Array Technologies, Inc. (ARRY)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered a decisive beat: revenue $393.5M (+70% YoY, +9% QoQ) and adjusted EPS $0.30; order book grew to $1.9B (>95% domestic) with book-to-bill >1x and new products now ~40% of order book . Versus S&P Global consensus, revenue beat by ~26% and EPS by ~49% (see Estimates Context)*
• Profitability improved sequentially: adjusted gross margin 28.1% (+30 bps QoQ) and adjusted EBITDA $72.2M (18.3% margin), the second-highest in company history, supported by mix shift to domestic projects and higher ASPs; YoY gross margin lower due to prior-year 45X amortization roll-off, commodity inflation and ~110 bps tariff drag .
• Guidance updated: FY25 revenue raised to $1.25–$1.28B (includes ~+$50M APA), adjusted gross margin trimmed to 27%–28%, adjusted EPS kept at $0.64–$0.70, FCF lowered to ~+$100M, capex cut to ~+$20M; expected tax rate ~25%–26% .
• Strategic catalysts: integration of APA proceeding on track; integrated tracker/foundation solution targeted for 2H26; management highlighted a multi-year multi-GW IPP award booked in Q4 and stronger 2026 setup (APA backlog not yet in order book) .

What Went Well and What Went Wrong

• What Went Well

  • Material top- and bottom-line beats with strong execution: “Our revenue reached $393 million, marking an impressive 70% year-over-year revenue growth… adjusted EBITDA result of $72 million… second highest quarter… on record” (CEO) . New product adoption robust (~40% of order book) and book-to-bill >1x .
  • Sequential margin improvement and mix: Adjusted gross margin rose to 28.1% (+30 bps QoQ) on higher domestic mix and ASP improvements .
  • Supply chain resilience: ability to offer 100% domestic content tracker and expectation to reduce tariff exposure to <14% of a typical BOM by year-end; >50 domestic and >100 international suppliers .

• What Went Wrong

  • YoY margin compression: gross margin 26.9% vs 33.8% in Q3’24 driven by loss of prior-year 45X amortization benefit, commodity inflation relative to ASVs, and ~110 bps tariff drag; APA diluted adjusted gross margin by ~20 bps in Q3 .
  • Free cash flow moderation: FCF slipped to $21.9M (vs $37.2M in Q2’25 and $43.9M in Q3’24) due to working capital and acquisition impacts .
  • Near-term cadence: ~$30M of revenue pull-ins from Q4 to Q3 and seasonal North America build pattern imply a “drop quarter” in Q4 with lower operating leverage; Brazil remains a headwind for counter-seasonality .

Financial Results

Notes:

• Q3 YoY growth drivers included market share gains and new product uptake; APA revenue contribution ~$16.9M .
• Sequential adjusted gross margin up 30 bps due to domestic mix and ASPs; offset by lower international shipments (Brazil) and ~20 bps APA dilution .

Segment detail: Management indicated higher ASVs in both ATI and SDI, but no granular segment revenue/margin disclosure in the 8-K .

Vs. Consensus (S&P Global)

Guidance Changes

Management drivers: tariff accounting drag, APA gross margin dilution near term (~20 bps in Q3), delayed international commissioning shifting software revenue, and inflation in inventory/logistics costs .

Earnings Call Themes & Trends

Management Commentary

• CEO: “Our revenue reached $393 million, marking an impressive 70% year-over-year… and an adjusted EBITDA result of $72 million… second highest quarter… on record.” He highlighted order book quality (>95% domestic), book-to-bill >1x, and ~40% of order book from new products (OmniTrack, SkyLink, Hail XP) .
• CFO: “We had approximately $30 million of pull-ins from the fourth quarter… gross margins declined primarily due to the fall off of the prior year 45X amortization benefit, commodities inflation… and approximately 110 basis points of tariff drag… APA… had a slight dilutive impact… of about 20 bps” .
• COO: “Through these efforts, we’ve continuously reduced our tariff exposure, now expecting by the end of the year less than 14% of a typical bill of materials to [be] exposed to tariff impacts” and reaffirmed 100% domestic content tracker optionality .
• Strategy: Integrated tracker/engineered foundation in tooling with soft launch 1H26 and hard launch 2H26; minimal incremental investment required due to co-development pre-acquisition .

Q&A Highlights

• Q4 cadence and seasonality: Management called Q4 a “drop quarter” due to lower revenue and North America seasonality; Brazil no longer provides the countercycle offset as before; FY25 27%–28% gross margin seen as a level to “hold” into 2026 barring large inflation/tariff shocks .
• Order book quality and visibility: $1.9B excludes APA; higher share of Tier-1 customers and domestic content reduces debooking risk; management expects backlog to increase into 2026 .
• APA revenue/margins: 2025 APA revenue roughly flat/slight growth versus pro forma; increasing utility-scale opportunities under Array; APA near-term gross margin slightly dilutive but expected to turn accretive with synergies and 45X .
• Pricing and pass-throughs: 70%–75% of contracts allow tariff pass-through; ASPs increased with steel; rational competitive pricing persists .
• International posture: Diversifying outside Brazil; DuraTrack/OmniTrack gaining in Europe/LatAm; U.S. export considered project-by-project vs lowest landed cost .
• “Flight to quality”: Wins driven by technical value (passive stow, hail mitigation, ground coverage) rather than lowest price; ASPs rose for first time in six quarters .

Estimates Context

• Q3 2025 vs S&P Global consensus: Revenue $393.5M vs $311.9M (+$81.6M, +26.2%); EPS (Adjusted/Normalized) $0.30 vs $0.2015 (+$0.0985, +48.9%); EBITDA (SPGI def.) $62.7M vs $56.8M (+$5.9M, +10.5%). Number of estimates: Revenue (21), EPS (20) [GetEstimates].
• Implications: Given the revenue/EPS beat and raised revenue guidance (with modest gross margin trim), Street models may lift near-term revenue and adjusted EPS while moderating implied FY25 margin/FCF assumptions in line with management’s updated ranges .

KPIs and Balance Sheet

Key Takeaways for Investors

• Execution-driven beat: Strong demand, share gains, and new product mix produced outsized revenue and adjusted EPS surprise; momentum appears durable into 2026 with multi-GW wins and improving order book quality .
• Near-term margin management: Sequential margin improvement is encouraging, but YoY rate pressure from 45X roll-off and tariffs persists; management’s 27%–28% FY25 adjusted gross margin framework likely anchors near-term estimates .
• Guidance mix: Revenue raised, but FCF and capex lowered; expect Street to recalibrate cash flow timing (45X/deposits) and APA integration costs while lifting revenue/EPS .
• Tariff/IRA positioning: Domestic content capability and active tariff management (pass-throughs; onshoring) reduce risk; expected BOM tariff exposure <14% by YE is a positive de-risking datapoint .
• APA integration upside: Slight near-term dilution to margins, but synergy path (procurement, 45X, cross-sell) and integrated foundation/trackers in 2H26 point to medium-term accretion potential .
• Seasonality watch: Q4 “drop quarter” and revenue pull-ins into Q3 temper near-term cadence; traders should watch bookings/backlog updates and international commissioning in Q4/Q1 .
• Stock catalysts: Further large-volume commitments from Tier-1 customers, backlog inclusion of APA, additional ASP resilience with steel, and concrete milestones on integrated foundation solution are potential positives .

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Additional detail, reconciliations, and definitions of non-GAAP metrics are provided in the company’s 8-K press release and presentation .

S&P Global disclaimer: *Values retrieved from S&P Global.