Array Technologies, Inc. Q1 FY2025 earnings call

Business and Market Update

• Strong first quarter driven by focused execution and robust demand, with revenue up 97% y-o-y and volume shipped up 143% y-o-y.
• Order book remains resilient at $2 billion, with an 18% increase in first quarter contracting compared to the fourth quarter of 2024.
• Added solar industry veterans to the management team, seeing benefits from leadership additions.

Supply Chain and Product Updates

• Over 75% of contracted projects allow passing 100% of tariffs to customers, and at least 75% of remaining 2025 domestic deliveries are for projects with US-made or already in US panels.
• CPQ program uses advanced algorithms for supply and logistics routing. Supply chain has over 50 US suppliers with over 40GW committed capacity, and global supply chain with over 75 partners.
• Product updates: SkyLink platform seeing strong interest, SmartTrack software with over 5GW deployed, DuraTrack and OmniTrack platforms verified for UL 3703 standard for 2,000 volts.

Financial Highlights

• Revenue in Q1 2025 was $302.4 million, up 97% y-o-y. Adjusted EBITDA was $40.6 million, with adjusted EBITDA margin of 13.4%. Net income attributable to common stockholders was $2.3 million compared to a net loss in prior year. Ended the quarter with $348 million in cash and total liquidity of ~$510 million.

In the first quarter of 2025, Array Technologies achieved revenue of $302 million, a 97% increase compared to the prior year first quarter and a 10% sequential increase from the fourth quarter of 2024. Delivered volume, measured in megawatts of generation capacity, was up 143% year-over-year, marking the second largest quarter of volume shipped since 2023. Sales in North America represented approximately 65% of the revenue in the quarter. Adjusted gross margin for the first quarter was 26.5%. The revenue growth was driven by substantial increase in volume shipped, including projects previously on hold from 2024. Year-over-year, there were moderate commodity-related ASP declines in legacy operations and slightly higher declines internationally, but sequentially, ASP increased slightly.

• Reaffirmed full-year 2025 guidance: revenue expected to be within $1.05 billion to $1.15 billion.
• Adjusted gross margin guidance within 29% to 30%.
• Adjusted G&A expected to be between $144 million and $152 million.
• Adjusted EBITDA expected to range between $180 million and $200 million.
• Adjusted diluted earnings per share anticipated to be between $0.60 and $0.70.
• Free cash flow expected to be between $115 million and $130 million in 2025 after capital expenditures of $30 million to $35 million.

• Geopolitical headwinds, including ongoing tariff negotiations and potential shifts in the Inflation Reduction Act, creating uncertainty for project timings and costs.
• In Brazil, devaluation of the real, volatile interest rates, and new tariffs on solar components slowing market growth for several quarters.
• Uncertainty around IRA tax credits and their impact on project economics and bookings.

Q: Mark Strouse asked about VCAs and potential new metrics, and follow-up on legacy low margin VCA deal.

A: Kevin Hostetler said they're in active discussions with customers on VCAs, no new metrics planned; Keith Jennings said no second quarter guidance given, legacy low price VCA has no scheduled call-offs in 2025.

Q: Colin Rusch asked about order size, lead times, and product competitive advantage.

A: Kevin Hostetler said lead times are industry-leading at 14 weeks, discussions on shortening; Neil Manning talked about product focus on extreme weather capabilities and SkyLink's simplified installation.

Q: David Benjamin asked about cash use plan and customer project schedule differences.

A: Keith Jennings said looking at all options for delevering term loans; Kevin Hostetler said customer conversations on project schedules are similar for EPCs and developers.

Q: Luke Anneser asked about uncertainty drivers (IRA vs tariffs) and preferred stock distributions.

A: Kevin Hostetler said uncertainty is from both IRA and tariffs; Keith Jennings said preferred stock distributions in summer 2026.

Q: Phillip Shen asked about exposure to battery cell pack challenges and impact of reciprocal tariffs.

A: Kevin Hostetler said 2025 projects seem solid as most components are in-country; tariff impact on back half not significant yet.

Q: Brian Lee asked about steel pricing impact and bookings momentum.

A: Kevin Hostetler said steel prices up, leading to slight ASP increases; bookings momentum too early to tell, but underlying demand is strong.