Shoals Technologies Group Inc (NASDAQ: SHLS) stock fell over 4.7% on August 11th, 2021 (as of 11:06:11 AM UTC-4 · USD; Source: Google finance) after the company posted mixed results for the second quarter of FY 21. SHLS in the second quarter of FY 21 has reported the adjusted earnings per share of 9 cents while reported the adjusted revenue growth of 38 percent to $59.7 million in the second quarter of FY 21, missing the analysts’ estimates for revenue of $60.1 million.
Adjusted EBITDA for the second quarter was $20.6 million, up 34% from $15.4 million in the prior-year period, with adjusted EBITDA margin decreasing approximately 90 basis points year over year to 34.5%. Adjusted net income has increased to $14.7 million in the second quarter compared to $13.1 million during the same period in the prior year, increasing 12%, mainly due to increased business solutions revenue, partially offset by an increase in interest expense.
This revenue growth is driven by a 62% year-over-year increase in the system solutions revenues, which was partially offset by an expected decline in components revenues. The growth in system solution revenues reflects strong demand for the combine. The decline in component revenue was consistent with the expected change in certain customers’ order timing relative to last year and the conversion of the other customers from components to system solutions. The sale of system solutions represented 86% of revenue versus 73% in the prior-year period. Gross margin in the second quarter expanded by over 500 basis points versus the prior-year period of 43.8% as a result of higher portion of the revenue coming from combine as the person go system solutions, purchasing efficiencies from increased volumes, improved materials planning, which reduced logistics costs, enhancements to product design and lower manufacturing costs and other manufacturing efficiencies resulting from higher production volumes.
Shoals Technologies has reaffirmed the previous guidance and expect 2021 revenue to be in the range of $230 million to $240 million, up 31% to 37% year over year. The company expects adjusted EBITDA to be in the range of $75 million to $80 million and adjusted net income to be in the range of $47 million to $51 million.