• Revenue: $231.4 million, down 34% from Q3 2023.
• Adjusted Gross Margin: 35.4%, a 940 basis point improvement year-over-year.
• Adjusted EBITDA: $46.7 million, representing 20.2% of revenue.
• Free Cash Flow: $43.9 million.
• Cash Balance: $332 million at the end of the quarter.
• Order Book: Consistent at $2 billion.
• Operating Expenses: $211 million, up from $47.2 million due to a $162 million non-cash goodwill impairment charge.
• Net Loss: $155.4 million compared to net income of $10 million in Q3 2023.
• Adjusted Net Income: $26.5 million versus $31.7 million in Q3 2023.
• Adjusted Basic and Diluted Net Income Per Share: 17 compared to 21 in the prior year period.
• Full Year 2024 Revenue Guidance: Narrowed to $900 million to $920 million.
• Full Year 2024 Adjusted Gross Margin Guidance: Approximately 34%.
• Full Year 2024 Free Cash Flow Guidance: Raised to $100 million to $115 million.

• Warning! GuruFocus has detected 3 Warning Sign with ARRY.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Array Technologies Inc (NASDAQ:ARRY) achieved $231 million in revenue, which was in the upper half of their guidance range.
• The company reported an adjusted gross margin of 35.4%, reflecting a 940 basis point improvement from the previous year.
• Array Technologies Inc (NASDAQ:ARRY) delivered $46.7 million of adjusted EBITDA, representing 20.2% of revenue.
• The company's order book remained consistent at $2 billion, with a domestic pipeline over three times larger than the previous year.
• Array Technologies Inc (NASDAQ:ARRY) is seeing strong traction with its expanded product portfolio, notably the OmniTrack terrain-following tracker, which now represents more than 20% of their global order book.

Negative Points

• Revenue was down 34% from the third quarter of 2023, largely due to project pushouts experienced this year.
• Operating expenses increased significantly due to a $162 million non-cash goodwill impairment charge related to the 2022 STI acquisition.
• The company reported a net loss attributable to common shareholders of $155.4 million compared to net income of $10 million in the prior year period.
• There were project pushouts in Brazil due to continued real weakness impacting PPA negotiations.
• The company experienced declining volume and ASPs year over year in the US and international sales.

Q & A Highlights

Q: Can you comment on the realization of the $2 billion backlog and any delays or pushouts? A: Kevin Hostetler, CEO: The backlog realization remains consistent, with about 80% expected to convert between the end of Q2 and 2025. The business has returned to a normalized level of pushouts and pull-ins, and we feel good about our 2025 growth prospects, with strong growth already in our backlog.

Q: What gives you confidence in the realization of projects in 2025 despite interconnection challenges? A: Kevin Hostetler, CEO: The 2025 setup is stronger than 2024, with most of the business already in our backlog. We are closely engaging with customers to validate their project timelines, and we feel better about the setup for 2025.

Q: Can you explain the goodwill impairment charge related to the STI acquisition? A: James Zhu, Chief Accounting Officer: The impairment was triggered by the sustained decline in our stock price and an update to long-term projections for certain markets, particularly due to the accelerated devaluation of the Brazilian real, affecting revenue when translated to USD.

Q: How do you view the competitive landscape and pricing dynamics? A: Kevin Hostetler, CEO: The market remains competitive among the top players, but we are not seeing significant deterioration in ASPs. We are seeing some competitors sharing 45X credits, and we have room to do the same to grow our market share.

Q: How are you positioned regarding domestic content and 45X credits? A: Neil Manning, COO: We are well-positioned to provide 100% domestic content by the first half of 2025. Kevin Hostetler, CEO: We are not explicitly sharing 45X credits but are using them to offer competitive pricing. Over 20% of our order book now focuses on domestic content.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.