What happened
Shares of solar company Shoals Technologies Group (SHLS -9.58%) jumped as much as 20.5% in trading on Friday, after the company reported fourth-quarter 2021 financial results. Shares closed the day up 14.6%.
So what
Revenue was up 24% from a year ago to $48.0 million, and net loss fell from $4.2 million to $2.2 million in the quarter. Gross profit, which is a key metric for manufacturers, was up 7% to $15.9 million.
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Management also said it's investing in growth, which pushed general and administrative expenses higher. In the quarter, the company spent $11.0 million on these activities, up from $5.6 million a year ago. But this investment is expected to pay off over time as new hires help drive growth.
Even more encouraging was that Shoals said backlog and awarded orders were up 94% from a year ago and 10% sequentially to $299.0 million. As a result, management said they expect revenue of $300 million to $350 million in 2022 with an adjusted net income of $54 million to $69 million. For context, in 2021 revenue was 213.9 million, and adjusted net income was $35.9 million.
Now what
Shoals is clearly experiencing tremendous growth as the solar industry expands. High commodity prices are driving incrementally more investment in renewable energy and companies like Shoals, which provides balance of systems components, will ride that growth.
I don't see the positive trends stopping soon either with solar continuing to be more cost-effective and countries taking energy security more seriously. But the stock is expensive given a market cap of $1.9 billion today, and that lack of value is what will keep me out of shares today.
