Executive Summary / Key Takeaways

• Strong Operational Momentum: Array Technologies delivered robust Q2 2025 results, with revenue up 42% year-over-year and year-to-date volume growth of 84%, signaling significant market share recovery and operational excellence.
• Strategic Product Innovation: The company's differentiated technology, including OmniTrack, SkyLink, and the new Hail XP, is gaining substantial market traction, with OmniTrack and SkyLink now comprising over 35% of the order book, enhancing competitive advantage and profitability.
• Optimized Capital Structure & Growth: Recent debt refinancing has significantly strengthened Array's balance sheet, extending maturities and reducing interest expense, while the pending APA Solar acquisition is set to expand its product portfolio and total addressable market.
• Positive 2025 Outlook: Array has raised its full-year 2025 revenue guidance to $1.18 billion - $1.215 billion, backed by a strong $1.8 billion order book and an anticipated 30% volume growth, despite ongoing market uncertainties.
• Resilient Competitive Positioning: Leveraging its patented designs, domestic content capabilities, and flexible architecture, Array is well-positioned to capitalize on increasing global energy demand and industry consolidation, mitigating risks from tariffs and regulatory shifts.

The Foundation of Solar Tracking Excellence

Array Technologies, Inc. (NASDAQ:ARRY), established in 1987 and headquartered in Albuquerque, New Mexico, stands as a global leader in solar tracking technology. The company provides essential products, software, and services for utility-scale and distributed generation solar PV projects. Array's business is segmented into Array Legacy Operations, primarily serving the U.S. market, and STI Operations, which focuses on international markets, particularly Spain and Brazil.

The broader industry landscape is characterized by an undeniable surge in global energy demand. Projections indicate the U.S. alone will require 50% more annual electricity production by 2035, driven by manufacturing reshoring, electrification, and data center growth, with peak demand growth rates exceeding five times that of the past decade. Solar energy remains at the forefront of this expansion, accounting for 64% of all new U.S. electricity deployment in 2024. Utility-scale solar, in particular, is favored for its rapid deployment, lower costs (with or without tax credits), absence of ongoing variable input costs, and a robust domestic supply chain.

Array operates in a competitive arena, primarily against players like Nextracker (NXT), SunPower (SPWR), and First Solar (FSLR). While Nextracker often emphasizes software-driven optimization, Array differentiates itself through a focus on hardware reliability, adaptability, and ease of installation. This strategic emphasis has allowed Array to carve out a strong niche, particularly in markets demanding robust physical performance and operational simplicity.

Technological Edge: Array's Differentiated Moat

Array's core competitive advantage is deeply rooted in its proprietary technology and continuous innovation. The flagship DuraTrack HZ v3 system utilizes a patented linked-row, single-driving apparatus. This design is a significant differentiator, as competitors often require one motor for each row of solar panels, making their designs "inherently less efficient and reliable." This patented design, which does not expire until February 5, 2030, translates into tangible benefits for customers, including greater reliability, lower installation costs, reduced maintenance requirements, and competitive manufacturing costs.

Beyond its foundational DuraTrack, Array has consistently pushed the boundaries of tracker technology:

• Passive Wind Stow: Introduced in 2015, this feature allows individual rows to move to a high tilt position to mitigate stress from high wind loads. This capability provides "up to 4% increased energy production when compared to active stow protocols provided by our competitors."
• OmniTrack: Launched in September 2022, this terrain-following tracker significantly reduces the need for grading and civil works, accommodating uneven terrain. Its rapid market adoption is evident, now representing over 35% of Array's order book and 30% of new bookings in Q1 2025. Both DuraTrack and OmniTrack platforms are fully verified for the UL 3703 standard for 2,000 volts, enabling "increased power density, lower balance of systems costs, and higher operating efficiency."
• SkyLink: Introduced in Q3 2023, SkyLink is an eight-link row, string-powered solution featuring wireless capability, DC motors, and ZigBee communications. This innovation eliminates the need for trenching and grid-based power, and can operate down to -40°C without batteries. Like OmniTrack, it now constitutes over 35% of the order book and 30% of Q1 2025 new bookings.
• Hail XP: Launched in May 2025, this advanced tracker is specifically designed for extreme weather events. It boasts an "optimal stow angle of 77 degrees" for superior hail protection, integrating seamlessly with Array's SmarTrack software. This addresses a critical industry pain point, as hail claims, while few in number, represent "more than half of the financial damages incurred" in the solar industry, with nearly 40% of the U.S. market prone to extreme hailstorms. The first Hail XP project was booked in Q2 2025 for early 2026 shipment in the Texas hail belt.
• SmarTrack Software: This IP-protected platform provides automated hail alert response, passive wind stow, automated snow response, diffuse, and backtracking capabilities. Over 5 gigawatts of SmarTrack are currently deployed, with a target of 10 gigawatts by year-end 2025. An automated snow response feature, using on-site snow sensors, is also set for launch.

A critical aspect of Array's technological moat is its flexible architecture, which does not require drilling into torque tubes. This allows for adaptable clamp offerings, enabling customers to readily shift between module brands, versions, and dimensions. This flexibility is crucial for navigating regulatory changes like safe harbor strategies and for repowering projects, where Array's 87 GW of deployed solutions make it ideally suited for module refreshes and site refurbishments. The company's R&D efforts are further bolstered by 22 new patents in 2024, bringing its total to 329 worldwide. Strategic investments, such as in SWAP Robotics, aim to integrate robotic operations for enhanced project cycle time efficiency, field installation savings, and CapEx optimization. These innovations collectively strengthen Array's competitive position, drive higher average selling prices (ASPs) for new products, reduce customer costs, and improve overall margins.

Financial Strength and Strategic Expansion

Array Technologies demonstrated robust financial performance in the second quarter of 2025, signaling a clear upward trajectory. Revenue reached $362.24 million, marking a substantial 42% increase year-over-year and a 20% sequential rise. This growth was primarily fueled by increased shipment volumes and an improved business mix favoring Array Legacy Operations. Year-to-date, revenue for the first half of 2025 stood at $664.61 million, a 62% increase over the prior year period, driven by an impressive 84% year-over-year volume growth.

Profitability also saw significant improvements. Net income to common shareholders surged to $28.47 million in Q2 2025, up 138% from the previous year, and a sequential improvement of over $26 million. Adjusted EBITDA reached $64 million, representing a healthy 17.5% margin. Diluted EPS followed suit, increasing to $0.19.

Free cash flow for Q2 2025 was $37 million, a notable increase from $2 million in the same period last year, driven by effective working capital management.

Despite these gains, gross margins faced some pressure, consolidating at 26.8% in Q2 2025 and 26.1% for the first half. This was primarily attributed to commodity-driven pricing pressures, elevated logistics costs, and the initial impact of tariffs. However, the sequential improvement in gross margin was supported by a more favorable mix of domestic projects, increased volume, and the roll-off of low-margin legacy Volume Commitment Agreement (VCA) projects. Array proactively reconfigured and descoped 2026 and 2027 projects associated with its sole remaining legacy fixed-priced VCA, enhancing the overall margin profile of its order book.

Array's liquidity and capital structure have been strategically optimized. The company ended Q2 2025 with a strong cash balance of $377.27 million and total liquidity exceeding $500 million, including $133.7 million available under its Revolving Credit Facility.

A significant debt refinancing in Q2 2025 saw the issuance of $345 million in new 2.88% Convertible Senior Notes due 2031. The proceeds were used to fully repay the $233.88 million Term Loan Facility and repurchase $100 million of 2028 Convertible Notes for $78.36 million, resulting in a $20.1 million gain on extinguishment of debt. These actions extended the average debt maturity by approximately two years and reduced annualized cash interest expense by $9 million. The net debt leverage ratio now stands at a healthy 1.7x, with no outstanding senior secured debt. The company also invested $35.1 million in capped calls for the new convertible notes, effectively raising the conversion price from $8.12 to $12.74 per share, providing crucial dilution protection.

Strategic Growth and Outlook

Array's strategic vision for growth is multifaceted, combining organic innovation with inorganic expansion. A pivotal move is the pending acquisition of APA Solar, LLC, a provider of engineered foundation solutions and fixed-tilt mounting systems. This $210 million transaction, expected to close in Q3 2025, marks Array's first step beyond core tracker components. It will enable Array to offer integrated tracker-plus-foundation systems, particularly for challenging soil conditions, and diversify into fixed-tilt systems, thereby significantly increasing its total addressable market. The acquisition is anticipated to be EPS accretive in its first year, before synergies, and aligns with the industry trend of developers and EPCs seeking integrated solutions to reduce complexity and risk.

The company's commitment to a robust domestic supply chain is a key strategic pillar. Array has achieved the capability to deliver 100% domestic content trackers for Table 1 of the Inflation Reduction Act (IRA) bill. This was demonstrated by booking its first 200 MW AC 100% domestic content tracker project for ENGIE (ENGIY) in Indiana, with shipments commencing in Q3 2025. With 93% of its domestic bill of materials sourced from the U.S., Array is well-positioned to capitalize on incentives for domestic manufacturing.

For the full year 2025, Array has raised its guidance, reflecting confidence in its operational execution and strong backlog. The company now projects revenue between $1.18 billion and $1.215 billion, with the midpoint representing a 9% increase. Adjusted gross margin is expected to be between 28% and 29%, while Adjusted EBITDA is forecasted to be in the range of $185 million to $200 million. Adjusted diluted EPS is anticipated to be between $0.63 and $0.70. This outlook is underpinned by a strong order book of $1.8 billion, including $645 million in remaining performance obligations, and an expected 30% volume growth in 2025. Management anticipates continued booking momentum in the second half of the year, driven by pent-up demand awaiting regulatory clarity.

Competitive Dynamics and Risks

Array's competitive standing is bolstered by its technological differentiation and operational agility. Its patented DuraTrack design offers inherent efficiency advantages over competitors like Nextracker, whose designs may require more motors per row. The company's flexible architecture, which avoids drilling into torque tubes, provides a distinct advantage in accommodating various module types and facilitating late panel selections, a crucial factor given current AD/CVD uncertainties. This also positions Array favorably for repowering older sites. While pricing in North America remains "fairly disciplined," international markets, particularly Brazil, exhibit less discipline due to a higher number of smaller competitors. Array leverages its 45X benefits opportunistically to offer competitive pricing without explicit sharing agreements, aiming to gain market share.

However, Array operates within a dynamic environment fraught with risks. Regulatory uncertainty stemming from the One Big Beautiful Bill Act (OBBB) poses challenges, with new termination dates for the solar Investment Tax Credit (ITC) and Foreign Entity of Concern (FEOC) limitations creating short-term delays as customers reevaluate project pipelines. Trade policy and tariffs, including increased duties on steel, aluminum, and solar components, along with ongoing Anti-Dumping/Countervailing Duty (ADCVD) orders, can disrupt supply chains, increase costs, and delay projects. Array has proactively mitigated these by expanding its domestic supply base and structuring commercial contracts for tariff cost recovery.

Macroeconomic factors also present challenges, particularly in international markets. Brazil, for instance, faces project delays due to a depreciating Real, high interest rates (15%, highest since 2006), and new solar component tariffs. Geopolitical instability, such as the Red Sea shipping disruptions, has led to port congestion and increased logistics costs, which Array addresses through increased local sourcing. Project timing delays persist due to factors like permitting and interconnection bottlenecks, equipment shortages (e.g., high voltage breakers), and EPC labor constraints. Despite these headwinds, management observes the U.S. market stabilizing and remains confident in its ability to execute.

Conclusion

Array Technologies is demonstrating a compelling narrative of strategic growth and operational resilience in a rapidly evolving solar market. The company's strong Q2 2025 performance, marked by significant revenue and volume growth, underscores its ability to execute and reclaim market share. This momentum is fundamentally driven by Array's deep commitment to technological innovation, with products like OmniTrack, SkyLink, and the new Hail XP providing tangible, quantifiable benefits that differentiate it from competitors and address critical industry challenges.

The strategic acquisition of APA Solar and the optimization of its capital structure further solidify Array's foundation for future expansion, enabling it to offer integrated solutions and broaden its market reach. While macroeconomic and regulatory uncertainties present ongoing challenges, Array's proactive measures, robust domestic content capabilities, and disciplined financial management position it to capitalize on the immense demand for utility-scale solar. For investors, Array Technologies represents a compelling opportunity to invest in a company that is not only delivering strong financial results but is also strategically positioned to lead the next chapter of solar energy deployment through continuous innovation and a relentless focus on customer value.