SHLS

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 our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”) and this Quarterly Report on Form 10-Q (“Form 10-Q”). In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections of our 2025 Form 10-K and this Form 10-Q captioned “Forward-Looking Statements” and “Risk Factors”. This MD&A contains the presentation of Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share, which are not presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”). Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share are being presented because management believes they provide investors and readers of this Form 10-Q with additional insight into our operational performance relative to earlier periods and relative to our competitors. 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. Readers of this Form 10-Q should use Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share only in conjunction with Gross Profit, and Net Income, the most closely comparable GAAP financial measures, as applicable. 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 company 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 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. Since electrical infrastructure is the backbone of a solar or BESS project, our products play a mission-critical role in the quality, safety, reliability, and efficiency of energy projects, which the industry prioritizes 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 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 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. We refer to individual, often custom and proprietary, products we sell as “components”. We believe our system solutions are unique in our industry because they integrate design and 22 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. Traditionally, and for the three and six months ended June 30, 2026, 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. 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. 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 energy infrastructure energy project. We have a focus in two end-markets: (1) clean, grid connected energy and (2) data center and mission-critical electrical infrastructure. This market diversification seeks to capitalize on the growing global demand for energy and the need to accelerate electrification. We derived 74.0% of our revenue from the sale of system solutions for the six months ended June 30, 2026. For the same period, we derived substantially all of our revenue from customers in the U.S. As of June 30, 2026, we had $801.4 million of backlog and awarded orders. Backlog of $425.1 million represents signed purchase orders or contractual minimum purchase commitments with take-or-pay provisions and awarded orders of $376.3 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 June 30, 2026, we believe approximately $418.9 million of backlog and $280.7 million of awarded orders have delivery dates in the next twelve months. Additionally, more than 12.7% of our June 30, 2026 backlog and awarded orders related to international projects. As of June 30, 2026, backlog and awarded orders increased by 19.4% relative to the same date last year and increased by 5.7% relative to March 31, 2026. 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. Our exports and imports are subject to complex trade and customs laws, tax requirements, and tariffs established through governmental actions, statutory authorities, or international agreements. Changes in tax policies or trade regulations, the disallowance of tax deductions on imported merchandise, the imposition of new or increased tariffs on imported products, including reciprocal tariffs, or retaliatory actions by trading partners could have an adverse effect on our business and results of operations. In recent years, the U.S. presidential administration (the “Administration”) implemented broad tariff measures affecting a wide range of imports. These measures included tariffs imposed under the International Emergency Economic Powers Act (the “IEEPA”), including reciprocal tariffs, and frequent changes in tariff rates, product coverage, implementation dates, exclusions, and related guidance. Tariff policy remained fluid, with frequent adjustments to tariff percentages and product coverage, as well as ongoing negotiations with global trading partners. These measures contributed to significant volatility and uncertainty in the global trade environment and increased costs for many importers. On February 20, 2026, the U.S. Supreme Court (the “Supreme Court”) invalidated the Administration’s tariff measures, ruling that the IEEPA did not authorize their imposition. Following the ruling, the Administration terminated the IEEPA tariffs, and U.S. Customs and Border Protection (“CBP”) ceased applying and collecting those duties for goods entered or withdrawn for consumption on or after February 24, 2026. While the ruling 23 halted IEEPA-based tariffs, the longer‑term implications for U.S. trade policy remain uncertain as the Administration promptly announced a temporary, across the board tariff under Section 122 of the Trade Act of 1974, initiated additional investigations, and has now proposed new tariffs on more than 60 countries, which are expected to take effect around the time the Section 122 tariffs expire. The Supreme Court ruling did not address issues relating to refund eligibility, timing, or procedures. Future judicial, regulatory or legislative actions related to the Supreme Court ruling could impact our operations, supply chain, and cash flow. On March 4, 2026, the Court of International Trade issued an order requiring CBP to process certain tariff‑refund claims in accordance with the Supreme Court’s ruling. CBP has been developing and implementing a phased refund process through its system, but litigation, appeals, and administrative implementation remain ongoing. Tariff actions have negatively affected our gross margins due to both direct tariff payments and higher supplier prices reflecting secondary tariff costs. Although we have expanded our domestic capabilities, strengthened supply chain resiliency, and increased domestic manufacturing capacity, these measures may not fully offset the impact of the heightened tariff environment in which we are currently operating or future trade policy changes. Any significant new tariffs, retaliatory actions by trading partners, or rapid shifts in trade regulations could increase raw material costs—including steel, copper, aluminum, and other components used in our products—and may limit our ability to source key materials efficiently. Additionally, retaliatory tariffs could affect exports of our manufactured products and potentially lead customers to seek alternative suppliers. We continue to monitor trade policy developments, litigation and administrative processes relating to tariffs, CBP guidance, and supply chain conditions and evaluate procurement strategies to reduce potential adverse effects on our business, financial condition, and results of operations. We also continue to optimize inventory levels in preparation for future production demands and potential changes in supplier lead times, pricing and availability. Energy‑Related Incentives Federal, state, local, and foreign governmental bodies offer incentives to owners, end users, distributors, and manufacturers of solar energy systems to promote the development of solar electricity. The range, eligibility requirements, availability, and duration of these incentives vary widely by geographic market and are subject to change. The 2022 Inflation Reduction Act (the “IRA”) introduced significant long‑term tax incentives to promote solar energy deployment in the United States. Under the IRA, taxpayers investing in eligible solar projects may qualify for Investment Tax Credits (“ITC”) or elect to claim Production Tax Credits (“PTC”) for eligible facilities. In 2025, H.R. 1, the One Big Beautiful Bill Act, modified several energy‑related tax provisions of the IRA. These changes include an accelerated phaseout or termination of the ITC and PTC for solar projects placed in service after 2027, as well as restrictions related to “foreign entities of concern,” which render certain projects owned or controlled by prohibited foreign entities ineligible for specific tax credits. The Department of the Treasury (the “Treasury”) and the Internal Revenue Service (the “IRS”) have issued guidance regarding certain prohibited foreign entity and material assistance requirements, and further guidance or rulemaking may affect how these restrictions are interpreted and applied. Reductions or uncertainty surrounding these incentives may diminish the financial attractiveness of solar projects, which could decrease demand for our products. Additionally, ongoing uncertainty around the 24 duration, eligibility criteria, and future legislative changes affecting these incentives may cause delays in project financing and execution, which could impact our sales volume and growth trajectory. The Solar Market and Critical Power Infrastructure The domestic utility‑scale solar market has previously experienced volatility driven by a combination of permitting delays, supply‑chain constraints, labor shortages, project‑financing challenges, interconnection bottlenecks, and uncertainty stemming from federal trade and tax policy changes. We believe long‑term demand fundamentals remain strong; however, new circumstances may emerge and could affect future project timing, pricing dynamics, and customer mix. These circumstances include changes in federal or state energy policy, delays in Treasury or IRS guidance, interpretations of tax credit eligibility requirements, lengthy lead times for electrical equipment, and uncertainty regarding the ability of developers to meet deadlines. We continue to monitor market conditions and manage these uncertainties through proactive commercial strategies, inventory planning, and close engagement with customers and suppliers. The market for critical power infrastructure is expanding as electricity demand increases and energy systems grow more complex, including as a result of data center expansion, artificial intelligence growth, electrification, grid modernization, and renewable energy deployment. However, this growth is accompanied by uncertainty arising from shifting policy frameworks, technological change, and varying levels of industry participation. These conditions may result in inconsistent coordination across stakeholders, policy fragmentation, and differing degrees of market readiness, each of which could influence project execution, capital allocation, and technology deployment. We will continue to assess how volatility in the industries in which we operate may affect our operations, capital expenditures, and cash flows. Other Macroeconomic Pressures Inflationary pressures persisted through 2025 and into 2026, driven in part by tariff‑related cost increases that elevated prices for imported and domestic goods. Forecasts indicate that while inflation is expected to gradually ease, it remains above the desired targets, with ongoing price pressures anticipated into 2026. Interest rates, though off their historic highs, remain elevated relative to long‑term averages, and forecasters expect only modest declines in 2026. Higher borrowing costs, coupled with uncertainty created by shifting tariff regimes and evolving monetary policy, may continue to affect capital markets and increase our cost of financing. Sourcing raw materials and securing inbound logistics continues to present challenges, reflecting persistent global supply chain disruptions, trade‑policy volatility, and geopolitical conflict. Tariff‑driven increases in import prices and secondary supplier cost increases have raised costs across multiple inputs, contributing to higher procurement and logistics costs. Ongoing geopolitical instability, including the conflict in the Middle East involving Iran, Israel, and the United States, may disrupt the availability of certain materials, contribute to increased global freight and input costs, and further complicate procurement planning. We expect these sourcing and logistics pressures to persist through 2026 as trade uncertainty and geopolitical tensions remain unresolved. Key Components of Our Results of Operations The following discussion describes certain line items in our condensed consolidated statements of operations. Revenue We generate revenue from the sale of EBOS solutions and components for solar, BESS, and OEM offerings. 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 25 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 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 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. 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 commercialize new and innovative products that address the changing technology and performance requirements of our customers. 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 and rework, personnel and depreciation of manufacturing and testing equipment. Personnel costs in cost of revenue include both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer. Our product costs are affected by the underlying cost of raw materials, including copper and aluminum; component costs, including fuses, resin, enclosures, and cable; technological innovation; economies of scale resulting in lower component costs; and improvements in production processes and automation. We do not currently hedge against changes in the price of raw materials. 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. Operating Expenses Operating expenses consist of general and administrative expenses as well as depreciation and amortization expense. Personnel-related costs are the most significant component of our operating expenses and include salaries, equity-based compensation, benefits, payroll taxes and commissions. The number of our full-time employees increased from 177 to 210 from June 30, 2025 to June 30, 2026, and we expect to hire new employees in the future to support our growth. The timing of these additional hires could materially affect our operating expenses in any particular period, both in absolute dollars and as a percentage of revenue. 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. Professional services consist of audit, tax, accounting, legal, internal controls, information technology, investor relations and other costs. We expect to increase our sales and marketing personnel as we expand into new geographic markets. Substantially all of our sales are currently in the U.S. We currently have a sales presence in the U.S., Asia-Pacific, Europe, Latin America, and Africa. We intend to grow our sales presence and marketing efforts in targeted geographic markets and could expand to additional countries in the future. Depreciation 26 Depreciation in our operating expenses consists of costs associated with property, plant and equipment (“PP&E”) not used in manufacturing our products. We expect that as we increase both our revenue and the number of our general and administrative personnel, we will invest in additional PP&E to support our growth resulting in additional depreciation expense. Amortization Amortization of intangibles consists of amortization of customer relationships, developed technology, trade names, backlog and noncompete agreements over their expected period of use. 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. Litigation settlement expense, net of recoveries Litigation settlement expenses related to the amounts owed, net of applicable insurance recoveries, to settle matters of litigation. Gain (loss) on sale of asset Gain on sale of asset represents consideration received in excess of the net book value of assets sold. Foreign currency gain (loss), 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 Benefit (expense) Shoals Technologies Group, Inc. is subject to U.S. federal and state income tax in multiple jurisdictions. 27 Results of Operations The following table summarizes our results of operations (dollars in thousands): Three Months Ended June 30, Increase / (Decrease) Six Months Ended June 30, Increase / (Decrease) 2026 2025 2026 2025 Revenue $ 163,372 $ 110,841 $ 52,531 47.4 % $ 303,929 $ 191,202 $ 112,727 59.0 % Cost of revenue 113,847 69,639 44,208 63.5 % 213,394 121,860 91,534 75.1 % Gross profit 49,525 41,202 8,323 20.2 % 90,535 69,342 21,193 30.6 % Operating expenses General and administrative expenses 28,465 23,064 5,401 23.4 % 59,479 44,757 14,722 32.9 % Depreciation and amortization 2,338 2,140 198 9.3 % 4,616 4,275 341 8.0 % Total operating expenses 30,803 25,204 5,599 22.2 % 64,095 49,032 15,063 30.7 % Income from operations 18,722 15,998 2,724 17.0 % 26,440 20,310 6,130 30.2 % Interest expense (3,474) (2,236) 1,238 55.4 % (6,377) (4,651) 1,726 37.1 % Interest income 268 76 192 252.6 % 327 194 133 68.6 % Litigation settlement expense, net of recoveries — — — — % (5,250) — (5,250) (100.0) % Gain (loss) on sale of assets — 3,134 (3,134) (100.0) % (2) 3,134 (3,136) (100.1) % Foreign currency gain (loss) (20) — (20) (100.0) % (28) — (28) (100.0) % Income before income taxes 15,496 16,972 (1,476) (8.7) % 15,110 18,987 (3,877) (20.4) % Income tax expense (3,358) (3,117) 241 7.7 % (3,269) (5,414) (2,145) (39.6) % Net income $ 12,138 $ 13,855 $ (1,717) (12.4) % $ 11,841 $ 13,573 $ (1,732) (12.4) % Comparison of the Three Months Ended June 30, 2026 and 2025 Revenue Revenue increased by $52.5 million, or 47.4%, for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, driven by strong underlying demand of products, the impact of market share capture initiatives, and an increase in volume of projects in the current year. Cost of Revenue and Gross Profit Cost of revenue increased by $44.2 million, or 63.5%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, driven by the increase in revenue. Gross profit as a percentage of revenue was 30.3% during the three months ended June 30, 2026, and 37.2% during the three months ended June 30, 2025. Gross profit as a percentage of revenue declined year over year primarily due to operational inefficiencies associated with the ramp-up and transition into the new manufacturing facility and product mix within the quarter, along with costs incurred to address product quality matters, including rework and corrective actions, as well as material-related inefficiencies and incremental lease accounting amortization. 28 Operating Expenses General and Administrative General and administrative expenses increased $5.4 million, or 23.4%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. The increase in general and administrative expenses was the result of a $4.4 million increase in cash and share-based incentive compensation expense due to increased headcount in comparison to the prior year period. Depreciation and Amortization Depreciation and amortization expenses increased by $0.2 million, or 9.3%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. Intangible assets and property, plant, and equipment remained stable period over period, with only a modest increase driven by routine capital investments. Interest Expense Interest expense, increased by $1.2 million, or 55.4%, for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025. This increase was due to an increase in the total weighted average outstanding balance of the Revolving Credit Facility during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Gain on sale of asset Gain on sale of asset decreased $3.1 million from the previous period due to the prior year sale of owned land and building assets to consolidate operations into new facilities. Income tax expense Income tax expense totaled $3.4 million for the three months ended June 30, 2026, as compared to income tax expense of $3.1 million for the three months ended June 30, 2025. Our effective income tax rate for the three months ended June 30, 2026 and 2025 was 21.7% and 18.4%, respectively. The change in our effective income tax rate was due to changes in various discrete items, particularly RSU and PSU windfalls during the three months ended June 30, 2026. Comparison of the Six Months Ended June 30, 2026 and 2025 Revenue Revenue increased by $112.7 million, or 59.0%, for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, driven by strong underlying demand of products, the impact of market share capture initiatives, and an increase in volume of projects in the current year. Cost of Revenue and Gross Profit Cost of revenue increased by $91.5 million, or 75.1%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, driven by the increase in revenue. Gross profit as a percentage of revenue was 29.8% during the six months ended June 30, 2026, and 36.3% during the six months ended June 30, 2025. Gross profit as a percentage of revenue declined period over period primarily due to operational inefficiencies associated with the ramp-up and transition into the new manufacturing facility and product mix within the period, along with costs incurred to address product quality matters, including rework and corrective actions, as well as material-related inefficiencies and incremental lease accounting amortization. 29 Operating Expenses General and Administrative General and administrative expenses increased $14.7 million, or 32.9%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase in general and administrative expenses was the result of $6.0 million in increased payroll, cash and incentive based share expense due to increased headcount in comparison to the prior year, a $5.5 million increase in legal expenses for ongoing matters related to wire insulation shrinkback, intellectual property, and shareholder litigation matters, and $1.9 million in increased costs related to technology and administration. Depreciation and Amortization Depreciation and amortization expenses increased by $0.3 million, or 8.0%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. Intangible assets and property, plant, and equipment remained stable period over period, with only a modest increase driven by routine capital investments. Interest Expense Interest expense, increased by $1.7 million, or 37.1%, for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase was due to an increase in the total weighted average outstanding balance of the Revolving Credit Facility during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Litigation settlement expense, net of recoveries Litigation settlement expense, net of recoveries increased by $5.3 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This is due to the accrual for the expected settlement amount, net of insurance recoveries related to the Company’s Securities litigation. See Note 13 - Commitments and Contingencies, in our condensed consolidated financial statements included in this Form 10-Q for more information. Gain on sale of asset Gain on sale of asset decreased $3.1 million from the previous period due to the prior year sale of owned land and building assets to consolidate operations into new facilities. Income tax benefit (expense) Income tax expense totaled $3.3 million for the six months ended June 30, 2026, as compared to income tax expense of $5.4 million for the six months ended June 30, 2025. Our effective income tax rate for the six months ended June 30, 2026 and 2025 was 21.6% and 28.5%, respectively. The change in our effective income tax rate was due to changes in various discrete items, particularly RSU and PSU shortfalls and windfalls during the six months ended June 30, 2026. 30 Non-GAAP Financial Measures Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted Earnings per Share (“EPS”) We define Adjusted Gross Profit as gross profit plus plant optimization expenses. We define Adjusted Gross Profit Percentage as Adjusted Gross Profit divided by revenue. We define Adjusted EBITDA as net income plus/(minus) (i) interest expense, (ii) interest income, (iii) income tax expense/(benefit), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) gain (loss) on sale of asset (viii) wire insulation shrinkback litigation expenses, (ix) plant optimization expenses, (x) shareholder litigation expenses, and (xi) litigation settlement expense, net of insurance recoveries. We define Adjusted Net Income as net income plus (i) amortization of intangibles, (ii) amortization / write-off of deferred financing costs, (iii) equity-based compensation, (iv) gain (loss) on sale of asset (v) wire insulation shrinkback litigation expenses, (vi) plant optimization expenses, (vii) shareholder litigation expenses, and (viii) litigation settlement expenses, net of insurance recoveries, all net of applicable income taxes. We define Adjusted Diluted EPS as Adjusted Net Income divided by the diluted weighted average shares of Class A common stock outstanding for the applicable period. Beginning with the three months ended March 31, 2026, we revised our definition of Adjusted EBITDA to exclude shareholder litigation costs, which are reflected in General and Administrative expenses on our Consolidated Statements of Operations. Comparative amounts for prior periods have been recast to conform to the current period presentation. Management believes this revised definition provides a more meaningful representation of the Company’s ongoing operating performance as the costs are not reflective of our core operations. Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, GAAP. We present Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS: (i) as factors in evaluating management’s performance when determining incentive compensation, as applicable; (ii) to evaluate the effectiveness of our business strategies; and (iii) because our credit agreement uses measures similar to Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS to measure our compliance with certain covenants. Among other limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and may be calculated by other companies in our industry differently than we do or not at all, which may limit their usefulness as comparative measures. Because of these limitations, Adjusted Gross Profit, Adjusted Gross Profit Percentage, Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. You should review the reconciliation of gross profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage, net income to Adjusted EBITDA, and net income to Adjusted Net Income and Adjusted Diluted EPS below and not rely on any single financial measure to evaluate our business. 31 Reconciliation of Gross Profit to Adjusted Gross Profit and Adjusted Gross Profit Percentage (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue $ 163,372 $ 110,841 $ 303,929 $ 191,202 Cost of revenue 113,847 69,639 213,394 121,860 Gross profit $ 49,525 $ 41,202 $ 90,535 $ 69,342 Gross profit percentage 30.3 % 37.2 % 29.8 % 36.3 % Plant optimization expense (b) $ 496 $ — $ 1,117 $ — Adjusted gross profit $ 50,021 $ 41,202 $ 91,652 $ 69,342 Adjusted gross profit percentage 30.6 % 37.2 % 30.2 % 36.3 % Reconciliation of Net Income to Adjusted EBITDA (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 12,138 $ 13,855 $ 11,841 $ 13,573 Interest expense 3,474 2,236 6,377 4,651 Interest income (268) (76) (327) (194) Income tax expense 3,358 3,117 3,269 5,414 Depreciation expense 2,740 1,439 4,939 2,830 Amortization of intangibles 1,891 1,896 3,793 3,792 Equity-based compensation 4,381 2,593 7,698 5,254 (Gain) loss on sale of asset — (3,134) 2 (3,134) Wire insulation shrinkback litigation expenses (a) 2,876 2,546 6,583 5,075 Plant optimization expenses (b) 496 — 1,117 — Shareholder litigation expenses (c) 464 197 2,120 913 Litigation settlement expense (c) — — 5,250 — Adjusted EBITDA $ 31,550 $ 24,669 $ 52,662 $ 38,174 Reconciliation of Net Income to Adjusted Net Income (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Net income $ 12,138 $ 13,855 $ 11,841 $ 13,573 Amortization of intangibles 1,891 1,896 3,793 3,792 Amortization / write-off of deferred financing costs 156 156 311 311 Equity-based compensation 4,381 2,593 7,698 5,254 (Gain) loss on sale of asset — (3,134) 2 (3,134) Wire insulation shrinkback litigation expenses (a) 2,876 2,546 6,583 5,075 Plant optimization expenses (b) 496 — 1,117 — Shareholder litigation expenses (c) 464 197 2,120 913 Litigation settlement expense (c) — — 5,250 — 32 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Tax impact of adjustments (d) (2,669) (1,021) (6,987) (2,955) Adjusted Net Income $ 19,733 $ 17,087 $ 31,728 $ 22,829 (a) For the three and six months ended June 30, 2026, represents $2.9 million and $6.6 million, respectively, of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. For the three and six months ended June 30, 2025, represents $2.5 million and $5.1 million, respectively, of expenses incurred in connection with the lawsuit initiated by the Company against the supplier of the defective wire. We consider this litigation distinct from ordinary course legal matters given the expected magnitude of the expenses, the nature of the allegations in the Company’s complaint, the amount of damages sought, and the impact of the matter underlying the litigation on the Company’s financial results. In the future, we also intend to exclude from our non-GAAP measures the benefit of recovery, if any. We believe excluding expenses from these discrete litigation events provides investors with a better view of the operating performance of our business and allows for comparability through periods. See Note 13 - Commitments and Contingencies, in our condensed consolidated financial statements included in this Form 10-Q for more information. (b) For the three and six months ended June 30, 2026, represents $0.5 million and $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. We believe excluding expenses from these events provides investors with a better view of the operating performance of our business and allows for comparability through periods. (c) For the three and six months ended June 30, 2026, represents $0.5 million and $2.1 million of expenses incurred in connection with the Company’s defense of certain derivative and class action litigation and for the three months and six months ended June 30, 2026, represents zero and $5.3 million, respectively, in settlement expenses associated with this litigation. For the three and six months ended June 30, 2025, represents $0.2 million and $0.9 million of expenses incurred in connection with the Company’s defense of certain derivative and class action litigation. We consider expenses incurred in connection with these legal matters distinct from normal matters and expenses within the operation of our business. (d) Shoals Technologies Group, Inc. is subject to U.S. Federal income taxes, in addition to state and local taxes. Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax. The adjustment to the provision for income tax reflects the effective tax rates below. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Statutory U.S. Federal income tax rate 21.0 % 21.0 % 21.0 % 21.0 % Permanent adjustments 2.5 % 0.6 % 2.5 % 0.6 % State and local taxes (net of federal benefit) 2.5 % 2.4 % 2.5 % 2.6 % Effective income tax rate for Adjusted Net Income 26.0 % 24.0 % 26.0 % 24.2 % 33 Calculation of Adjusted Diluted Earnings per Share (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Diluted weighted average shares outstanding 170,023 167,562 169,893 167,238 Adjusted Net Income $ 19,733 $ 17,087 $ 31,728 $ 22,829 Adjusted Diluted EPS $ 0.12 $ 0.10 $ 0.19 $ 0.14 Liquidity and Capital Resources We finance our operations primarily with operating cash flows and short and long-term borrowings. Our ability to generate positive cash flow from operations is dependent on the strength of our gross profits as well as our ability to quickly turn our working capital. Conversely, lower than expected gross margins or an inability to quickly turn our working capital, together with an inability to incur additional short and long-term borrowings, would reduce cash flows and could have a material adverse effect on our liquidity, financial condition and results of operations. Based on our past performance and current expectations, we believe that operating cash flows and availability under our Revolving Credit Facility will be sufficient to meet our near and long-term future cash needs. Cash used in operating activities was $34.6 million during the six months ended June 30, 2026, as compared to cash provided by operating activities of $1.7 million during the six months ended June 30, 2025. As of June 30, 2026, our cash and cash equivalents were $15.7 million, an increase from $7.3 million as of December 31, 2025. As of June 30, 2026 we had outstanding borrowings of $196.8 million, a $60.0 million increase from outstanding borrowings of $136.8 million as of December 31, 2025. As of June 30, 2026, we also had $51.4 million available for additional borrowings under our $250.0 million Revolving Credit Facility. Six Months Ended June 30, 2026 2025 Net Cash Provided by (Used in) Operating Activities $ (34,640) $ 1,737 Net Cash Used in Investing Activities (14,663) (10,342) Net Cash Provided by (Used in) Financing Activities 57,707 (10,220) Net Increase (Decrease) in Cash and Cash Equivalents $ 8,404 $ (18,825) Operating Activities For the six months ended June 30, 2026, cash used in operating activities was $34.6 million, due to operating results that included $11.8 million of net income, which included $30.2 million of non-cash expense, along with cash inflows in deferred revenue of $18.2 million, accrued expenses and other of $10.0 million, and litigation receivable and settlement liabilities of $4.3 million. These inflows were offset by outflows in inventory of $97.1 million, accounts receivable and unbilled receivables of $6.4 million, warranty of $4.1 million, and other assets of $2.4 million. For the six months ended June 30, 2025, cash provided by operating activities was $1.7 million, primarily due to operating results that included $13.6 million of net income, which included $16.5 million of non-cash expense, along with cash inflows in unbilled receivables of $11.0 million, accounts payable of $6.1 million, and accrued expenses of $3.9 million. These cash inflows were offset by cash outflows of $25.3 million related 34 to accounts receivable, $21.5 million of warranty liability, and $2.4 million and $1.5 million in other assets, and inventory, respectively. Investing Activities For the six months ended June 30, 2026, net cash used investing activities was $14.7 million, which was attributable to purchases of property and equipment. For the six months ended June 30, 2025, net cash used investing activities was $10.3 million, which was attributable to the purchase of $15.4 million in property and equipment, offset by the proceeds from the sale of property and equipment of $5.1 million. Financing Activities For the six months ended June 30, 2026, net cash provided by financing activities was $57.7 million, due to $60.0 million in borrowings on the Revolving Credit Facility, and $2.3 million in taxes paid related to net share settled equity awards. For the six months ended June 30, 2025, net cash used in financing activities was $10.2 million, due to $40.0 million in payments on the Revolving Credit Facility, offset by $30.0 million in borrowings, and $0.3 million in taxes paid related to net share settled equity awards. Debt Obligations For a discussion of our debt obligations see Note 9 - Long-Term Debt in our condensed consolidated financial statements included in this Form 10-Q. Surety Bonds For a discussion of our surety bond obligations see Note 13 - Commitments and Contingencies in our condensed consolidated financial statements included in this Form 10-Q. Product Warranty For a discussion of our product warranties see Note 8 - Warranty Liability in our condensed consolidated financial statements included in this Form 10-Q. Critical Accounting Policies and Accounting Estimates For a description of the application of our critical accounting policies or estimation procedures, see our 2025 Form 10-K. There were no material changes to the information previously disclosed.