Everybody, welcome to day two of the J.P. Morgan Natural Resources Conference. My name's Mark Strouse. I cover clean energy and power infrastructure here at J.P. Morgan. Our first session of the day is with Brandon Moss, CEO of Shoals Technologies. Brandon, welcome. Thank you for coming. Good morning. Thanks, Mark. Great. I want to keep this open. If anybody has any questions, feel free to raise your hand. I would just ask that you wait for the mic to come around, since we are webcasting. Brandon, maybe you just want to give a few introductory comments, kind of what Shoals is all about, for anybody unfamiliar in the space. Sure. For those that are not familiar with us, we are the largest electrical balance of systems provider globally and in the States, primarily focused on utility scale solar fields. We do service the C&I market as well and have an OEM business that provides components more broadly to the solar industry. We are diversifying our business to really supply custom engineered electrical equipment to the broader electrical industry. Our first step in that direction was in the battery energy storage space, and we are serving a few end markets in that space now as well. We are in Portland, Tennessee, north of Nashville. We've got about 2,000 employees now. We are celebrating our 30th year doing business and our fifth year being a publicly traded company in 2026. Great. Okay. We're approaching the end of June here, so I'll steer clear of asking questions about 2Q. Thank you. I do want to ask about kind of just high level thoughts within, excuse me, maybe starting with the core solar business. Can you talk about kind of demand, bookings trends that you're seeing? Then kind of talking about the next several years, I mean, just kind of the puts and takes with power demand, with tax credit movements. Sure over the next several years, how you're thinking about this space through the end of the decade. I've said, Mark, probably the last couple of quarters, we're in the strongest solar market ever. That does not appear to be slowing down. I am a believer that the market is going to be stronger longer than maybe some of the prognosticators believe. Obviously, we've got the ITC and PTC sunsetting at the end of the decade. Assuming that does happen, right? There's still maybe some open windows for that even to change over the course of this year's election cycle, as there's a lot of focus around energy prices, obviously, right? That's going to be the key headline of this election cycle. I would not maybe totally think those things are going away. In total, there could be some windows there for change. However, if they do, I believe, and I think a lot of others in the industry believe, solar still being the lowest levelized cost of energy, and maybe most importantly right now, the fastest energy generation to deploy, is going to enable a lot of market continued growth in the near term and sustainability in the future. Feel really good about the continued strength in the broader bookings environment in solar. Great. Okay. Maybe pivoting to BESS. A lot of investor focus on energy storage at the moment. Can you just spend a minute just kind of talking about your approach to that market, which I think is unique? Talk about the different markets that you're addressing, so it's not just data centers. Sure. What are you looking at there? Sure. We've got what I would consider to be a pretty niche product, right? We are DC power specialists, and we've got a product that fits in battery energy storage called a DC Recombiner. Effectively what we're doing is we're aggregating DC power sources to deliver that power to an inverter converter system. We are a piece of the puzzle in the battery power architecture, and again, with a pretty innovative niche product. We serve primarily three markets. Mark mentioned the largest, which is the data center space. We're also selling into two other markets, one being grid firming, where there is just battery backup placed on the grid effectively to smooth volatility. Obviously, we are selling into the solar and storage market. That is the smallest market opportunity for us because the predominance in that space for battery backup is to use an AC paired system, plug-and-play solution. You guys know who the players are, Tesla and others. Our biggest market opportunity is obviously data centers. That's where we've had the most success to date. I think we've got first mover advantage in this market with the product that we are providing, and it's an exciting growth vector for the company. Great. Okay. You talked about kind of relative to each other. How about relative to the solar business? How big can that BESS market be, do you think? That market for us, if we stay with just a DC paired solution, is probably a $200 million opportunity. It's not a massive opportunity in the solar space unless we move into the AC paired space. Sorry. Overall BESS, though, when you include data centers and everything, how big is this market? That market we've not provided with data center specifically market size because the TAM changes significantly as the adoption of one-for-one pairing battery energy storage to consumption in the data center space. That market size is as big or bigger than our core solar business. Yeah. Okay. Right. You have an engineered solution with ON.energy's medium voltage UPS. Can you talk about why you entered into that partnership? What's unique about ON.energy that you found interesting? What is the go to market for that, and can you kind of talk about progress that you're seeing with that partnership? Yeah, we're excited about the partnership. Obviously, in all our markets, we go to market with a partnership mindset. When you think about what we're doing specifically with ON.energy, it's not really all that different to what we do with EPCs in the solar space. We have framework agreements. We decide on duration and pricing and quantities of products, and then we execute that agreement over time. It's a framework deal similar to our others. We're excited about ON.energy specifically because we feel, and I think they would say the same, that they've got a 6 to 12 month probably head start on the marketplace in really figuring out this medium voltage UPS architecture. We're very excited about that. They've got a strong pipeline, obviously, that we've got visibility to that will bring continued opportunity for us over the course of the next few years. Having said that, although they've got a patented architecture that our products will be a part of, there are others trying to do the same thing, right? Again, maybe a little bit further behind where ON.energy is, but I think the predominance of larger scale AI backed data centers will have this medium voltage UPS architecture, and there will be others that figure out how to do that, and we've got opportunities to partner with those individuals as well. Okay. Sounds like it's not exclusive. On the ON.energy side, are they using Shoals exclusively or? We have an agreement in place that is time-based and unit volume based. Okay. Our goal is to be the predominant supplier of the units to them. Okay. I would encourage you all to look into ON.energy. They've thrown out some very big numbers in the next several years. Okay. All right. Can we kind of turn to competition? Sure. Maybe within what we're talking about with BESS and everything, kind of new, excuse me, new players emerging, but within the core solar business as well. Maybe give this an opportunity to kind of update us on the litigation against one of your competitors. Sure. Yeah. The competitive landscape, look, the market is robust, as mentioned before. I think the biggest concerns for our immediate customers right now are speed of installation because of the amount of business that they have and effectively, certainty of supply and delivery. I think as it relates to installation speed, ease of installation, we continue to have the preferred solution in the marketplace. You're seeing that with our recent quote levels and our recent backlog and awarded orders growth. We truly remain the preferred solution in the marketplace. I believe that will continue. The market is growing, we have also outgrown the market. You can look at last year as an example of that and where we've guided to this year. I think that will prove to be the same scenario. We are taking wallet share specifically with a number of customers, I think we're doing that through flexibility of how we're delivering product, packaging, design, and also new products, where historically, we had maybe turned down those opportunities. We're well positioned. We've got the preferred solution in the marketplace, we'll continue to have that. I don't see big changes in the competitive landscape. I know there's always a lot of questions with others entering the EBOS market. I've not seen any material changes in the competitive dynamics because of those situations. As it relates to our current litigation against one of our competitors, tomorrow, actually, we will have, hopefully, an ITC decision. Okay. That was delayed two weeks. We were supposed to have that in the beginning of June. They pushed it a few weeks. We will find out news from the commission tomorrow. As a reminder, the commission did announce months back that they would not review contested items. Effectively agreeing with what the administrative law judge ruled in her initial determination. Tomorrow, assuming it happens tomorrow, we always have to caveat that with the courts, it would just be around remedy for the ITC case. Tomorrow will be a big day for us, hopefully. Related to that, we also have a district court case. A week or so back, the court ruled that our patents were valid and enforceable. We will have a district court case in North Carolina in August to prove infringement and also have damages determined at that case as well. Things are moving forward, maybe finally coming to closure on that case. Yeah. That'd be good. Okay. Can you talk about the opportunity that you've been pursuing the last at least two or three years now with kind of the Long Tail BLA? Kind of getting into new customers that you had never worked with before. Give us an update on that. What are you seeing as far as kind of opening up the solar market, but also being able to cross-sell some of your best solutions or anything else? Yeah. We have become much more flexible about the architecture of what we will engineer and deliver to our customer base. I would say that we were pretty rigid around our design being a traditional BLA layout, a traditional BLA solution. We're not as open to other architectures in the past. That has changed. That is why I think we're growing in the way that we are relative to the rest of the market. There are two products that have helped enable that, one being Long Tail BLA. If you think historically, our cents per watt contribution to a solar site was about $0.02, $0.025 a watt. Our product would effectively end at a disconnect. There would be another trunk wire that went from the disconnect to the inverter. Architectures on sites are changing now. We are changing with them to be able to provide that DC feeder solution as sites really organize their disconnects around the inverter space. That's opened up some market opportunity for us that's probably $0.005-$0.008, and has been a very successful product for us. We're very happy and honestly probably the growth of that product category has grown faster than we had anticipated, frankly. We have also introduced in the market a Super Harness, SuperJumper that sort of mimic what a BLA can do, and also a mini BLA. Those products are also picking up traction in the marketplace. Again, we're winning wallet share with specific EPCs as a result of those products. Okay. Can you talk about international? That market's grown fairly significantly in recent years. Can you just talk about where you're seeing the most growth right now? Are there kind of differences in labor dynamics or regulatory standards, anything like that- Sure would preclude Shoals from going into a certain market? Yeah. Our growth last year came primarily in Australia and LATAM. Those are two real focus regions for our company right now. We are investing in more human capital in Australia and building out almost, I'd call it a fully autonomous commercial side of the business where we've got sales engineering, project management, all the things that you would need to service an EPC in country. We are seeing great opportunities as a result of that. We're excited about the potential growth in Australia. As Mark, you mentioned, the labor dynamics there are very similar to the United States. Topography and a lot of situations are there very similar to the States, I think we will continue to have wins there as well. It is probably worth mentioning, us being a domestic producer current trade policy puts us at a bit of a disadvantage for exporting product. For us to continue to grow our international business within the current trade policy will probably require some outside investment for production at some point, unless trade policy changes, of course. Okay. Got it. Any questions? Larry? Sorry, do you mind waiting for the mic? Yeah. Thanks. Just wondering if you guys, there's a lot of activity on the M&A space. Nextracker has gone into the space. You guys seem like a lovely target. I don't know if that's something you guys are contemplating in the strategic analysis. Yeah, look, I would say we probably contemplate targeting companies versus being a target more, obviously well aware of where we're sitting in the space. When I think about capital allocation specifically for us, it's centered around growth. We've invested a lot of capital to build out this new factory to grow in our core solar markets. We are looking at M&A opportunities, tuck-in opportunities that can help us diversify more in the power equipment space. Strategically for us, our goal is to make Shoals look like a more diversified equipment provider. That doesn't necessarily mean in the solar space. I think about it more in the general electrical space than anything else. I'd say capital allocation for us, focus on inorganic growth for tuck-ins to help diversify. Also, on the organic side, we are very excited about our new data center product that we launched maybe two months ago now, called Airlink, that is going to live in the white space of the data center. We've not played in that market to date. We've been in the infrastructure side, so we're very excited about the potential growth of that market. If you think about the scale of the opportunity inside of the data center for us, it's probably a $2 billion market today and going to a $4 billion market by 2030. I think our IP, our solution that we're bringing to market versus traditional busbar, is very unique, and has the opportunity as architectures move to 800 V DC to be exceptionally successful. Just a quick follow-up on that. Given your growth potential in general electrical and BESS and data centers, et cetera, it sounds like you could potentially benefit from a 0% coupon convertible to help finance that growth. I don't know if that's something also under consideration. There have been a lot of people mention that to us, yes. It's something we are thinking about. I wish Dominic were here to have heard that. All right. Thanks, Larry. Maybe just spend a few more minutes on that, the inside the data center opportunity. Yeah. Sure. What is that product? How is it different than what you're doing already? Yeah. It's effectively BLA, right? The architecture is effectively BLA. Our BLA in a solar application collects power. A BLA in this application would distribute power. It's a trunk bus solution with leads similar to what we would have on our solar product that drop down to rack servers. What is fantastic about that product is, one, installation is faster and easier. Traditional busway has significant lead times right now. Traditional busway is inherently inflexible. It's a fixed structure. There are, at higher voltages, some concerns around that product. That product is limited today by current. Typical AC busbar solutions can deliver about 1,250 A. Our product is capable of going up to 2,800 A. Compare that with an extra circuit and double that. We can go do an 800 V solution. We can go all the way up to 1,500 V. As compute changes over time, the power density of our product is significant and superior to others, and we will be able to effectively future-proof a data center from a power delivery standpoint versus having to change that architecture when you change the compute in the future. We are very excited about the product. Again, mentioned that the market size is very large. We've got some work to do still there around UL. We've got some things that we've got to work through from a National Electrical Code standpoint, all normal course of developing a new product. We're exceptionally excited about it. the UL process and everything, should we think about that as over the next 12 months, or is that into the- I think, the canned answer is six to 12, but I would bet more on 12 than- Yeah six, knowing UL and everything, that the new products and things they're dealing with now. Yeah. to the extent that 800 V DC architecture, I think most people are saying kind of 2028, 2029 timeframe, you'll be right there. We will be right there. The product is also AC capable, so we've got a 480 AC solution, which is the vast majority of what is being developed in the data center space today. We can roll that solution as we get approvals at 480 AC. It's effectively the same manufacturing process as the DC solution for us. Okay. Can you give us an update on the new facility in Tennessee? I went out to the last one, and I remember kind of being very tight quarters. Yeah. The status update on the new facility, and just kind of talk about some of the efficiency gains that you're expecting there. Yeah. The new facility, all of our equipment is installed. We'll say it looked a lot bigger when it was a 640,000 sq ft empty building than it does today, but by no means is it tight quarters like our old facility. All equipment is in. We've got additional capacity around BLA harness lines. The last part of our move was to move our enclosures. Our combiner box is in, which we completed that about a month ago. What is very exciting for us is the investment in our battery energy storage, our recombiner production line. That's literally the first thing you see when you walk out onto the production floor is sort of an assembly line set up to manufacture those products at scale. We are excited to be in. The facility has started, the equipment is in, and we're trying to get everybody in the right spot and maximize our production in that site. As any new plant move goes, there's daily challenges, but we're getting better and better each day in that facility, and we're really excited about the growth that it will provide for us over the course of the next few years. Okay. I know Dom isn't here, but I'm going to give you a financials question. Sure. Just kind of walk everybody through, on the margin side, we get a lot of questions, just kind of the roadmap over the last couple of years, kind of changes with competition, changes with product mix, kind of the waterfall. Yeah From point A to point B. Where do we go from here? Sure. Yeah, just thinking about margins, maybe more future-looking, talk about the competitive landscape first. As mentioned at the start of the conversation, the market is very good. I think capacity is probably tight, and the pricing behavior is playing out as you might expect, given that scenario. As a reminder, we've got a 12-18 month sales cycle, so the jobs that we're pricing now will not become revenue for 3-6 quarters effectively, right? We are happy about the current business climate as it relates to pricing. Okay. Mix is something that we talk about on a quarterly basis, has a big impact on our margin within a quarter. That mix is typically driven by how much of our OEM business we have as a contributing factor to our revenue in the quarter in long-tailed BLA. Again, both businesses, both product lines, great businesses for us, great contribution to operating income, but on a gross margin percentage basis can be dilutive within a quarter. As we've said, we see margins improving in the back half of this year and going forward, continue to believe that will be the case. As mentioned with the new plant move, obviously there's some headwinds from time to time on moving costs as we experienced in the first quarter and continue to get the plant where we want to be from a production standpoint. I think the margin outlook in the future, Mark, continues to be where we've communicated it. Yeah. Okay. Last chance, any questions? Okay, Brandon, we can wrap. Thank you all so much.