereof.
We may face difficulties integrating and optimizing our consolidated Tennessee-based manufacturing and distribution operations and may not fully realize the anticipated benefits. In 2024, we announced plans for significant capital investment to expand and consolidate our Tennessee-based manufacturing and distribution operations at a new facility in Portland, Tennessee.
Additionally, existing or future tariffs or other trade restrictions may negatively affect key customers, suppliers, and manufacturing partners.
Further, actions we take to adapt to new tariffs or trade restrictions may negatively affect key customers, suppliers, and manufacturing partners and cause us to modify our operations, forgo potential business opportunities, or lose awarded business opportunities.
The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased as well.
The risk of cyberattacks and intrusions has increased as the number, sophistication and intensity of such incidents continue to grow, including those perpetrated by organized crime groups and nation-state actors, and as a result of increased capabilities of artificial intelligence.
In addition, there can be no assurance that we will be able to establish our planned consolidated facility within the planned timeline, or at all. The expense and time required to bring this facility online and to assure that our products manufactured at such facility comply with our quality standards could be greater than currently anticipated.
In addition, the time and expense required to stabilize operations and achieve anticipated efficiencies and cost savings may be greater than expected, and there can be no assurance that the anticipated benefits of the consolidation will be fully realized, or realized within expected timeframes.
Additional actions may be taken by third parties, e.g., at the U.S. Patent and Trademark Office that may prevent our patent applications or trademark applications from issuing. Acquisitions, joint ventures and/or investments and the failure to integrate acquired businesses, could disrupt our business and negatively impact our results of operations.
Any inability to protect, enforce or defend our intellectual property, or the incurrence of significant costs in doing so, could materially adversely affect our business, financial condition and results of operations. Acquisitions, joint ventures and/or investments and the failure to integrate acquired businesses, could disrupt our business and negatively impact our results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, we leverage cybersecurity specialists to complete annual external audits and objective assessments of our cybersecurity program and practices, including our data protection practices, as well as to conduct targeted attack simulations. We have also purchased network security and cyber liability insurance in order to provide a level of financial protection, should a data breach occur.
Biggest changeThe Company conducts annual internal security audits and vulnerability assessments of the Company’s information systems and related controls, including systems that process or store personal data. In addition, we leverage third party cybersecurity specialists to conduct annual external audits and assessments of our cybersecurity program and practices, including our data protection practices, as well as to conduct targeted cyber-attack simulations.
In 2024, we continued the development of our enterprise risk program, which integrates cybersecurity. Our cybersecurity processes include technical security controls, policy enforcement mechanisms, monitoring systems, tools and related services from third-party providers, and management oversight to assess, identify and manage risks from cybersecurity threats.
In 2025, we continued the development of our enterprise risk program, which integrates cybersecurity. Our cybersecurity processes include technical security controls, policy enforcement mechanisms, monitoring systems, tools and related services from third-party providers, and management oversight to assess, identify and manage risks from cybersecurity threats.
Our Vice President of IT leads our dedicated Information Technology team (“IT team”), which executes on our data privacy and information security programs and policies, and our Cyber Incident Response Team (“IRT”), which executes on our incident response procedures in the event of a data privacy or security event and conducts annual exercises simulating cybersecurity and data breach incidents.
Our Vice President of IT leads our dedicated Information Technology team (“IT team”), which executes our data privacy and information security programs and policies, and our Cyber Incident Response Team (“IRT”), which executes our incident response procedures in the event of a data privacy or security event and conducts annual exercises simulating cybersecurity incidents.
Item 1C. Cybersecurity Risk Management and Strategy 31 Table of Contents Our cybersecurity strategy focuses on striking a balance between data barriers and access, and promoting vigilance among our employees, contractors, and business partners. We monitor and implement procedures, policies, and activities designed to manage our data and to maintain a high level of privacy and security within our systems.
Item 1C. Cybersecurity Risk Management and Strategy Our cybersecurity strategy focuses on striking a balance between data barriers and access, and promoting vigilance among our employees, contractors, and business partners. We monitor and implement procedures, policies, and activities designed to manage our data and to maintain a high level of privacy and security within our systems.
“Risk Factors—The unauthorized access to our information technology systems or the disclosure of personal or sensitive data or confidential information, whether through a breach of our computer system or otherwise, could severely disrupt our business or reduce our sales or profitability” and “Failure of our information technology systems, including 32 Table of Contents those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations.” Governance Our board of directors reviews our management of cybersecurity risks, and our Audit Committee has been delegated primary oversight of such risks and the steps our management has taken and takes to monitor and control these exposures.
“Risk Factors—The unauthorized access to our information technology systems or the disclosure of personal or sensitive data or confidential information, whether through a breach of our computer system or otherwise, could severely disrupt our business or reduce our sales or profitability” and “Failure of our information technology systems, including those managed by third parties, whether intentional or inadvertent, could lead to delays in our business operations and, if significant or extreme, affect our results of operations.” Governance Our board of directors reviews our management of cybersecurity risks, and has delegated to our Audit Committee primary oversight of such risks and the steps our management takes to monitor and control these risks.
The IRT is comprised of internal members from the finance, legal, human resources, and operations departments, as well as external cybersecurity vendors and advisors. The members of our IRT understand the complexities of our business and are experienced in the financial, legal, regulatory and operational consequences of a cybersecurity incident or threat to the Company.
The IRT is comprised of internal members from the finance, legal, human resources, and operations departments, and are assisted by external cybersecurity vendors and advisors. The members of our IRT understand the complexities of our business and are 25 Table of Contents experienced in the financial, legal, regulatory and operational consequences of a cybersecurity incident or threat to the Company.
Our Audit Committee also receives regular briefings on cybersecurity matters, including cybersecurity threats and receives details on any significant cybersecurity incidents.
Our Audit Committee also receives regular reports about cybersecurity matters, including cybersecurity threats, and it receives details about any significant cybersecurity incidents.
Our data privacy and security program is overseen by our Vice President of IT, who presents to the Board on an annual basis. Starting in 2024, our Board receives quarterly briefings on cybersecurity matters and the Company’s efforts to prevent, detect, mitigate, and remediate cybersecurity risks.
Our data privacy and security program is overseen by our Vice President of Information Technology (“IT”), who reports to the Board on an annual basis about cybersecurity risks. Our Board also receives quarterly reports about cybersecurity matters and the Company’s efforts to prevent, detect, mitigate, and remediate cybersecurity risks.
Under this assessment process, we gather information from certain third parties who contract with us and share or receive data, to help us assess potential risks associated with their security controls.
In addition, we maintain specific policies and practices governing our third-party security risks, including our third-party assessment process. Under this assessment process, we gather information from certain third parties who contract with us and share or receive personal identifying and confidential information, to help us assess potential risks associated with their security controls.
However, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In 2024, we did not experience any material cybersecurity incident. However, future incidents could have a material impact on our business strategy, results of operations, or financial condition.
We have obtained cybersecurity liability insurance, however, such insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, or at all. In 2025, we did not experience, and are not reasonably likely to have experience, a material cybersecurity incident.
Our program includes a defense-in-depth approach with multiple layers of security controls, including network segmentation, security monitoring, endpoint protection, and identity and access management, as well as data protection best practices and data loss prevention controls.
Our program includes a defense-in-depth approach with multiple layers of security controls, including network segmentation, security monitoring, endpoint protection, and identity and access management, as well as data protection leading practices and data loss prevention controls. 24 Table of Contents Through our cybersecurity program, we continuously monitor cybersecurity vulnerabilities and potential attack vectors, and we evaluate the potential adverse operational and financial effects of a cybersecurity incident.
We also generally require third parties to, among other things, maintain security controls to protect our confidential information and data, and notify us of material data breaches that may impact our data. We assess the risks from cybersecurity threats that impact select third-party service providers with whom we share personal identifying and confidential information.
We also generally require third parties to, among other things, maintain security controls to protect our confidential information and data, the confidential information of our customers, and to notify us of data incidents that may impact our data or data of our customers.
We implemented risk-based controls to protect our information, the information of our customers and other third parties, our information systems, our business operations, and our products and related services. We have an information security risk program structured according to the National Institute of Standards and Technology Cybersecurity Framework, industry best practices, privacy legislation, and other standards and regulations.
We have implemented risk-based controls to protect our information, the information of our customers and other third parties, our information systems, our business operations, and our products and related services.
Our cybersecurity awareness program includes regular phishing simulations, and quarterly general cybersecurity awareness and data protection modules for all employees with network access, as well as more contextual and personalized modules for targeted users and roles. We complete annual internal security audits and vulnerability assessments of the Company's information systems and related controls, including systems affecting personal data.
Our cybersecurity awareness program includes regular phishing simulations, and quarterly general cybersecurity awareness and data protection training modules for all employees with network access,as well as more contextual and personalized training modules for applicable users and roles.
We continue to evolve our oversight processes to mature how we identify and manage cybersecurity risks associated with the services we procure from such third parties.
We assess the risks from cybersecurity threats that impact select third-party service providers with whom we share personal identifying and confidential information. We continue to enhance our oversight processes for how we identify and manage cybersecurity risks associated with the services we procure from such third parties.
For additional discussion of the risks posed by cybersecurity threats, see Item 1A.
However, future incidents could have a material impact on our business strategy, results of operations, or financial condition. For additional discussion of the risks posed by cybersecurity threats, see Item 1A.
Removed
Through our cybersecurity program, we continuously monitor cybersecurity vulnerabilities and potential attack vectors and evaluate the potential operational and financial effects of any threat and of cybersecurity risk countermeasures made to defend against such threats. In addition, we maintain specific policies and practices governing our third-party security risks, including our third-party assessment process.
Added
We have an information security risk program that is designed based on the National Institute of Standards and Technology Cybersecurity Framework, industry leading practices, privacy laws and regulations, and other applicable standards and regulations.
Removed
The IT team is led by Shoals’ Vice President of IT, Gerald Jowers, who joined in 2024 with 30 years of technology experience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The table below describes the material facilities owned or leased by Shoals Technologies Group, Inc. as of February 2025: Location Status Approximate Square Feet Uses 1400 Shoals Way, Portland, TN Owned 103,200 Office, manufacturing, warehousing and shipping 1035 Fred White Blvd., Portland, TN Owned 75,360 Office, warehousing and shipping 109 Kirby Drive, Portland, TN Leased 219,767 Office, manufacturing, warehousing and shipping 215 Industrial Drive, Muscle Shoals, AL Owned 16,910 Office, manufacturing, warehousing and shipping 1500 Shoals Way, Portland, TN Leased 638,330 Office, manufacturing, warehousing and shipping We believe that our existing properties are in good condition and are sufficient and suitable for the conduct of our business for the foreseeable future.
Biggest changeProperties The table below describes the material facilities owned or leased by Shoals Technologies Group, Inc. as of February 2026: Location Status Approximate Square Feet Uses 1400 Shoals Way, Portland, TN Owned 103,200 Office, manufacturing, warehousing and shipping 215 Industrial Drive, Muscle Shoals, AL Owned 16,910 Office, manufacturing, warehousing and shipping 109 Kirby Drive, Portland, TN Leased 219,767 Office, manufacturing, warehousing and shipping 1500 Shoals Way, Portland, TN Leased 638,330 Office, manufacturing, warehousing and shipping We believe that our existing properties are in good condition and are sufficient and suitable for the conduct of our business for the foreseeable future.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, the results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of litigation. 33 Table of Contents Item 4. Mine Safety Disclosures Not applicable. PART II
Biggest changeHowever, the results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, we may incur significant costs and experience a diversion of management resources as a result of litigation. Item 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of February 21, 2025, there were no shares of Class B common stock outstanding, and therefore, no registered account holders thereof. Dividend Policy We currently intend to retain all available funds and any future earnings for use in the operation of our business and therefore we do not currently expect to pay any cash dividends.
Biggest changeAs of February 19, 2026, there were no shares of Class B common stock outstanding, and therefore, no registered account holders thereof. Dividend Policy 26 Table of Contents We currently intend to retain all available funds and any future earnings for use in the operation of our business and therefore we do not currently expect to pay any cash dividends.
Recent Sales of Unregistered Equity Securities There were no unregistered sales of equity securities during the year ended December 31, 2024 that have not been previously reported in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K. Use of Proceeds from Registered Securities Not applicable.
Recent Sales of Unregistered Equity Securities There were no unregistered sales of equity securities during the year ended December 31, 2025 that have not been previously reported in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K. Use of Proceeds from Registered Securities Not applicable.
Holders of Record As of February 21, 2025, there were four registered account holders of our Class A common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers.
Holders of Record As of February 19, 2026, there were four registered account holders of our Class A common stock. The number of record holders does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYou should review the reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage, net income to Adjusted EBITDA, and net income attributable to Shoals Technologies Group, Inc. to Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business. 42 Table of Contents Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands): Year Ended December 31, 2024 2023 2022 Revenue $ 399,208 $ 488,939 $ 326,940 Cost of revenue 257,191 320,635 195,629 Gross profit $ 142,017 $ 168,304 $ 131,311 Gross profit percentage 35.6% 34.4% 40.2% Wire insulation shrinkback expenses (a) $ 13,764 $ 61,705 $ — Adjusted gross profit $ 155,781 $ 230,009 $ 131,311 Adjusted gross profit percentage 39.0% 47.0% 40.2% Reconciliation of Net Income to Adjusted EBITDA (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 24,127 $ 42,661 $ 143,013 Interest expense 13,827 24,100 18,538 Interest income (518) — — Income tax expense 13,736 12,274 8,987 Depreciation expense 5,007 2,612 1,858 Amortization of intangibles 7,619 7,917 8,651 Payable pursuant to the TRA adjustment (c) — — 6,675 Gain on termination of TRA — — (110,883) Equity-based compensation 14,230 20,862 16,108 Acquisition-related expenses — — 42 Wire insulation shrinkback expenses (a) 13,764 61,705 — Wire insulation shrinkback litigation expenses (b) 7,292 1,260 — Adjusted EBITDA $ 99,084 $ 173,391 $ 92,989 43 Table of Contents Reconciliation of Net Income Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands): Year Ended December 31, 2024 2023 2022 Net income attributable to Shoals Technologies Group, Inc. $ 24,127 $ 39,974 $ 127,611 Net income impact from assumed exchange of Class B common stock to Class A common stock (d) — 2,687 15,402 Adjustment to the provision for income tax (e) — (653) (3,726) Tax effected net income 24,127 42,008 139,287 Amortization of intangibles 7,619 7,917 8,651 Amortization / write-off of deferred financing costs 3,093 2,165 1,365 Payable pursuant to the TRA adjustment (c) — — 6,675 Gain on termination of TRA — — (110,883) Equity-based compensation 14,230 20,862 16,108 Acquisition-related expenses — — 42 Wire insulation shrinkback expenses (a) 13,764 61,705 — Wire insulation shrinkback litigation expenses (b) 7,292 1,260 — Tax impact of adjustments (f) (11,591) (24,604) 1,158 Adjusted Net Income $ 58,534 $ 111,313 $ 62,403 (a) For the year ended December 31, 2024 represents (i) $13.3 million of wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, and (ii) $0.5 million of inventory write-downs of wire in connection with wire insulation shrinkback.
Biggest changeReconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands): Year Ended December 31, 2025 2024 2023 Revenue $ 475,331 $ 399,208 $ 488,939 Cost of revenue 308,823 257,191 320,635 Gross profit $ 166,508 $ 142,017 $ 168,304 Gross profit percentage 35.0% 35.6% 34.4% Wire insulation shrinkback expenses (a) $ — $ 13,764 $ 61,705 Adjusted gross profit $ 166,508 $ 155,781 $ 230,009 Adjusted gross profit percentage 35.0% 39.0% 47.0% Reconciliation of Net Income to Adjusted EBITDA (in thousands): Year Ended December 31, 2025 2024 2023 Net income $ 33,574 $ 24,127 $ 42,661 Interest expense 9,994 13,827 24,100 Interest income (305) (518) — Income tax expense 14,944 13,736 12,274 Depreciation expense 6,233 5,007 2,612 Amortization of intangibles 7,611 7,619 7,917 Equity-based compensation 9,902 14,230 20,862 Gain on sale of assets (1,835) — — Wire insulation shrinkback expenses (a) — 13,764 61,705 Wire insulation shrinkback litigation expenses (b) 18,342 7,292 1,260 Plant optimization expenses (c) 1,063 — — Adjusted EBITDA $ 99,523 $ 99,084 $ 173,391 36 Table of Contents Reconciliation of Net Income Attributable to Shoals Technologies Group, Inc. to Adjusted Net Income (in thousands): Year Ended December 31, 2025 2024 2023 Net income attributable to Shoals Technologies Group, Inc. $ 33,574 $ 24,127 $ 39,974 Net income impact from assumed exchange of Class B common stock to Class A common stock (d) — — 2,687 Adjustment to the provision for income tax (e) — — (653) Tax effected net income 33,574 24,127 42,008 Amortization of intangibles 7,611 7,619 7,917 Amortization / write-off of deferred financing costs 622 3,093 2,165 Equity-based compensation 9,902 14,230 20,862 Gain on sale of asset (1,835) — — Wire insulation shrinkback expenses (a) — 13,764 61,705 Wire insulation shrinkback litigation expenses (b) 18,342 7,292 1,260 Plant optimization expenses (c) 1,063 — — Tax impact of adjustments (f) (8,712) (11,591) (24,604) Adjusted Net Income $ 60,567 $ 58,534 $ 111,313 (a) For the year ended December 31, 2025 represents no wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, nor any inventory write-downs of wire in connection with wire insulation shrinkback.
General and Administrative Expenses General and administrative expenses consist primarily of salaries, equity-based compensation expense, employee benefits and payroll taxes related to our executives, and our sales, finance, human resources, information technology, engineering and legal organizations, travel expenses, facilities costs, marketing expenses, insurance, bad debt expense and fees for professional services.
General and Administrative Expenses General and administrative expenses consist primarily of legal and professional fees, salaries, equity-based compensation expense, employee benefits and payroll taxes related to our executives, and our sales, finance, human resources, information technology, engineering and legal organizations, travel expenses, facilities costs, marketing expenses, insurance, bad debt expense and fees for professional services.
Financing Activities For the year ended December 31, 2024, net cash used in financing activities was $71.2 million, due to $2.6 million used to pay deferred financing costs, $25.3 million used for the repurchase of Class A common stock, $143.8 million in payments on the Term Loan, and $148.8 million in proceeds on the Revolving Credit Facility, offset by $47.0 million in payments made to the same facility.
For the year ended December 31, 2024, net cash used in financing activities was $71.2 million, due to $2.6 million used to pay deferred financing costs, $25.3 million used for the repurchase of Class A common stock, $143.8 million in payments on the Term Loan, and $148.8 million in proceeds on the Revolving Credit Facility, offset by $47.0 million in payments made to the same facility.
Federal income tax rate 21.0 % 21.0 % 21.0 % Permanent adjustments 1.3 % 1.9 % 0.2 % State and local taxes (net of federal benefit) 2.9 % 3.3 % 3.0 % Effective income tax rate for Adjusted Net Income 25.2 % 26.2 % 24.2 % (f) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.
Federal income tax rate 21.0 % 21.0 % 21.0 % Permanent adjustments 1.1 % 1.3 % 1.9 % State and local taxes (net of federal benefit) 2.3 % 2.9 % 3.3 % Effective income tax rate for Adjusted Net Income 24.4 % 25.2 % 26.2 % (f) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.
The implementation of these proposed tariffs, any future increases in existing tariff rates, additional tariffs on other goods, or further retaliatory actions from other governments may result in higher costs for us, and there can be no assurance we will be able to pass on any of the increases in raw material costs directly resulting from the tariffs to our customers.
The implementation of these proposed tariffs, any future increases in existing tariff rates, additional tariffs on other goods, or further retaliatory actions from other governments, or the threat thereof, may result in higher costs for us, and there can be no assurance we will be able to pass on any of the increases in raw material costs directly resulting from the tariffs to our customers.
Based upon the Company’s ongoing assessment, the Company currently believes the wire insulation shrinkback is related to defective wire manufactured by Prysmian Cables and Systems USA, LLC (“Prysmian”). Based on the Company’s continued analysis of information available as of the date of this Annual Report, the Company determined that a potential range of loss was both probable and reasonably estimable.
Based upon the Company’s assessment, the Company currently believes the wire insulation shrinkback is related to defective wire manufactured by Prysmian Cables and Systems USA, LLC (“Prysmian”). Based on the Company’s continued analysis of information available as of the date of this Annual Report, the Company determined that a potential loss was both probable and reasonably estimable.
Management’s discussion and analysis relating to the fiscal year ended December 31, 2023 and the applicable year-to-year comparisons to the fiscal year ended December 31, 2022 are not included in this Annual Report on Form 10-K but can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Management’s discussion and analysis relating to the fiscal year ended December 31, 2024 and the applicable year-to-year comparisons to the fiscal year ended December 31, 2023 are not included in this Annual Report on Form 10-K but can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
Trade Regulation and Import Tariffs Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate. Particularly, our exports and imports are subject to complex trade and customs laws, tax requirements and tariffs set by governments through mutual agreements or unilateral actions.
Trends and Uncertainties Trade Regulation and Import Tariffs Our business activities are subject to numerous laws and regulations in the jurisdictions in which we operate. Particularly, our exports and imports are subject to complex trade and customs laws, tax requirements and tariffs set by governments through mutual agreements or unilateral actions.
A discussion and analysis covering historical cash flows for the year ended December 31, 2022 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
A discussion and analysis covering historical cash flows for the year ended December 31, 2023 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Cost of Revenue and Gross Profit Cost of revenue consists primarily of system solutions and components costs, including purchased raw materials, as well as costs related to shipping, customer support, product warranty, personnel and depreciation of manufacturing and testing equipment.
Cost of Revenue and Gross Profit Cost of revenue consists primarily of system solutions and components costs, including purchased raw materials, as well as costs related to importing and tariffs, shipping, customer support, product warranty, personnel and depreciation of manufacturing and testing equipment.
We believe that the 47 Table of Contents accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as 40 Table of Contents these policies relate to the more significant areas involving management’s judgments and estimates.
Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in ASC 450, Contingencies, and has not been considered in our estimate of the warranty liability as of December 31, 2024.
Because the lawsuit against Prysmian is ongoing, potential recovery from Prysmian is not considered probable as defined in ASC 450, Contingencies , and has not been considered in our estimate of the warranty liability as of December 31, 2025.
Some of these costs, primarily indirect personnel and depreciation of manufacturing and testing equipment, are not directly affected by sales volume. Gross profit may vary from 38 Table of Contents year to year and is primarily affected by our sales volume, product prices, product costs, product mix, customer mix, geographical mix, shipping method and warranty expense.
Some of these costs, primarily indirect personnel and depreciation of manufacturing and testing equipment, are not directly affected by sales volume. Gross profit may vary from year to year and is primarily affected by our sales volume, product prices, product costs, product mix, customer mix, geographical mix, shipping method and warranty expense.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated financial statements and the related notes and 34 Table of Contents other financial information included in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with our consolidated financial statements and the related notes and other financial information included in this Annual Report on Form 10-K.
See Note 8 - Warranty Liability, in our consolidated financial statements included in this Annual Report on Form 10-K for more information. (b) For the year ended December 31, 2024, represents $7.3 million of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire.
See Note 8 - Warranty Liability, in our consolidated financial statements included in this Annual Report on Form 10-K for more information. (b) For the year ended December 31, 2025, represents $18.3 million of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire.
Results of Operations Set forth below is a comparison of the results of operations and changes in financial condition for the years ended December 31, 2024 and 2023.
Results of Operations Set forth below is a comparison of the results of operations and changes in financial condition for the years ended December 31, 2025 and 2024.
Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt (“MW”) or greater (“utility-scale solar”). These EPCs work with owners and developers of solar assets to build solar energy projects.
Specifically, we primarily sold to engineering, procurement and construction firms (“EPCs”) for use in large solar and BESS projects designed to generate electricity and feed it directly into the electric grid, typically with a generation capacity of 1 megawatt or greater. These EPCs work with owners and developers of solar assets to build energy infrastructure projects.
Our revenue growth is dependent on continued growth in the amount of solar energy projects constructed each year and our ability to increase our share of demand in the geographies where we currently compete and plan to compete in the future, as well as our ability to continue to develop and commercialize new and innovative products that address the changing technology and performance requirements of our customers.
Our revenue growth is dependent on continued growth in the amount of projects to support energy infrastructure constructed each year and our ability to increase our share of demand in the geographies where we currently compete and plan to compete in the future, as well as our ability to continue to develop and 31 Table of Contents commercialize new and innovative products that address the changing technology and performance requirements of our customers.
The number of full-time employees in our general and administrative departments increased from 149 to 185 from December 31, 2023 to December 31, 2024, and we expect to hire new employees in the future to support our growth.
The number of full-time employees in our general and administrative departments increased from 185 to 199 from December 31, 2024 to December 31, 2025, and we expect to hire new employees in the future to support our growth.
We do not intend Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to be substitutes for any GAAP financial information.
We do not intend Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, 27 Table of Contents Adjusted Net Income, and Adjusted Diluted Earnings per Share to be substitutes for any GAAP financial information.
The estimated range, as revised, continues to be based on several assumptions, including the potential magnitude of engineering, procurement and construction firm’s labor cost to identify and perform the repair and replacement of impacted harnesses, estimated failure rates, materials replacement cost, planned remediation method, inspection costs, and other various assumptions.
The estimated loss, as revised, continues to be based on several assumptions, including estimated failure rates, future notification of impacted harnesses, the potential magnitude of engineering, procurement and construction firm’s labor cost to identify and perform the repair and replacement of impacted harnesses, materials replacement cost, planned remediation method, and inspection costs.
If revenue were recognized at a point in time rather than over time, then for the year ended December 31, 2024, net income would be $9.7 million higher, and EPS - basic and diluted would increase by $0.05. In certain instances the promised goods do have an alternative use.
If revenue were recognized at a point in time rather than over time, then for the year ended December 31, 2025, net income would be $0.4 million higher, and EPS - basic and diluted would increase by $0.01. In certain instances the promised goods do have an alternative use.
For the year ended December 31, 2023, represents $1.3 million of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire.
For the year ended December 31, 2024, represents $7.3 million of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire.
In 2024, we also used approximately $28.6 million of cash to pay for expenses related to the identification, repair and replacement of the wire harnesses impacted in connection with the wire insulation shrinkback matter. We expect to continue spending significant amounts of cash in connection thereof.
In 2025, we also used approximately $41.0 million of cash to pay for expenses related to the identification, repair and replacement of the wire harnesses impacted in connection with the wire insulation shrinkback matter. We expect to continue spending significant amounts of cash in connection thereof.
We define Adjusted Net Income as net income attributable to Shoals Technologies Group, Inc. plus (i) net income impact from assumed exchange of Class B common stock to Class A common stock as of the beginning of the earliest period presented, (ii) adjustment to the provision for income tax, (iii) amortization of intangibles, (iv) amortization / write-off of deferred financing costs, (v) payable pursuant to the TRA adjustment, (vi) gain on termination of the TRA, (vii) equity-based compensation, (viii) acquisition-related expenses, (ix) wire insulation shrinkback expenses, and (x) wire insulation shrinkback litigation expenses, all net of applicable income taxes.
We define Adjusted Net Income as net income attributable to Shoals Technologies Group, Inc. plus (i) net income impact from assumed exchange of Class B common stock to Class A common stock as of the beginning of the earliest period presented, (ii) adjustment to the provision for income tax, (iii) amortization of intangibles, (iv) amortization / write-off of deferred financing costs, (v) equity-based compensation, (vi) gain/loss on sale of assets, (vii) wire insulation shrinkback expenses, (viii) wire insulation shrinkback litigation expenses, and (ix) plant optimization expenses, all net of applicable income taxes.
The Company recorded total warranty expense related to this matter of $13.3 million, $59.2 million, and $0.5 million, respectively, during years ended December 31, 2024, 2023 and 2022.
The Company recorded total warranty expense related to this matter of zero, $13.3 million, and $59.2 million respectively, during the years ended December 31, 2025, 2024 and 2023.
Over the past few years, escalating trade tensions between the United States and China led to increased tariffs and trade restrictions, including tariffs applicable to some of our products.
Beyond the most recent tariffs, over the past few years, escalating trade tensions between the United States and China and other jurisdictions led to increased tariffs and trade restrictions, including tariffs applicable to some of our products.
Such increase or decrease may be material. The Company does not maintain insurance for product warranty issues and has commenced a lawsuit against Prysmian, as discussed in more detail under Wire Insulation Shrinkback Litigation section of Note 15 - Commitments and Contingencies.
The Company does not maintain insurance for product warranty issues and has commenced a lawsuit against Prysmian, as discussed in more detail under Wire Insulation Shrinkback Litigation section of Note 15 - Commitments and Contingencies.
We generated cash from operating activities of $80.4 million during the year ended December 31, 2024, as compared to cash provided by operating activities of $92.0 million and $39.5 million, respectively, during the years ended December 31, 2023 and 2022.
We generated cash from operating activities of $17.1 million during the year ended December 31, 2025, as compared to cash provided by operating activities of $80.4 million and $92.0 million, respectively, during the years ended December 31, 2024 and 2023.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share amounts): Year Ended December 31, 2024 2023 2022 Diluted weighted average shares of Class A common stock outstanding, excluding Class B common stock 168,725 164,504 114,803 Assumed exchange of Class B common stock to Class A common stock — 5,698 52,828 Adjusted diluted weighted average shares outstanding 168,725 170,202 167,631 Adjusted Net Income $ 58,534 $ 111,313 $ 62,403 Adjusted Diluted EPS $ 0.35 $ 0.65 $ 0.37 Liquidity and Capital Resources We finance our operations primarily with operating cash flows and borrowings from our Revolving Credit Facility.
Reconciliation of Diluted Weighted Average Shares Outstanding to Adjusted Diluted Weighted Average Shares Outstanding (in thousands, except per share amounts): Year Ended December 31, 2025 2024 2023 Diluted weighted average shares of Class A common stock outstanding, excluding Class B common stock 168,378 168,725 164,504 Assumed exchange of Class B common stock to Class A common stock — — 5,698 Adjusted diluted weighted average shares outstanding 168,378 168,725 170,202 Adjusted Net Income $ 60,567 $ 58,534 $ 111,313 Adjusted Diluted EPS $ 0.36 $ 0.35 $ 0.65 Liquidity and Capital Resources We finance our operations primarily with operating cash flows and borrowings from our Revolving Credit Facility.
The price and volume of our system solutions and components is driven by the demand for our solar system solutions and components, volume based discounts and rebate incentives, changes in product mix between homerun and plug-and-play EBOS, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.
The price and volume of our system solutions and components is driven by the demand for our energy infrastructure system solutions and components, volume based discounts and rebate incentives, changes in product mix, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.
These inflows were offset by $9.8 million in cash outflows related to other assets, $5.8 million for the purchase of inventory, $5.6 46 Table of Contents million of accounts payable and accrued expenses and other, along with cash outflows of $29.1 million and $3.5 million of warranty liability and deferred revenue, respectively.
Other cash inflows included $48.2 million of accounts receivable and unbilled receivables. These inflows were offset by $9.8 million in cash outflows related to other assets, $5.8 million for the purchase of inventory, $5.6 million of accounts payable and accrued expenses and other, along with cash outflows of $29.1 million and $3.5 million of warranty liability and deferred revenue, respectively.
Gross profit as a percentage of revenue was 35.6% for the year ended December 31, 2024 as compared to 34.4% for the year ended December 31, 2023.
Gross profit as a percentage of revenue was 35.0% for the year ended December 31, 2025 as compared to 35.6% for the year ended December 31, 2024.
Investing Activities For the year ended December 31, 2024, net cash used in investing activities was $8.4 million, which was attributable to the purchase of property and equipment. For the year ended December 31, 2023, net cash used in investing activities was $10.8 million, of which $10.6 million was attributable to the purchase of property and equipment.
Investing Activities For the year ended December 31, 2025, net cash used in investing activities was $28.0 million, which was attributable to the purchase and sale of property and equipment. For the year ended December 31, 2024, net cash used in investing activities was $8.4 million, which was attributable to the purchase of property and equipment.
For the year ended December 31, 2023 represents, (i) $59.1 million wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, and (ii) $2.6 million of inventory write-downs of wire in connection with wire insulation shrinkback.
For the year ended December 31, 2024 represents (i) $13.3 million of wire insulation shrinkback warranty expenses related to the identification, repair and replacement of a subset of wire harnesses presenting unacceptable levels of wire insulation shrinkback, and (ii) $0.5 million of inventory write-downs of wire in connection with wire insulation shrinkback.
As a result, upon effectiveness of such exchanges, all of the LLC Interests in Shoals Parent LLC were held by the Company, no other holders owned LLC Interests and no Class B common stock was or is outstanding. On July 1, 2023, the Company contributed 100% of its LLC Interests to Shoals Intermediate Parent, a wholly-owned subsidiary of the Company.
As a result, upon effectiveness of such exchanges, all of the LLC Interests in Shoals Parent LLC were held by the Company, no other holders owned LLC Interests and no Class B common stock was or is outstanding.
We continue to monitor the condition of our supply chain and evaluate our procurement strategy to reduce any negative impact on our business, financial condition, and results of operations. During the year ended December 31, 2024 we continued to monitor and optimize our inventory levels.
We also continue to monitor the condition of our supply chain and evaluate our procurement strategy to reduce any negative impact on our business, financial condition, and results of operations. During the period ended December 31, 2025, we continued to monitor and optimize our inventory levels in preparation for upcoming production demands.
On December 27, 2023 and January 19, 2024, we used proceeds from the Revolving Credit Facility and cash on hand to make $50.0 million and $100.0 million, respectively, voluntary prepayments of outstanding borrowings under the Term Loan Facility.
As of December 31, 2025 we also had $60.5 million available for additional borrowings under our $200.0 million Revolving Credit Facility. On December 27, 2023 and January 19, 2024, we used proceeds from the Revolving Credit Facility and cash on hand to make $50.0 million and $100.0 million, respectively, voluntary prepayments of outstanding borrowings under the Term Loan Facility.
This increase in gross profit as a percentage of revenue was due to a reduced amount of wire insulation shrinkback expenses in the current year as compared to the prior year, offset by 40 Table of Contents increases in material and labor costs, non-recurring operational charges, competitive dynamics, volume discounts, and customer mix in our key markets, and a reduction in leverage on fixed costs.
This change in gross margin was due to a reduced amount of wire insulation shrinkback expenses in the current year compared to the prior year, offset by increased material costs, tariffs, non-recurring operational charges, competitive dynamics, volume discounts, and product mix in our key markets, and a reduction in leverage on fixed costs.
We define Adjusted EBITDA as net income plus/(minus) (i) interest expense, (ii) interest income (iii) income tax expense, (iv) depreciation expense, (v) amortization of intangibles, (vi) payable pursuant to the TRA adjustment, (vii) gain on termination of the TRA, (viii) equity-based compensation, (ix) acquisition-related expenses, (x) wire insulation shrinkback expenses, and (xi) wire insulation shrinkback litigation expenses.
We define Adjusted EBITDA as net income plus/(minus) (i) interest expense, (ii) interest income (iii) income tax expense, (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) gain/loss on sale of assets, (viii) wire insulation shrinkback expenses, (ix) wire insulation shrinkback litigation expenses, and (x) plant optimization expenses.
As a result, we generally believe customers prioritize reliability and safety over price when selecting EBOS solutions. We design, manufacture and sell a variety of products used by the solar and battery storage industries, including Solar BLA Solutions; Homeruns, Interconnection and Extension Solutions; Combiners and Re-Combiners; Load Break Disconnects and Transition Solutions; Wireless Performance Monitoring; and BESS.
We design, manufacture and sell a variety of products used by the solar and battery storage industries, including Solar BLA Solutions; Homeruns, Interconnection and Extension Solutions; Combiners and Re-Combiners; Load Break Disconnects and Transition Solutions; Wireless Performance Monitoring; and BESS.
Year Ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 80,388 $ 91,955 $ 39,455 Net cash used in investing activities (8,393) (10,847) (3,657) Net cash used in financing activities (71,191) (67,167) (36,589) Net increase (decrease) in cash, cash equivalents $ 804 $ 13,941 $ (791) Operating Activities For the year ended December 31, 2024, cash provided by operating activities was $80.4 million, due to operating results that included $24.1 million of net income, which included $61.9 million of non-cash expense.
Year Ended December 31, 2025 2024 2023 Net cash provided by operating activities $ 17,067 $ 80,388 $ 91,955 Net cash used in investing activities (27,955) (8,393) (10,847) Net cash used in financing activities (5,303) (71,191) (67,167) Net increase (decrease) in cash, cash equivalents $ (16,191) $ 804 $ 13,941 Operating Activities For the year ended December 31, 2025, cash provided by operating activities was $17.1 million, due to operating results that included $33.6 million of net income, which included $43.3 million of non-cash expense.
Cost of Revenue and Gross Profit Cost of revenue decreased by $63.4 million, or 20%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023, driven by the decrease in revenue.
Cost of Revenue and Gross Profit Cost of revenue increased by $51.6 million, or 20%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, driven by the increase in revenue.
As of December 31, 2024, we had $634.7 million of backlog and awarded orders. Backlog of $154.8 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $479.9 million are orders we are in the process of documenting a contract for but for which a contract has not yet been signed.
Backlog of $326.2 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $421.4 million are orders we are in the process of documenting a contract for but for which a contract has not yet been signed.
As of December 31, 2024, our cash and cash equivalents were $23.5 million, an increase from $22.7 million as of December 31, 2023. As of December 31, 2024 we had outstanding borrowings of $141.8 million, a decrease from $183.8 million as of December 31, 2023.
As of December 31, 2025, our cash and cash equivalents were $7.3 million, a decrease from $23.5 million as of December 31, 2024. As of December 31, 2025 we had 38 Table of Contents outstanding borrowings of $136.8 million, a decrease from $141.8 million as of December 31, 2024.
Depreciation and Amortization Depreciation and amortization expense within operating expenses increased by less than $0.1 million or 0.5%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Depreciation and Amortization Depreciation and amortization expense within operating expenses increased by less than $0.1 million or 0.1%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. The stability in the balance was due to consistent amortization of intangible assets.
Following the contribution, Shoals Parent LLC became a disregarded single member limited liability company, eliminating the Company’s Up-C structure. Following the elimination of the Up-C structure, effective December 31, 2023, the Company consummated an internal reorganization transaction whereby certain of the Company’s wholly-owned subsidiaries merged with and into other subsidiaries.
Following the elimination of the Up-C structure, effective December 31, 2023, the Company consummated an internal reorganization transaction whereby certain of the Company’s wholly-owned subsidiaries merged with and into other subsidiaries. As part of this reorganization, Shoals Parent LLC merged with and into Shoals Intermediate Parent, with Shoals Intermediate Parent as the surviving corporation.
Traditionally, and for the year ended December 31, 2024, we primarily sold our EBOS solutions and components and OEM components to customers in the United States.
Traditionally, and for the year ended December 31, 2025, we primarily sold our EBOS solutions and OEM components to customers in the United States, while also fulfilling orders for international utility-scale solar projects.
Contracts for solar system solutions can range in value from several hundred thousand to several million dollars. Our revenue is affected by changes in the price, volume and mix of solar system solutions and components purchased by our customers.
Our contractual delivery period for system solutions can vary from one to three months whereas manufacturing typically requires a shorter time frame. Contracts for system solutions can range in value from several hundred thousand to several million dollars. Our revenue is affected by changes in the price, volume and mix of system solutions and components purchased by our customers.
The adjustment to the provision for income tax reflects the effective tax rates below, assuming Shoals Technologies Group, Inc. owned 100% of the units in Shoals Parent LLC prior to March 10, 2023. Year Ended December 31, 2024 2023 2022 Statutory U.S.
(e) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes. The adjustment to the provision for income tax reflects the effective tax rates below, assuming Shoals Technologies Group, Inc. owned 100% of the units in Shoals Parent LLC prior to March 10, 2023.
Non-operating Expenses Interest Expense Interest expense consists of interest and other charges paid in connection with our Senior Secured Credit Agreement. Interest income Interest income is related to interest on bank deposits.
Non-operating Expenses Interest Expense 32 Table of Contents Interest expense consists of interest and other charges paid in connection with our Senior Secured Credit Agreement. Interest income Interest income is related to interest on bank deposits. Gain on sale of assets Gain on sale of assets represents consideration received in excess of the net book value of assets sold.
Elimination of Up-C Structure and Entity Simplification In 2023, following a secondary offering of shares of Class A common stock by certain selling stockholders, all the holders of LLC Interests exchanged all the LLC Interests and corresponding shares of Class B common stock of the Company beneficially owned by them into shares of Class A common stock of the Company.
Following a secondary offering of shares of Class A common stock by certain selling stockholders in March 2023, all the holders of limited liability interests of Shoals Parent LLC (“LLC Interests”), our former operating subsidiary, exchanged all the LLC Interests and corresponding shares of Class B common stock of the Company beneficially owned by them into shares of Class A common stock of the Company.
As of December 31, 2024, backlog and awarded orders increased by 0.5% relative to December 31, 2023 and increased by 6.5% relative to September 30, 2024.
As of December 31, 2025, backlog and awarded orders increased by 17.8% relative to December 31, 2024 and increased by 3.7% relative to September 30, 2025.
As of December 31, 2024, we believe approximately $154.8 million of backlog and $284.5 million of awarded orders have delivery dates in 2025. The remaining $195.4 million have planned delivery dates beyond 2025. Additionally, we believe more than 13% of our December 31, 2024 backlog and awarded orders relate to international projects.
As of December 31, 2025, we believe approximately $326.2 million of backlog and $277.3 million of awarded orders have delivery dates in 2026. The remaining $144.1 million have planned delivery dates beyond 2026. Additionally, we believe more than 12% of 28 Table of Contents our December 31, 2025 backlog and awarded orders relate to international projects.
In making such determination, we consider all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of operations. We routinely evaluate the realizability of our deferred tax assets by assessing the likelihood that our deferred tax assets will be recovered based on all available positive and negative evidence.
In making such determination, we consider all available evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and results of operations.
In 2025, we expect capital expenditures between $25.0 million to $35.0 million, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year.
In 2026, we expect capital expenditures between $20.0 million to $30.0 million, subject to other strategic uses of capital and the evolution of operating cash flows and the working capital position throughout the year. We believe our cash flow from operations will generally be sufficient to fund these expenditures.
Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, could have an adverse effect on our business and results of operations.
Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, including reciprocal tariffs, could have an adverse effect on our business and results of operations. Beginning in March 2025, the current U.S. presidential administration (the “Administration”) unveiled broad actions related to tariffs with global trading partners.
Reconciliations of Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to the respective most closely comparable GAAP measure, as well as a calculation of Adjusted Gross Profit Percentage and Adjusted Diluted Weighted Average Shares Outstanding, are provided below, in “—Non-GAAP Financial Measures.” Overview We are a leading provider of electrical balance of system (“EBOS”) solutions and components, including battery energy storage solutions (“BESS”) and Original Equipment Manufacturer (“OEM”) components, for the global energy transition market.
Reconciliations of Adjusted Gross Profit, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share to the respective most closely comparable GAAP measure, as well as a calculation of Adjusted Gross Profit Percentage and Adjusted Diluted Weighted Average Shares Outstanding, are provided below, in “—Non-GAAP Financial Measures.” Overview Shoals Technologies Group is a leading design-engineering and manufacturer of advanced electrical infrastructure solutions for mission‑critical applications across solar photovoltaic (PV), battery energy storage solutions (BESS), and data center power systems.
Our capital expenditures primarily relate to purchases of property, plant, and equipment to support manufacturing operations and growth initiatives. In 2024, we had capital expenditures of $8.4 million. We believe our cash flow from operations will generally be sufficient to fund these expenditures.
Our capital expenditures primarily relate to purchases of property, plant, and equipment to support manufacturing operations and growth initiatives. In 2025, we had capital expenditures of $33.0 million.
In 2024, we 36 Table of Contents experienced generally higher interest rates than we have historically, which led to general higher interest rates associated with our Senior Secured Credit Agreement in the year ended December 31, 2024; however, interest rates did decline from their historically high levels during the course of 2024.
Interest rates have remained generally higher when compared to historical rates, causing the interest rates associated with our Senior Secured Credit Agreement to be generally higher; however, interest rates did decline from their historically high levels during the course of 2024.
While the implementation and scope of these proposed tariffs is still uncertain, any significant new tariffs, which may last for an indefinite period of time, may result in increased prices for certain of our raw materials including steel, copper and aluminum.
Any significant new tariffs or the threat thereof, which may last for an indefinite period of time, may make it more difficult for us to source raw materials 29 Table of Contents and could result in increased prices for certain of our raw materials including steel, copper and aluminum.
However, given the mission critical nature of EBOS, the decision to use our products typically involves input from both the EPC and the owner/developer of the solar energy project.
However, given the mission-critical nature of EBOS (as further described below), the decision to use our products typically involves input from both the EPC and the owner/developer of the energy infrastructure energy project. We have a focus in two end-markets: (1) clean, grid connected energy and (2) data center + mission-critical electrical infrastructure.
For the year ended December 31, 2023, net cash used in financing activities was $67.2 million, due to $51.5 million in payments on the Term Loan, $8.0 million in net payments on the Revolving Credit Facility, $2.6 million in distributions to our non-controlling interest holders and $3.9 million in taxes related to net share settled equity awards.
Financing Activities For the year ended December 31, 2025, net cash used in financing activities was $5.3 million, due to $0.4 million for taxes paid on settled equity awards, and $60.0 million in proceeds on the Revolving Credit Facility, offset by $65.0 million in payments made to the same facility.
These estimates are inherently uncertain given our relatively short history of sales, and actual results that differ from our assumptions and judgments could have a material adverse effect on our business, financial condition and results of operations. 49 Table of Contents Wire Insulation Shrinkback Warranty The Company has been notified by certain customers that a subset of wire harnesses used in its EBOS solutions is presenting unacceptable levels of contraction of wire insulation (“wire insulation shrinkback”).
These estimates are inherently uncertain given our relatively short history of sales, and actual results that differ from our assumptions and judgments could have a material adverse effect on our business, financial condition and results of operations.
Operating Expenses General and Administrative General and administrative expenses increased $1.5 million, or 2%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Operating Expenses General and Administrative General and administrative expenses increased $19.3 million, or 23%, for the year ended December 31, 2025 as compared to the year ended December 31, 2024. General and administrative expenses increased primarily due to higher legal and professional costs of $15.7 million.
The high-end of the range of potential loss is $160.0 million, which is $87.0 million higher than the low-end of the range of potential loss. As of December 31, 2024 and December 31, 2023, our recorded warranty liability related to this matter was $39.9 million and $54.9 million, respectively.
As of December 31, 2025 and December 31, 2024, our recorded warranty liability related to this matter was $3.3 million and $39.9 million, respectively.
When we sell a solar system solution, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things. Our contractual delivery period for solar system solutions can vary from one to three months whereas manufacturing typically requires a shorter time frame.
Our customers include EPCs, utilities, solar developers, independent power producers, and solar module manufacturers. We derive the majority of our revenue from selling system solutions. When we sell a system solution, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things.
However, the Russia-Ukraine war has reduced the availability of certain materials that can be sourced in Europe and, as a result, increased global logistics costs for the procurement of some inputs and materials used in our products. We expect these trends to persist into early 2025, which may be further impacted by any global trade wars as described below.
While the Company does not directly source a significant amount of raw materials from Europe, the Russia-Ukraine war has reduced the availability of certain materials that can be sourced in Europe and, as a result, increased global logistics costs for the procurement of some inputs and materials used in our products.
EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels to an inverter and ultimately to the power grid. EBOS components are mission-critical products that have a high consequence of failure, including lost revenue, equipment damage, fire damage, and even serious injury or death.
Our solutions also support original equipment manufacturers (“OEMs”). EBOS encompasses all of the components that are necessary to carry the electric current produced by solar panels or stored by a BESS solution to an inverter and ultimately to the power grid.
As of December 31, 2024, we had $454.2 million of deferred tax assets, net of a $3.1 million valuation allowance related to land, other non-amortizable intangibles, and state tax attributes for net operating loss carryforwards and goodwill amortization. Other than these valuation allowances, we expect to realize future tax benefits related to the utilization of these assets.
In projecting future taxable income, we consider our historical results and incorporate certain assumptions, including revenue growth and operating margins, among others. As of December 31, 2025, we had $438.0 million of deferred tax assets, net of a $3.0 million valuation allowance related to land, other non-amortizable intangibles, and state tax attributes for net operating loss carryforwards and goodwill amortization.
Our effective income tax rate for the year ended December 31, 2024 and 2023 was 36.3% and 22.3%, respectively.
Income Tax Expense 34 Table of Contents Income tax expense was $14.9 million for the year ended December 31, 2025 as compared to income tax expense of $13.7 million for the year ended December 31, 2024. Our effective income tax rate for the year ended December 31, 2025 and 2024 was 30.8% and 36.3%, respectively.
This decrease is explained by activity related to our voluntary prepayments on the Term Loan Facility and amendment of the Senior Secured Credit Agreement. Due to the prepayments and amendment, the Company wrote off a liability of $2.5 million of deferred interest, along with an asset of $2.3 million of deferred financing costs.
Due to the prepayments in 2024 and amendment, the Company wrote off a liability of $2.5 million of unamortized deferred interest, along with an asset of $2.3 million of unamortized deferred financing costs. This is offset by a higher weighted average outstanding balance in 2025 as compared to 2024 yielding higher quarterly interest payments.
These trends are the result of the 37 Table of Contents costs of permitting issues; project financing; lingering uncertainty about the application of the Inflation Reduction Act of 2022 to solar projects; uncertainty regarding changes in the U.S. trade environment, including the imposition of trade restrictions, import tariffs, anti-dumping and countervailing duties; supply chain constraints; and interconnection complications.
Industry trends are impacted by a variety of factors, including: permitting issues; supply chain 30 Table of Contents disruptions; labor availability; project financing; anti-dumping and countervailing duties; interconnection complications; and uncertainty regarding changes in public policy and the U.S. trade environment.
During the three months ended September 30, 2024, the Company determined that it was appropriate to adjust the range from the estimates provided in prior quarters, and based on additional information obtained, the Company increased the low-end of the estimated range from $59.7 million to $73.0 million, and decreased the high-end of the estimated range from $184.9 million to $160.0 million.
For the year ended December 31, 2023, the Company disclosed an initial range of potential loss from $59.7 million to $184.9 million. During the year ended December 31, 2024, the Company determined it was appropriate to adjust the range of estimates previously provided based on additional information obtained.
Our ability to obtain raw materials required to manufacture our components and system solutions from domestic and international suppliers, as well as our ability to secure inbound logistics to and from our facilities, were still impacted in 2024. The Company does not directly source a significant amount of raw materials from Europe.
Our ability to obtain the raw materials required to manufacture our components and system solutions from domestic and international suppliers, as well as our ability to secure inbound logistics to and from our facilities, remained challenging during 2025, complicated by volatility in government policies and regulation concerning trade and ongoing political conflict.
A 10% increase in harness installation costs and materials replacement cost would have resulted in an increase of the high end of the range of potential loss of $12.1 million and $2.7 million, respectively. Additionally, changes to the planned remediation method could also have a material impact on the warranty liability.
As of December 31, 2025, a 20% increase in projects that would require standard remediation work would have resulted in an increase in our recorded liability of $1.1 million. Additionally, changes to the planned remediation method could also have a material impact on the warranty liability.
Although we did not materially experience such negative effects during fiscal year 2024, we cannot be certain that we would not experience negative effects in 2025, particularly given President Trump’s rhetoric concerning trade and tariffs.
However, we cannot be certain that we would not experience negative effects in the future, particularly given the Administration’s positions concerning trade and tariffs and the fluctuating nature of such actions to date.
Income Tax Expense 39 Table of Contents Shoals Technologies Group, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions.
Foreign currency (loss) gain, net Foreign currency gains and losses arise from the remeasurement of transactions in a currency other than the function currency of the Company based on exchange rate fluctuations. Income Tax Expense Shoals Technologies Group, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions.
For the year ended December 31, 2023, cash provided by operating activities was $92.0 million, due to operating results that included $42.7 million of net income, which included $109.8 million of non-cash expense, along with an increase of $9.6 million in accounts payable and accrued expenses and other, and a decrease of $15.0 million in inventory.
These inflows were offset by outflows of $51.9 million 39 Table of Contents in accounts receivable and unbilled receivables, $41.0 million in warranty liability payments, and $35.1 million in inventory, For the year ended December 31, 2024, cash provided by operating activities was $80.4 million, due to operating results that included $24.1 million of net income, which included $61.9 million of non-cash expense.
See Note 15 - Commitments and Contingencies, in our consolidated financial statements included in this Annual Report on Form 10-K for more information. 44 Table of Contents (c) Represents an adjustment to eliminate the impact of the payable pursuant to the TRA.
See Note 15 - Commitments and Contingencies, in our consolidated financial statements included in this Annual Report on Form 10-K for more information. 37 Table of Contents (c) For the year ended December 31, 2025, represents $1.1 million of expenses incurred in connection with actions taken to consolidate our operations into a newly constructed facility, including items such as professional fees, relocation, facility set-up and other costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe majority of our contracts require customer deposits ranging from 10 to 20% of the contract value. We continually evaluate our reserves for potential credit losses and establish reserves for such losses. The loss of this large customer or any significant customer could have a material adverse effect on our financial conditions and results of operations.
Biggest changeOur five largest customers contributed approximately 53.7% of our total revenue for the year ended December 31, 2025 and 46.8% of accounts receivable as of December 31, 2025. The majority of our contracts require customer deposits ranging from 10 to 20% of the contract value. We continually evaluate our reserves for potential credit losses and establish reserves for such losses.
We have interest rate exposure with respect to the entire balance as it is all variable interest rate debt. A 100 basis point increase/decrease in interest rates would impact our expected annual interest expense for the next 12 months by approximately $1.4 million. 51 Table of Contents
We have interest rate exposure with respect to the entire balance as it is all variable interest rate debt. A 100 basis point increase/decrease in interest rates would impact our expected annual interest expense for the next 12 months by approximately $1.4 million. 43 Table of Contents
Significant price increases for these raw materials could reduce our operating margins if we are unable to recover such increases from our customers, in the form of increased prices, which could harm our business, financial condition and results of operations. Interest Rate Risk As of December 31, 2024, our long-term debt totaled $141.8 million.
Significant price increases for these raw materials could reduce our operating margins if we are unable to recover such increases from our customers, in the form of increased prices, which could harm our business, financial condition and results of operations. Interest Rate Risk As of December 31, 2025, our long-term debt totaled $136.8 million.
Commodity Price Risk We are subject to risk from fluctuating market prices of certain commodity raw materials, including copper, that are used in our products. Prices of these raw materials may be affected by supply restrictions, inflation or other market factors from time to time, and we do not enter into hedging arrangements to mitigate commodity risk.
Prices of these raw materials may be affected by supply restrictions, inflation or other market factors from time to time, and we do not enter into hedging arrangements to mitigate commodity risk.
We do not hold or issue financial instruments for trading purposes. 50 Table of Contents Concentrations of Major Customers Our customers include EPCs, utilities, solar developers, and solar module manufacturers, but we derive the majority of our revenue from the sale of products to EPCs. Our EPC customers typically construct multiple projects for several different owners.
Our market risk exposure is primarily a result of fluctuations in steel, aluminum and copper prices and customer concentrations. We do not hold or issue financial instruments for trading purposes. Concentrations of Major Customers Our customers include EPCs, utilities, solar developers, and solar module manufacturers, but we derive the majority of our revenue from the sale of products to EPCs.
One customer contributed approximately 26.4% of our total revenue for the year ended December 31, 2024 and 19.0% of accounts receivable as of December 31, 2024. Our five largest customers contributed approximately 54.3% of our total revenue for the year ended December 31, 2024 and 50.8% of accounts receivable as of December 31, 2024.
Our EPC customers typically construct multiple projects for several different owners. One customer contributed approximately 19.1% of our total revenue for the year ended December 31, 2025 and 25.2% of accounts receivable as of December 31, 2025.
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Our market risk exposure is primarily a result of fluctuations in steel, aluminum and copper prices and customer concentrations.
Added
The loss of this large customer or any significant customer could have a material adverse effect on our financial conditions and results of operations. Commodity Price Risk We are subject to risk from fluctuating market prices of certain commodity raw materials, including copper, that are used in our products.

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