Shoals Modifies Leverage Covenant, Adds $50M Revolver With 18-Month Limit
Credit Pressure
Company Background
Shoals Technologies Group is a Portland, Tennessee-based manufacturer of electrical balance of system components — the wiring, connection, and monitoring hardware that ties together utility-scale solar arrays, battery storage systems, and, more recently, data center power infrastructure. Founded in 1996 and publicly listed in 2021, the company has approximately $1.7 billion in market capitalization. Full-year 2025 revenue was $475.3 million, up 19% year-over-year, and the company ended that year with a record backlog and awarded orders of $747.6 million.
The first quarter of 2026 marked a sharp acceleration: revenue reached $140.6 million, up 74.9% from the prior-year period, and management subsequently raised its full-year 2026 revenue guidance to $600 million to $640 million. That growth, however, is being financed in part through heavy revolving credit utilization — the company has consistently carried well over $100 million drawn on its revolving facility throughout 2025 and into 2026.
Shoals has also been managing a multi-front litigation burden for several years. A defective wire insulation issue at a supplier led to tens of millions in warranty and litigation costs through 2024 and 2025, and a shareholder class action resulted in a $70 million gross settlement accrual in the first quarter of 2026, substantially offset by a $64.75 million insurance receivable.
What Was Disclosed
On June 10, 2026, Shoals entered Amendment No. 7 to its credit agreement, originally dated November 25, 2020, with JPMorgan Chase Bank as administrative agent and Wilmington Trust as collateral agent. The amendment does two principal things. First, it provides a new $50 million incremental revolving tranche available for 18 months from the effective date — expiring around December 2027. Second, it replaces the existing financial covenant — a maximum consolidated first lien secured leverage ratio — with a maximum consolidated total leverage ratio capped at 4.00 to 1.00, with temporary increases permitted if a material acquisition closes. The filing notes that the new incremental loans carry substantially the same terms as the existing revolving loans and may be prepaid at any time without premium or penalty.