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Array Technologies, Inc. (ARRY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $275.2M, down 19% year-over-year but up 19% sequentially; adjusted gross margin was 29.8% (down sequentially due to a legacy fixed‑price VCA and 45X roll‑off) and adjusted EBITDA was $45.2M .
  • GAAP net loss to common of $(141.2)M reflected non‑cash charges: $74.0M goodwill impairment and $91.9M long‑lived intangible asset write‑down tied to the 2022 STI acquisition; adjusted diluted EPS was $0.16 .
  • Order book ended 2024 at $2.0B (+10% YoY); delivered MW volume rose 2% YoY and 35% QoQ, indicating volume recovery despite pricing compression from lower steel/aluminum/logistics costs .
  • 2025 outlook: Array guides revenue to $1.05–$1.15B (+~20% YoY), adjusted gross margin 29–30%, adjusted EBITDA $180–$200M, adjusted EPS $0.60–$0.70; Q1 2025 revenue $260–$270M and adjusted EBITDA margin 11–13% as low‑margin legacy VCA shipments weigh on early year margins .
  • Stock reaction catalysts: visibility on domestic content and 45X mechanics, U.S. market stabilization into 2025, potential margin tailwinds from rising domestic steel prices, and resolution of Brazil macro/tariff headwinds; note no explicit 45X sharing arrangements with customers, though competitive pricing may reflect “profit pool leakage” .

What Went Well and What Went Wrong

What Went Well

  • Record full‑year adjusted gross margin of 34.1%, with Q4 adjusted gross margin of 29.8% driven by 45X credits, operational execution, and product mix; “we achieved…record gross margin on the full year” .
  • Order book momentum and product traction: order book reached $2.0B (+10% YoY); OmniTrack accounts for >20% of the order book and ~10% of 2024 revenue; domestic portion grew >20% in 2024 .
  • Management execution and strategic investments: remediation of material weaknesses, new Albuquerque facility, and $3M investment in Swap Robotics to drive installation automation and cost savings; “on track to deliver 100% domestic content trackers by the first half of 2025” .

What Went Wrong

  • GAAP results impacted by non‑cash impairments: $74.0M goodwill impairment and $91.9M intangible write‑down in Q4 linked to STI acquisition; full‑year goodwill impairment totaled $236.0M .
  • Pricing/ASP compression from commodity declines and Brazil macro: steel prices down ~30% over two years pressured ASPs; Brazil faced currency devaluation, volatile rates, and new tariffs, contributing to de‑bookings >$50M in Q4 .
  • Q1 2025 margin headwinds: adjusted EBITDA margin guided to 11–13% due to the second half of a low‑margin 2021 fixed‑price VCA shipping and reduced 45X amortization in the quarter, before normalizing later in 2025 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$341.6 $231.4 $275.2
GAAP Diluted EPS ($)$0.04 $(1.02) $(0.93)
Adjusted Diluted EPS ($)$0.17 $0.17 $0.16
Adjusted EBITDA ($USD Millions)$48.2 $46.7 $45.2
Gross Margin (%)24.7% 33.8% 28.5%
Adjusted Gross Margin (%)25.7% 35.4% 29.8%

Additional KPIs and cash metrics:

KPIQ2 2024Q3 2024Q4 2024
Free Cash Flow ($USD Millions)$1.8 $43.9 $44.6
Cash & Equivalents ($USD Thousands)$282,320 $332,372 $362,992
Order Book ($USD Billions)$2.0 $2.0 $2.0
Delivered Volume Trend (MW)N/AN/A+2% YoY; +35% QoQ
North America Revenue Mix (%)N/A~70% ~73%

Full year 2024 reference (for context):

MetricFY 2023FY 2024
Revenue ($USD Millions)$1,576.6 $915.8
Adjusted EBITDA ($USD Millions)$288.1 $173.6
Adjusted Gross Margin (%)27.3% 34.1%
Free Cash Flow ($USD Millions)$215.0 $135.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$900–$920 Actual: $915.8 Met, above midpoint
Adjusted EBITDA ($USD Millions)FY 2024$170–$180 Actual: $173.6 Met, midpoint
Adjusted EPS ($)FY 2024$0.60–$0.65 Actual: $0.60 Met low end
Revenue ($USD Millions)Q1 2025None (no prior quarterly guidance) $260–$270 New
Adjusted EBITDA Margin (%)Q1 2025None (no prior quarterly guidance) 11–13 New
Revenue ($USD Millions)FY 2025None$1,050–$1,150 New
Adjusted Gross Margin (%)FY 2025None29–30 New
Adjusted EBITDA ($USD Millions)FY 2025None$180–$200 New
Adjusted EPS ($)FY 2025None$0.60–$0.70 New
Adjusted SG&A ($USD Millions)FY 2025None$144–$152 New
Effective Tax Rate (%)FY 2025None24–25 New
Free Cash Flow ($USD Millions)FY 2025None$115–$130; Capex $30–$35 New

Earnings Call Themes & Trends

TopicQ-2 (Q2 2024)Q-1 (Q3 2024)Current (Q4 2024)Trend
AI/data center demandTailwinds expected; Congressional testimony on IRA support “Bullish” on AI‑driven demand; solar leading new capacity Brattle/Conserve America study: U.S. electricity +50% by 2035 from AI/manufacturing reshoring Strengthening
Supply chain (HV equipment, labor)Persistent delays; elongated timelines Long‑lead HV equipment shortages; interconnection/permitting challenges Headwinds persist but U.S. market stabilized by year‑end Stabilizing U.S.
Tariffs/macroAD/CVD uncertainty; domestic content safe harbor table learning curve AD/CVD clarity expected; domestic content guidance helpful Trump executive orders not affecting ITC/PTC/domestic content/45X; Brazil hit by tariffs/currency Mixed: policy clarifies; Brazil worsens
Product performanceLaunch of SkyLink; insurance forum SkyLink traction; 77‑degree hail stow announcement; SmartTrack automation OmniTrack ~10% of FY revenue; >20% of order book; domestic content 100% tracked Improving adoption
Regional trendsBrazil project delays (real devaluation); U.S. pushouts Europe modest; Brazil DG leadership; U.S. pipeline 3x YoY U.S. stabilization; Europe modest; Brazil headwinds to persist 3–4 quarters U.S. better; Brazil weaker
Regulatory/legal (IRA/45X)Domestic content safe harbor table aids adoption Final 45X rules (clamps under purlin); bipartisan support Credits unaffected; continued use of 45X; no explicit sharing with customers Supportive/stable

Management Commentary

  • CEO: “ARRAY delivered strong fourth quarter and full year 2024 results…we exceeded the mid‑point of our fourth quarter revenue guidance and achieved record gross margin on the full year…orderbook of $2 billion” .
  • CEO on market: “Utility scale solar remains the cheapest and fastest‑growing energy source…we experienced the market stabilizing by year‑end” .
  • COO: “Array attained 22 new patents in 2024…over 5GW of SmartTrack solutions in operation…customers indicating significant interest in our high‑angle hail stow tracker…stow angle of at least 77 degrees” .
  • CFO: “Q4 revenue was $275.2M…adjusted gross margin 29.8%…sequential decline of 560 bps due to a large low‑margin legacy VCA order and Brazil headwinds” .
  • CFO: “For FY 2025…adjusted gross margins…29% to 30%…adjusted EBITDA…$180M to $200M…adjusted diluted EPS…$0.60 to $0.70…effective tax rate…24% to 25%” .

Q&A Highlights

  • Q1 2025 margin dip: EBITDA margin guided lower as second half of low‑margin 2021 fixed‑price VCA ships and 45X amortization rolls off; margins expected to stabilize in later quarters .
  • Safe harbor orders: Less than ~10% of order book from legacy safe harbor; dialogues for new safe harbor underway, none yet booked .
  • Bookings/backlog: North America book‑to‑bill ~1.5; Brazil de‑bookings (> $50M) masked strength; no cancellations in Brazil, awaiting dates and renegotiated PPAs .
  • 45X sharing: No explicit sharing agreements; some competitive “leakage” in profit pool; FY25 gross margin outlook 29–30% despite roll‑off of prior year 45X amortization .
  • Steel/tariffs: Domestic steel prices up ~30% since Jan; pricing system allows ASP upside without margin risk as steel prices rise (lock pricing at contracting) .
  • Backlog coverage and go‑get: 2025 plan largely in backlog; go‑get “nicely sub‑10%” vs ~20–25% typical historically .

Estimates Context

  • S&P Global consensus (EPS, revenue, EBITDA) for Q4 2024 could not be retrieved due to data access constraints at time of analysis; therefore, explicit “vs estimates” comparisons are unavailable. Values would normally be retrieved from S&P Global; unavailable in this instance.

Key Takeaways for Investors

  • Sequential recovery in Q4 volumes and revenue with adjusted margins resilient, but early 2025 margins will be temporarily weighed by legacy VCA shipments and 45X amortization timing; normalization expected thereafter .
  • FY2025 guide implies ~20% revenue growth with 29–30% adjusted gross margins and rising adjusted EBITDA, underpinned by a $2.0B order book and >50% scheduled 2025 deliveries; go‑get is low, improving forecast quality .
  • 45X and domestic content are strategic tailwinds; management not explicitly sharing credits, but competitive pricing may reflect some profit pool leakage; domestic content 100% trackers targeted for 1H 2025 .
  • Steel price inflation and tariff dynamics could support ASPs and margins given Array’s contracting/pricing approach; monitor U.S. steel trends for incremental margin upside .
  • Brazil remains a key watch item (FX, tariffs, rates); de‑bookings held back backlog optics, though no cancellations; expect multi‑quarter normalization timeline .
  • Product differentiation (OmniTrack, SkyLink, SmartTrack hail/snow automation, 77‑degree stow) and insurance engagement position Array well in extreme weather risk mitigation and irregular site layouts, supporting share gains .
  • Capital structure discipline and cash generation continue: FY24 FCF $135.4M, cash $364M; FY25 FCF guide $115–$130M with capex $30–$35M .