Shoals delivered revenue growth in Q2, surpassing Wall Street’s expectations, but the market reacted negatively, with shares dropping sharply after the report. Management pointed to higher domestic project volume and strong bookings as key drivers, yet acknowledged margin pressure from strategic pricing actions and an evolving product mix. CEO Brandon Moss emphasized the impact of competitive pricing and ongoing legal expenses as near-term headwinds, noting, “Gross profit percentage was in line with expectations of mid- to upper 30s, driven largely by strategic pricing initiatives and product mix.”

Is now the time to buy SHLS? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Shoals’s Q2 Earnings Call

• Julien Dumoulin-Smith (Jefferies) asked about order activity and customer willingness to sign contracts amid policy uncertainty. CEO Brandon Moss said project calendars remain busy, with strong market execution and growing backlog, especially in BESS and data center-related products.
• Philip Shen (ROTH Capital Partners) queried about growth expectations for 2026 and negative free cash flow guidance. CFO Dominic Bardos explained that working capital needs and warranty remediation will pressure cash flow this year, but these expenses are expected to decrease toward year-end.
• Brian Lee (Goldman Sachs) questioned why higher revenue guidance did not translate into higher EBITDA guidance. Bardos noted that promotional pricing and changes in customer and product mix are lowering margins, while legal expenses remain elevated.
• Colin William Rusch (Oppenheimer) asked about Shoals’ position on power quality and future product innovation. Moss highlighted the durability and performance of existing products and stated that the company’s 2 KV line is expected to roll out in 2026.
• Dimple Gosai (Bank of America) inquired about the battery energy storage opportunity amid FEOC (Foreign Entity of Concern) restrictions. Moss responded that Shoals is working with domestic suppliers and alternative battery technologies to address regulatory challenges and support data center demand.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be tracking (1) the pace of backlog conversion into revenue, as well as any signs of project delays; (2) execution of operational improvements tied to the new consolidated facility in Tennessee; and (3) the scale and profitability of international and BESS opportunities as they move from pipeline to revenue. The resolution of legal and warranty expenses will also remain in focus as indicators of improved margin potential.

Shoals currently trades at $4.62, down from $5.37 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).

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