Array Technologies, Inc. Q2 FY2025 earnings call

• Business and market update: Second quarter revenue was $362 million, with strong year-over-year and sequential growth. Volume was the highest in 2 years, and first half volume was up 84% year-over-year.
• Acquisition: Definitive agreement to acquire APA Solar, on track to close in coming weeks.
• Convertible notes: Issued new convertible notes to eliminate high-cost term loan and repurchase portion of 2028 convertible notes at a discount.
• Commercial efforts: Customer-centric approach improved order book quality, with half of order book now from utilities, IPPs, and developers. Gross new bookings approximately 1x book-to-bill.
• Product launches: Launched Hail XP tracker, which has seen strong market response. Completed supply chain and certification for 100% domestic content tracker for IRA bill.
• Event: Array Days program in Chicago had over 70 engineers attend, focusing on technical audience feedback.

In the second quarter of 2025, Array Technologies reported revenue of $362 million. Volume was a key driver, with over 50% year-over-year volume growth, making it the highest volume quarter in the last 2 years. Year-to-date volume was up 84% year-over-year. The OmniTrack and SkyLink new products now constitute more than 35% of the order book.

• Raised full-year 2025 revenue outlook to $1.18 billion to $1.215 billion, increasing the midpoint by nearly $100 million or 9%.
• Adjusted gross margin expected to be between 28% and 29%.
• Adjusted EBITDA expected to range between $185 million and $200 million.
• Adjusted diluted earnings per share forecasted to be in the range of $0.63 to $0.70.
• Free cash flow remains between $115 million and $130 million in 2025 after capital expenditures.

• Regulatory uncertainties: Changes in One Big Beautiful Bill affecting utility-scale solar tax credits, executive order on safe harbor criteria creating uncertainty, and foreign entity of concern restrictions for 2026 projects.
• Tariffs and commodity pressures: Impacting tracker input costs, with some tariffs expected to be recovered but having a transitory effect on gross margins due to denominator math.
• Industry consolidation: Developers and EPCs seeking integrated solutions, leading to potential consolidation in the industry.

Q: Mark Strouse from JPMorgan asked about near-term bookings and clarity on regulations.

A: Kevin Hostetler said Q2 had muted bookings until last few weeks, with customers waiting for clarity on rules, expecting more order flow in Q4 for safe harboring.

Q: Jon Windham from UBS asked about international progress.

A: Neil Manning said strong first half in international, but some markets like Brazil have uneven bookings due to economic factors.

Q: Joseph Osha from Guggenheim Partners asked about book-to-bill and market share.

A: Kevin Hostetler said book-to-bill approximated 1, and they are comfortable with their market share and win rate.

Q: Brian Lee from Goldman Sachs asked about revenue outlook and gross margins.

A: Keith Jennings said most revenue growth is volume-driven, and gross margins for the second half are expected to be around 29% to 30% with considerations for tariffs and denominator math.

Q: Dimple Gosai from Bank of America asked about project lead times and DOI permitting.

A: Kevin Hostetler said no impacts seen yet from DOI permitting changes.

Q: Andre Adams on behalf of Colin Rusch from Oppenheimer asked about pricing opportunity.

A: Kevin Hostetler said new products like OmniTrack, SkyLink, and Hail XP provide pricing opportunity through added value to customers.

Q: Maheep Mandloi from Mizuho asked about OmniTrack and APA margins.

A: Kevin Hostetler said OmniTrack and SkyLink combined make up 35% of order book, and combining with APA foundations provides flexibility in terrain following.

Q: Dylan Nassano from Wolfe Research asked about 2Q revenue outperformance and guidance assumptions.

A: Kevin Hostetler said Q2 overdrive was due to operational ability to accelerate projects at customers' request, and guidance has no embedded go-get business.

Q: Vikram Bagri from Citi asked about market share and debookings.

A: Keith Jennings and Kevin Hostetler said debookings were due to project execution issues and not loss to competitors, with win rate remaining strong