Array Technologies, Inc. (NASDAQ:ARRY) is a leading global provider of solar tracking technology, offering innovative solutions that maximize energy production and deliver value to utility-scale and distributed generation customers. With a rich history spanning over three decades, the company has established itself as a key player in the rapidly growing solar energy industry.
Company Background and Product Innovation
Founded in 1989 and headquartered in Albuquerque, New Mexico, Array Technologies has evolved from a small, entrepreneurial venture into a solar technology powerhouse. The company's flagship product, the DuraTrack HZ v3 tracker system, features a patented design that allows one motor to drive multiple rows of solar panels through articulated driveline joints. This innovative approach results in greater reliability, lower installation costs, and reduced maintenance requirements compared to competitor designs, which often require one motor for each row of solar panels.
Array Technologies' commitment to innovation is evident in its extensive patent portfolio, with over 300 patents worldwide. The company has continuously expanded its product offerings, introducing new tracker systems, software platforms, and field services to meet the evolving needs of its customers and maintain its competitive edge in the global renewable energy market.
Strategic Milestones and Global Expansion
In 2020, Array Technologies reached a significant milestone by completing its initial public offering on the Nasdaq exchange. This move provided the company with additional capital to fund growth initiatives and further solidify its market position. That same year, Array expanded its global footprint with the strategic acquisition of Soluciones Técnicas Integrales Norland, S.L.U. (STI), a Spanish solar tracking solutions provider. This transaction allowed Array to accelerate its international expansion and better address the rising global demand for utility-scale solar projects, particularly in developing countries in Latin America and Africa.
Navigating Challenges
Over the years, Array Technologies has faced various challenges, including supply chain disruptions and commodity price fluctuations. To mitigate these issues, the company has focused on diversifying its supplier base, enhancing its domestic manufacturing capabilities, and securing long-term supply agreements with key vendors. These efforts have helped Array navigate the volatile market conditions and maintain its strong position in the industry.
Financial Performance
Array Technologies' financial performance has been a mixed bag in recent years. In fiscal year 2024, the company reported revenue of $915.8 million, a 42% decline compared to the previous year. This decrease was primarily driven by a reduction in both volume and average selling prices (ASPs). However, the company's adjusted gross margin expanded by 680 basis points to a record 34.1%, showcasing its ability to maintain profitability despite market headwinds.
For the most recent quarter, Array reported revenue of $275.2 million, representing a 19% year-over-year decline. The company cited commodity cost declines and the impact of project pushouts as headwinds affecting its performance. Despite these challenges, Array's annual net income for fiscal year 2024 was -$240.4 million, while its annual operating cash flow remained strong at $154 million.
Liquidity and Cash Flow
The company's free cash flow generation remained strong, with $135.4 million in fiscal year 2024, down from $215 million in the prior year. This robust cash flow enabled Array to end the year with a sizable cash balance of $364 million, providing the company with ample liquidity to navigate the evolving market landscape.
Array's financial position remains solid, with a debt-to-equity ratio of 2.40 as of December 31, 2024. The company has a $575 million term loan facility, of which $233.9 million was outstanding, and a $200 million revolving credit facility, which remained undrawn at the end of 2024. Array's current ratio of 2.28 and quick ratio of 1.82 further underscore its strong liquidity position.
Market Challenges and Opportunities
One of the key factors impacting Array's financial performance has been the volatility in the solar industry, particularly in its largest international market, Brazil. Factors such as the devaluation of the Brazilian real, volatile interest rates, and newly introduced tariffs on solar components have significantly slowed market growth in the region, resulting in project delays and order cancellations.
Despite these challenges, Array remains focused on leveraging its innovative product portfolio and strategic initiatives to drive growth. The company's order book reached $2 billion at the end of fiscal year 2024, up 10% compared to the prior year, underscoring the strong demand for its solar tracking solutions. Over 50% of this order book is expected to be delivered in 2025, providing a solid foundation for future revenue growth.
Research and Development Initiatives
To further strengthen its market position, Array has been actively investing in research and development (R&D) to enhance its product offerings. In 2024, the company introduced the OmniTrack, a flexible tracker design that accommodates uneven terrain and requires less grading, and the SkyLink wireless tracker control system, which reduces installation costs and improves reliability.
Domestic Supply Chain Strategy
Additionally, Array has made significant strides in its domestic supply chain strategy, positioning itself to meet the growing demand for solar projects with high domestic content. The company is on track to provide 100% domestic content trackers in the U.S. market by the first half of 2025, a key differentiator in an environment of geopolitical tensions and trade policy shifts.
Business Segments and Global Reach
Array Technologies operates through two main segments: Array Legacy Operations and STI Operations. The Array Legacy Operations segment, which contributed 70% of the company's total revenue in 2024, focuses on providing solar tracking technology to utility-scale and distributed generation customers in the United States. This segment generated revenue of $661.6 million and gross profit of $270 million in 2024.
The STI Operations segment, added through the acquisition of STI in January 2022, primarily serves international markets including Spain, Brazil, and South Africa. This segment, which accounted for 30% of Array's total revenue in 2024, offers dual-row tracker systems well-suited for sites with irregular boundaries or fragmented project areas. The STI Operations segment generated revenue of $254.2 million and gross profit of $27.7 million in 2024.
Array's global reach is evident in its revenue distribution, with 70% derived from the U.S. market and 30% from international markets in 2024. The company has shipped over 83GW of trackers globally as of the end of 2024, solidifying its position as a leader in the solar tracking industry.
Future Outlook
Looking ahead, Array has provided guidance for fiscal year 2025, targeting revenue in the range of $1.05 billion to $1.15 billion, representing a double-digit year-over-year increase. The company expects its adjusted EBITDA to range between $180 million and $200 million, reflecting an improvement in profitability driven by structural cost enhancements and the benefits of the Inflation Reduction Act's 45X tax credit.
For the first quarter of 2025, Array anticipates revenue between $260 million and $270 million, with an adjusted EBITDA margin of 11% to 13%. The company also projects adjusted gross margin of 29% to 30%, adjusted SG&A of $144 million to $152 million, and free cash flow of $115 million to $130 million for the full year 2025.
While Array Technologies has faced its fair share of challenges, the company's strong market position, innovative product portfolio, and strategic initiatives position it well to navigate the evolving solar industry landscape. As the global demand for renewable energy continues to grow, with the utility-scale solar industry expected to expand at a mid- to high-single digit rate in the coming years, Array's ability to provide cost-effective, reliable, and technologically advanced solar tracking solutions could be a key driver of its long-term success.