Attention Current Long-term Shoals Technologies Group, Inc. (SHLS) Shareholders

Philadelphia, Pennsylvania--(Newsfile Corp. - March 26, 2024) - Current Shoals Technologies Group, Inc. (NASDAQ: SHLS) shareholders who have held shares of the Company's stock since at least May 17, 2021, have standing to seek corporate reforms, the return of funds back to company coffers and potentially a court approved incentive award if appropriate.

According to an underlying securities fraud class action complaint, certain officers and directors of Shoals touted the Company's "focus on quality and reliability" with regard to its EBOS components, from which Shoals generated the majority of its revenue. These components were backed by a product warranty Shoals provided to its customers. Shoals highlighted that its products "meet [the Company's] stringent quality requirements." As the Company's warranty supported the products meeting "stringent quality requirements," Shoals assured investors that its reported "Cost of Revenue" included costs related to product warranty liability.

In Shoals' Quarterly Report on Form 10-Q for the first quarter of 2023, filed with the SEC on May 8, 2023 (the "1Q23 10-Q"), investors were first informed of a potential issue involving "a subset of wire harnesses used in [Shoals'] EBOS solutions [] presenting excessive pull back of wire insulation at connection points," which Shoals dubbed "shrinkback." Shoals also sought to ease investors' concerns by reporting that it had "substantially ceased use of the related wire."

Then, on August 1, 2023, Shoals filed its Quarterly Report on Form 10-Q for the second quarter of 2023 ("2Q23 10-Q") with the SEC and held a conference call with analysts to discuss its results for the quarter. The 2Q23 10-Q disclosed that Shoals had recorded a warranty liability of $9.3 million related to the shrinkback issue. During the corresponding call with analysts, Oppenheimer analyst Colin Rusch asked Defendants to "talk a little bit about the wire issues . . . how extensive it was in terms of the number of customers and number of shipments and how much time it was spread over?" In response, Chief Financial Officer ("CFO") Dominic Bardos stated, "We've communicated pretty much everything we can." CFO Bardos also confirmed that "[t]he charge that we booked in the quarter we believe is adequate to do the remediation required, and that's why we booked it."

The filed complaint further alleges that, in reality, and as remained undisclosed to investors, Shoals was well aware of customers experiencing wire insulation shrinkback by March 2022. For example, in March 2022, Shoals learned of exposed copper conduit resulting from shrinkback in EBOS wire harnesses at a customer's solar field in Arizona. Indeed, throughout 2022, Shoals learned of numerous customers experiencing similar copper conduit exposure, or shrinkback. As investors belatedly found out, Shoals had installed defective wire harnesses in at least 300 solar fields. These harnesses represented approximately 30% of the total amount of Shoals harnesses manufactured between 2020 and 2022. As a result, Defendants' positive statements about the Company's financial guidance, business, operations, and prospects during the Class Period were materially false and/or misleading.

On November 7, 2023, Shoals stunned the market by revealing that the Company had been forced to take an additional $50.2 million charge for warranty expense as result of the wire shrinkback issue. Shoals further advised that it expected the wire shrinkback issue to cost between $59.7 million and $184.9 million dollars to remedy.

On this news, Shoals' stock price fell more than 20%, from a closing price of $16.23 per share on November 7, 2023, to a closing price of $12.95 per share on November 9, 2023, wiping out approximately $550 million in market capitalization.

If you have held Shoals shares since prior to May 17, 2022 and would like to learn more at no cost to you, please visit https://grabarlaw.com/the-latest/shoals-shareholder-investigation/ or contact Joshua Grabar at jgrabar@grabarlaw.com or Mia Heller at mheller@grabarlaw.com, or call us at 267-507-6085.

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Contact:
Joshua H. Grabar, Esq.
Grabar Law Office
One Liberty Place
1650 Market Street, Suite 3600
Philadelphia, PA 19103
Tel: 267-507-6085
Email: jgrabar@grabarlaw.com

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