PORTLAND, Tenn. – Shoals Technologies Group, Inc. (NASDAQ: SHLS), a key player in the energy transition market, has announced a stock repurchase program with authorization to buy back up to $150 million of its Class A common stock. This repurchase plan will be active through December 31, 2025, and may include open market purchases, privately negotiated transactions, and other methods as permitted by federal securities laws.
The company's CEO, Brandon Moss, expressed that this initiative is expected to deliver shareholder value and reflects the board and management's confidence in Shoals' business and its prospects for growth. To initiate this program, Shoals has entered into an Accelerated Share Repurchase (ASR) agreement with Jefferies LLC to repurchase $25 million worth of stock. This will initially involve the transfer of approximately 2.2 million shares, based on the stock's closing price as of June 10, 2024.
The ultimate number of shares bought back will depend on the average share price during the ASR period, with a final settlement expected in the third quarter of 2024. Dominic Bardos, CFO of Shoals, indicated that the repurchase program is a component of the company's broader strategy for value creation, which also considers investments in technology, strategic acquisitions, debt reduction, and further share repurchases.
The repurchase authorization does not commit Shoals to a specific number or timing of share repurchases, which will be influenced by various factors, including market conditions and capital availability. Shoals anticipates funding the repurchases through cash on hand, free cash flow, and borrowings under its credit facilities.
Shoals Technologies Group, specializing in electrical balance of system solutions, has been a prominent name in the renewable energy industry since its inception in 1996. The company's innovations have consistently aimed at enhancing installation efficiency, safety, and system reliability.
This news is based on a press release statement and contains forward-looking statements regarding the impact of the share repurchase program and the company's growth potential. These statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations.
In other recent news, Shoals Technologies Group has been in the spotlight with mixed financial projections and strategic shifts. The company's FY24 guidance, including expected revenue of $465M, adjusted EBITDA of $140M, and net income of $92.5M, was notably below FactSet consensus estimates, primarily due to project delays and higher interest rates.
Q1 2024 results showed revenue of $90.8M and non-GAAP EPS of $0.07, reflecting a year-over-year decline in gross margin to 40.2%. Despite these setbacks, the company expects to maintain a stable adjusted EBITDA margin and remains optimistic about the second half of 2024.
In addition to financial challenges, Shoals Technologies is facing an ongoing litigation against Voltage, LLC, and Hikam America over patent infringement, which could significantly impact the company's competitive position. In response to these issues, several analyst firms including Barclays (LON:BARC) Capital Inc., Cantor Fitzgerald, RBC Capital Markets, TD Cowen, Mizuho Securities, and Northland have adjusted their price targets and ratings for the company.
Despite facing industry headwinds, Shoals Technologies is exploring strategic management decisions such as share buybacks and mergers & acquisitions to enhance shareholder value. Furthermore, the company is also looking to expand its international presence under a newly realigned sales team. These recent developments reflect the company's proactive approach to navigating a complex landscape of market demand, litigation, and industry-wide challenges.
InvestingPro Insights
Shoals Technologies Group's recent announcement of a stock repurchase program is a strategic move that aligns with their confidence in the company's growth trajectory. As investors evaluate the potential impact of this initiative, InvestingPro metrics and tips provide a deeper understanding of the company's financial health and market position.
InvestingPro Data suggests that Shoals Technologies Group currently holds a market capitalization of $1.16 billion, with a P/E ratio of 37.99. This reflects a high earnings multiple, which is echoed by the adjusted P/E ratio for the last twelve months as of Q1 2024, standing at 38.11. Despite the challenges, the company has demonstrated a solid 30.38% revenue growth over the last twelve months, signaling strong business performance.
Two notable InvestingPro Tips for Shoals include the expected net income growth this year and the fact that the company operates with a moderate level of debt. These insights indicate a potentially favorable outlook for the company's profitability and financial stability.
Still, it is important to note that 13 analysts have revised their earnings downwards for the upcoming period, and the stock price has experienced significant volatility, with a 71.64% decline over the last year. These factors could influence investor sentiment and the effectiveness of the repurchase program.
For those interested in a comprehensive analysis, there are additional InvestingPro Tips available, which delve into aspects such as the company's liquid assets, stock price movements, and profitability predictions. Access to these tips can be found at https://www.investing.com/pro/SHLS.
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