Array Technologies, Inc. (NASDAQ:ARRY) Poised for Continued Growth Amidst Industry Tailwinds

Published on September 24, 2024 | Ticker: ARRY

Array Technologies, Inc. (NASDAQ:ARRY) is a leading global manufacturer and supplier of utility-scale solar tracking systems and technologies. The company has established itself as a dominant player in the solar industry, leveraging its innovative product offerings and strong customer relationships to drive consistent financial performance.

Financials

In the fiscal year 2023, Array Technologies reported annual revenue of $1,576,551,000 and net income of $137,240,000. The company's strong operational execution was reflected in its annual operating cash flow of $231,955,000 and free cash flow of $214,966,000, highlighting its ability to generate substantial cash flow to fund growth initiatives and strengthen its financial position.

During the first quarter of 2024, Array Technologies generated revenue of $153,403,000, a decrease of 59% compared to the same period in the prior year. This decline was primarily driven by a 60% decrease in volume at the company's Array Legacy Operations segment and a 45% decrease in volume at its STI Operations segment, coupled with a slight decrease in average selling prices. Despite the revenue decline, the company was able to expand its adjusted gross margin to 35.7%, an increase of 880 basis points year-over-year, excluding a one-time $4 million benefit. This margin expansion was achieved through the company's ongoing focus on operational efficiency and cost optimization initiatives.

Strong Bookings and Backlog

Array Technologies' performance in the first quarter was evidenced by its bookings activity, with the company securing approximately $400 million in new orders and ending the quarter with a backlog of $2.1 billion. This backlog provides the company with significant visibility into future revenue, with approximately 80% of the first quarter bookings coming from what the company classifies as Tier 1 customers.

Geographic Diversification

The company's geographic diversification is also a key strength, with 73% of its first quarter revenue derived from the United States and the remaining 27% from international markets, primarily in Brazil and Spain. This balanced revenue mix helps mitigate the company's exposure to any single market and allows it to capitalize on growth opportunities across various regions.

Business Overview

Array Technologies' product portfolio continues to evolve, with the company recently introducing several innovative offerings, including its patented Hail Alert Response system and enhanced wind stow technology. These advancements not only improve the performance and reliability of the company's solar tracking systems but also provide tangible benefits to its customers, such as increased energy production and reduced maintenance costs.

The company's focus on research and development has been a key driver of its success, with the team investing $1.9 million in the first quarter of 2024 to develop new products and enhance existing offerings. This commitment to innovation has allowed Array Technologies to maintain its technological edge and stay ahead of the competition.

Outlook

Looking ahead, Array Technologies has reaffirmed its full-year 2024 guidance, projecting revenue in the range of $1.25 billion to $1.4 billion, adjusted gross margins in the low 30% range, and adjusted EBITDA of $285 million to $315 million.

Risks and Challenges

One potential risk factor the company is monitoring is the recent filing of antidumping and countervailing duty (AD/CVD) petitions on solar modules from certain Southeast Asian countries. While the ultimate impact of these petitions remains uncertain, Array Technologies believes its flexible product offerings and strong customer relationships position it well to navigate any potential disruptions in the supply chain.

Conclusion

Array Technologies' solid financial performance, innovative product portfolio, and strong market position make it well-equipped to capitalize on the growing demand for utility-scale solar projects globally. The company's focus on operational excellence, cost optimization, and strategic investments in research and development position it for continued success in the years ahead.

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