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Array Technologies, Inc. (ARRY)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong top-line and earnings: revenue $362.2M, adjusted EPS $0.25, and adjusted EBITDA $63.6M; book-to-bill ~1x ex-VCA and orderbook >$1.8B as commercial execution improved mix and margins .
  • Results beat Wall Street consensus on revenue and adjusted EPS; revenue +25% vs S&P Global consensus and adjusted EPS above consensus, while company cited beats on adjusted EBITDA as well .
  • Guidance raised: FY25 revenue increased to $1.180–$1.215B; midpoints for adjusted EBITDA and adjusted EPS increased; adjusted gross margin lowered to 28–29% to reflect tariff pass-through “denominator math”; adjusted G&A raised modestly .
  • Strategic catalysts: APA Solar acquisition (foundations, fixed-tilt) expected to close imminently; 100% domestic-content trackers and Hail XP launch; capital structure optimized with term loan repaid, new converts, and $100M 2028 converts repurchased at ~20% discount .

What Went Well and What Went Wrong

What Went Well

  • Commercial execution drove scale and mix improvement: revenue +42% YoY and +20% QoQ; adjusted EBITDA +57% QoQ; adjusted gross margin +130 bps QoQ to 27.8% .
  • Orderbook quality improved via descoping/repricing of legacy fixed-price VCA, raising backlog margin dollars; OmniTrack and SkyLink now >35% of the orderbook .
  • Capital structure de-risked: $345M new 2031 converts; term loan repaid; $100M of 2028 converts repurchased at ~20% discount, reducing annual cash interest by ~$9M .

Management quotes:

  • “Adjusted EBITDA came in at $64 million, outperforming expectations and driven by strong execution and our exceptional second quarter volume delivery.”
  • “Most notably, we were able to de scope and reconfigure… legacy fixed priced VCA. This effort resulted in an improved higher margin order book…”
  • “We issued $345,000,000 of new 2.875% convertible senior notes… reduced our annualized cash interest expense by $9,000,000” .

What Went Wrong

  • Gross margin down YoY due to commodity/logistics and tariff timing; GAAP gross margin 26.8% vs 33.6% in 2Q24; adjusted gross margin 27.8% vs 35.0% in 2Q24 .
  • Tariff pass-through burdened margins via denominator effects; India’s additional 25% tariffs add modeling uncertainty; adjusted G&A increased on growth investments .
  • International unevenness: Brazil softness (rates ~15%, hydro season) causing project delays; Europe bookings uneven; debookings in prior periods addressed via more conservative orderbook additions .

Financial Results

Income Statement and Cash Metrics (comparisons vs prior periods)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$255.8 $302.4 $362.2
Gross Margin (GAAP)33.6% 25.3% 26.8%
Adjusted Gross Margin (%)35.0% 26.5% 27.8%
Net Income to Common ($M)$11.9 $2.3 $28.5
Diluted EPS (GAAP)$0.08 $0.02 $0.19
Adjusted EPS$0.20 $0.13 $0.25
Adjusted EBITDA ($M)$55.4 $40.6 $63.6
Adjusted EBITDA Margin (%)21.7% 13.4% 17.5%
Free Cash Flow ($M)$1.8 ($15.4) $37.2

Notes:

  • Sequential strength driven by volume and mix; GAAP margins compressed YoY by tariff/commodity/logistics timing; adjusted margins improved QoQ with higher domestic mix and 45X benefits .

Actual vs Wall Street Consensus (S&P Global)

MetricConsensusActual
Revenue ($USD Millions)$288.8*$362.2
Primary EPS (GAAP or Normalized)$0.196*$0.25 (Adjusted EPS)
EBITDA ($USD Millions)$53.4*$52.8* / $63.6 Adjusted
  • ARRY beat revenue by ~25% and beat adjusted EPS; management highlighted beats on revenue, adjusted EBITDA, and adjusted EPS .
  • EBITDA consensus vs reported depends on definition; company emphasizes adjusted EBITDA ($63.6M) .

KPIs and Operating Metrics

KPIQ2 2025
Orderbook>$1.8B
Book-to-bill (ex-VCA)~1x
Volume growth YoY / YTD+52% YoY; +84% YTD
OmniTrack + SkyLink as % of orderbook>35%
Cash & Equivalents$377.3M
Available Liquidity~$510.9M
Net Debt$332.1M; Net Debt leverage 1.7x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$1.05B–$1.15B $1.180B–$1.215B Raised
Adjusted Gross MarginFY 202529%–30% 28%–29% Lowered (tariff pass-through)
Adjusted EBITDAFY 2025$180M–$200M $185M–$200M Midpoint raised
Adjusted EPS (diluted)FY 2025$0.60–$0.70 $0.63–$0.70 Midpoint raised
Adjusted G&AFY 2025$144M–$152M $150M–$155M Raised (growth investments)
CapexFY 2025$30M–$35M $30M–$35M Maintained
Free Cash FlowFY 2025$115M–$130M $115M–$130M Maintained

Company expects 2H revenue split ~60/40 between Q3/Q4 and reiterated guidance excludes APA impact until close .

Earnings Call Themes & Trends

TopicQ4 2024 (Prior-2)Q1 2025 (Prior-1)Q2 2025 (Current)Trend
Tariffs & CommodityASP declines; Brazil tariffs; domestic supply progress Tariff mitigation; 93% domestic BOM; pass-through on >75% contracts Tariff “denominator math” drags margins; India +25% tariff added; pass-through timing Elevated headwind; process in place
Domestic Content & Supply Chain100% domestic tracker targeted 1H25 Confirmed 100% domestic tracker bookings for 2H ENGIE 200 MWac project with 100% domestic content; new US lines Execution milestone achieved
Product InnovationOmniTrack traction; SmartTrack hail/snow SkyLink pipeline; SmartTrack >5GW Hail XP launched (77° stow), first booking; OmniTrack+SkyLink >35% orderbook Portfolio differentiation growing
Regulatory/OBBB/FEOCMonitoring IRA; credits likely intact Uncertainty; safe harbor potential; DC engagement OBBB changes; FEOC/commence-construction; refining safe harbor offerings Near-term uncertainty persists
Regional TrendsEurope modest growth; Brazil soft Brazil delays; Europe solid; Middle East opportunity Brazil uneven, interest rates 15%; Europe uneven bookings International mixed
Capital StructureMaterial weaknesses remediated Revolver amended/extended to Oct’28 Term loan repaid; new 2031 converts; repurchased 2028 converts; interest -$9M Flexibility improved
Backlog Quality/VCAOrder book $2B; North America growth Legacy VCA impact Q1; conservative additions VCA descoped/repriced; backlog margin up Mix improved

Management Commentary

  • “While there is still uncertainty around the final changes and implementation of the OBBB… we are raising our full-year revenue outlook and increasing the midpoint of our profitability guidance components.” — Kevin Hostetler, CEO .
  • “Adjusted gross margin improved by 130 basis points… due to a higher mix of domestic projects, volume increase and 45X benefits.” — Keith Jennings, CFO .
  • “Array has completed… deliver a 100% domestic content tracker… 200 MWac… ENGIE’s Emerald Green Solar project in Indiana” — Neil Manning, President & COO .
  • “Issuance of 2031 convertible senior notes… extended our average debt maturity ~2 years… reduced annualized cash interest expense by ~$9M.” — Keith Jennings, CFO .
  • “We booked our first Hail XP project in the Texas Hail Belt… shipments planned in early 2026.” — Neil Manning, President & COO .

Q&A Highlights

  • Bookings cadence: heavy quoting, awards held pending regulatory clarity; expect potential safe-harbor orders to skew toward Q4 awards for 1H26 delivery .
  • Legacy VCA: descoping/repricing improved backlog margin and predictability; no further 2025 shipments under legacy VCA .
  • International: Brazil delays tied to rates/hydro; Europe uneven; opportunistic share capture post competitor changes .
  • Tariffs: pass-through neutral in dollars but compresses margins via denominator math; timing lag in recovering June 1+ tariffs .
  • Capital structure: preferred remains reasonably priced; focus on operating runway and strategic optionality post refinancings .

Estimates Context

  • S&P Global consensus for Q2 2025: revenue $288.8M*, primary/normalized EPS $0.196*, EBITDA $53.4M*; ARRY reported revenue $362.2M, adjusted EPS $0.25, and adjusted EBITDA $63.6M, indicating material beats on revenue and adjusted EPS, with adjusted EBITDA above company expectations .
  • Estimate revisions likely to move higher post-guide raise, while margin expectations may recalibrate lower given tariff pass-through effects described by management .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution is improving with scale: sequential revenue and adjusted EBITDA inflection, mix shift toward domestic and premium products; watch for continued traction of OmniTrack/SkyLink/Hail XP .
  • Guidance raise is a positive catalyst; expect estimate revisions, particularly revenue and adjusted EPS, while gross margin assumptions must incorporate tariff “denominator math” .
  • Near-term regulatory/tariff uncertainty is manageable; ARRY’s domestic content and contract pass-throughs mitigate cash/earnings risk; safe-harbor dynamics could bolster orders late-2025 .
  • APA Solar acquisition should enhance BOSS offering, diversify into fixed-tilt, and be accretive to adjusted EPS pre-synergies; closing would be another catalyst .
  • Capital structure de-risked: reduced interest burden and extended maturities provide strategic flexibility to invest and absorb volatility; liquidity >$500M .
  • International remains mixed (Brazil/Europe), but share capture opportunities exist; maintain conservative assumptions for non-US regions .
  • For trading: focus on 2H revenue split (~60/40 Q3/Q4) and safe-harbor clarity; any mid-August policy guidance could drive orders sentiment and stock movement .