Q1 2025 Array Technologies Inc Earnings Call
Greetings, welcome to Array Technologies' first quarter 2025 earnings call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Julia Ward, investor relations at Array. Please go ahead. Thank you very much.
Speaker Change: Thank you. I would like to welcome everyone to Array Technology's first quarter 2025 earnings conference call. I am joined on this call by Kevin Hostetler, RCEO, Keith Dunnings, RCEO, and Neil Manning, our president and COO.
Speaker Change: Today's call is being webcast here at our Investor Relations website at ir.arraytechang.com, including audio and slides.
Speaker Change: In addition, the press release and the presentation detailing our quarterly results have been posted on the website.
Today's discussion of financial results includes non-GAAP measures . [inaudible]
Speaker Change: A reconciliation of gap to non-GAAP financial measures can be found in the accompanying presentation and on our website. We encourage you to visit our website at arraychecking.com for the most current information on our company.
Speaker Change: As a reminder, the matters we are discussing today include forward looking statements regarding market demand and supply are expected results and other matters.
Speaker Change: These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made on this call.
Speaker Change: We refer you to the documents we file with the SEC, including our most recent Form 10K for a discussion of risks that may affect our future results.
Speaker Change: Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee the future results levels of activity, performance or achievements.
Speaker Change: We are under no duty to update any of the four-looking statements to conform these statements to actual results except as required by law.
I'll now turn the call over to Kevin.
Kevin Hostetler: Thank you, Julia. Good morning, everyone, and thank you for joining us today.
Kevin Hostetler: I'll begin with a brief business and market update, then Neil Manning, our president and chief operating officer, will provide some updates on market strategy, supply chain, product, and commercial execution for the quarter.
Speaker Change: Keith Jennings, our Chief Financial Officer, will provide our first quarter 2025 financial highlights and comments on our full year 2025 financial guidance. Then we'll open up the line for your questions.
Speaker Change: Starting on slide four, I'll begin with the summary and key highlights of the quarter, followed by a discussion on the latest near-term market dynamics and the industry environments.
Speaker Change: In today's rapidly evolving policy environment, including ongoing tariff negotiations and potential shifts in the Inflation Reduction Act,
Speaker Change: We remain focused on what we can control, executing our strategy with discipline, maintaining operational agility and delivering long-term value for our shareholders
Speaker Change: While near-term volatility is a reality, we are confident in the strength of our fundamentals and the resilience of our company.
Speaker Change: Integrity and transparency remain at the core of how our team operates [inaudible]
Speaker Change: Through this complex and dynamic environment, we believe staying the course on our mission will continue to earn the trust of our customers and shareholders alike.
Speaker Change: As shown on Slide 5, we have a strong first quarter driven by focused execution coupled with robust demand for our offerings.
which accelerated volume growth to 143 percent. [inaudible]
Speaker Change: Over the prior year first quarter, achieving the second largest quarter of volume shift since Q2 of 2023.
Speaker Change: This strong momentum is reflected in achieving $302 million of revenue in the first quarter.
Speaker Change: A 97% increase over the prior year first quarter, and a 10% increase sequentially over the fourth quarter of 2024 . . . . .
First quarter adjusted gross margin came in at 26.5%
Speaker Change: Indicative of the compression we expected in the quarter due to the impacts of the previously mentioned legacy volume commitment agreement project and some additional large international lower margin projects . . . .
Speaker Change: Our cash position is strong, with a quarter-ending cash balance of $348 million.
Speaker Change: Turning to slide 6, I'll provide some details on our order book.
Speaker Change: Despite near-term policy-related headwinds, our order book is resilient and maintained at $2 billion.
Speaker Change: Robust Sales and Operational Performance delivered accelerated contracting of an 18% increase in the first quarter when compared to the fourth quarter of 2024.
Speaker Change: This is despite some customers having difficulty in pricing their PPAs and fully understanding their forward project costs in the current environment.
Speaker Change: We continue to strengthen our management team with the addition of several solar industry veterans, both domestically and internationally throughout the first court. We are already seeing the benefits from these leadership additions to the organization.
Speaker Change: Our discipline and customer-centric approach continues to gain traction as new and existing customers are seeing the benefits of Array's innovative products, software, and services portfolio combined with our outstanding on-time delivery and ease of doing business.
Speaker Change: Our Domestic Order Book continues to build on the momentum we experienced through the end of last year with over 9% growth in the first quarter.
Speaker Change: As of corner end, over 40% of our order book is set to be delivered in the remaining quarters of 2025 and we would still expect to book some additional DG projects over the next couple of quarters for delivery in 2025.
We remain pleased with our project by project win rate.
Speaker Change: And we're seeing great traction with our recently expanded product offerings, such as OmniTrack and Skylink, which together accounted for 15% of revenue in Q1 and 30% of new bookings in the quarter
Speaker Change: We are encouraged by our momentum, which we believe is resulting from our strength and organization, high customer engagement, and innovative and differentiated solutions for our customers.
Speaker Change: Transitioning to slide seven, I want to re-emphasize the need for solar energy as a major portion of an effective all-of-the-above energy strategy.
The increasing energy demand globally is unmistakable.
Speaker Change: According to the Brattle and Conservative America study, the U.S. alone will need 50% more annual electricity production than today to meet demand in 2035, created mostly by manufacturing reshoring
Industrial and Transportation Electrification, and Data Center Group. Thank you very much.
while the demand growth may slow slightly. [inaudible]
Speaker Change: And the mix of generation capacity may change slightly. Utility scale solar is still faster to deploy. Lower in cost both with and without tax credits.
Speaker Change: Has no ongoing variable input costs, and utilizes a proven domestic supply chain.
Speaker Change: Thus we see continued growth to meet the increased electricity demand in the coming decade. [inaudible]
despite this demand growth long term. [inaudible]
Speaker Change: Market Research from organizations such as Wood McKenzie, and the Solar Energy Industries Association
Speaker Change: Our forecasting US utility scale installations to be flat in 2025 largely due to the uncertain regulatory environment.
Speaker Change: With this being said, let's take a look at how we are managing the market dynamics, both in the near term and the long term.
Speaker Change: I'm on page 8 of the presentation materials where we summarize our spots in two distinct buckets.
Near-term uncertainty and long-term confidence [inaudible]
Speaker Change: While utility scale solar remains the lowest cost and fastest growing energy source to meet our rapidly increasing demand for electricity
Speaker Change: The current geopolitical headwinds have created an unusual amount of uncertainty and volatility.
Speaker Change: The potential impacts of the current market uncertainty may lead to some project delays in the short-term until there is better understanding of tariffs, the associated commodity increases, and the potential reform to IRA tax credits.
Speaker Change: Additionally, given the cost structure of utility scale solar projects, we do not anticipate a significant impact from tariffs as equipment typically only accounts for approximately 50% of a utility scale project.
Speaker Change: As such, a 15% increase in equipment costs would result in less than an 8% increase in the overall cost of a project.
Speaker Change: We believe developers will have to leverage to increase PPA prices to accommodate higher equipment costs if tariffs and or commodity pricing increases remain in place for the longer term.
Speaker Change: of interest rates, tariffs, and commodity price increases on their business models and individual project timing.
Speaker Change: In the last few weeks, through these conversations with customers, we have confirmed that at least 75% of our remaining 2025 domestic deliveries are for projects that either have domestic panels or panels currently in the United States.
Speaker Change: We are also active participants with industry association partners like American Clean Power and the Solar Energy Industry Association.
Speaker Change: to publicly share the impact that Array and other US solar manufacturers are having on the American economy.
Delivering both jobs and secure, reliable energy
Speaker Change: We continue to monitor developments on the IRA tax credits and tariffs, and we are having direct conversations with policymakers in Washington to communicate our support for the energy tax credits.
To this end, I was in Washington DC last week. [inaudible]
Speaker Change: and had constructive meetings at the White House and with several members of both the House and the Senate on both sides of the aisle. [inaudible]
Speaker Change: To discuss our perspective on the importance of the energy tax credits and the alignment of these credits with the administration's goals of growing American manufacturing and meeting rapidly rising electricity demand.
Speaker Change: As the legislative reconciliation process moves forward, we will continue our direct engagement in DC on this topic and share information as it becomes clearer.
Speaker Change: However, I would note that given the current plan reconciliation process and the necessary steps to clear any required voting thresholds,
Speaker Change: It will likely be a bit cloutier and chaotic initially before negotiations ensue and it becomes both clearer and more supportive over time.
Speaker Change: On the international front, in Brazil, the devaluation of the Brazilian Rial, the volatile interest rate environment, and the newly introduced tariffs on solar components have significantly slowed market growth in what was traditionally one of the largest solar markets globally. [inaudible]
Speaker Change: In Europe , our business is performing as expected and we are seeing solid market growth in 2025.
Speaker Change: We believe we are well positioned to continue to capture market share in the region.
Speaker Change: We are actively evaluating additional markets for international expansion, including the Middle East where we announced opportunities in the first half of 2024.
Speaker Change: where excited by the positive reception and the potential growth in the region.
Speaker Change: Amidst this period of global economic uncertainty, our continued focus on what we can control has arrayed well-position to navigate the changes in the utility scale and distributed generation solar landscapes, which is why we are reaffirming our full year 2025 guidance.
Speaker Change: Given this backdrop, I'll turn it over to Neil to go into more detail on how we are responding to the near-term uncertainty and to review our products and commercial updates.
Thanks, Kevin.
Speaker Change: Moving to slide 9, given the worldwide focus on tariffs, I want to share some additional details on a raised tariff response and our supply chain to help you understand our basis for confidence in navigating current events.
Speaker Change: As the original provider of high domestic content trackers, Ray was already well positioned prior to the changes in the global trade landscape that emerged this year.
Speaker Change: A commercial and supply chain teams have been working around the clock to respond to the near-term power of uncertainty.
Speaker Change: On the commercial front, we conducted comprehensive backlog and pipeline review to identify terror provisions within our contracts.
and reconfirmed delivery dates with our customers.
Speaker Change: For a 75% of contracted projects allows us to pass 100% of the tariffs onto the customer.
Kevin Hostetler: As Kevin mentioned earlier, we also confirmed that at least 75% of our remaining 2025 domestic deliveries are for projects that either have US made panels for panels already in the United States.
Kevin Hostetler: Supply chain impacts are often unpredictable, which is why preparedness matters. [inaudible]
Kevin Hostetler: At Array, we've been an investing talent, technology and commodity buying strategies for the past several years which has paid off in recent months.
Kevin Hostetler: with real-time costing, inclusive of raw materials, logistics costs and tariffs. [inaudible]
Kevin Hostetler: Visigility, and conjunction with proactive steel purchases from our long-term domestic steel partners.
or just a few of the longer-term investments. [inaudible]
that are now yielding positive outcomes. . .
Thank you. Bye.
Kevin Hostetler: Sheetal speaks at her remaining points on her actions related to near-term uncertainty in a few moments. [inaudible]
Moving to side 10 Good evening.
Ray: From the supply chain perspective, as you'll see here, Ray's built a network of over 50 suppliers in the United States with a committed capacity in excess of 40 gigawatts.
Ray: The United States source material drives over 93% of the content for a divastic bills material. So we were in a good position heading into this tower of environment.
Ray: So the portion of our bill of materials exposed the tariff is quite low. Thank you very much.
Ray: We are now quoting 100% domestic content trackers under Table 1 of the IRA to those customers for requesting this capability and we have booked orders for 100% domestic content trackers to be delivered to customers in the second half of this year
Ray: Outside the United States, a global supply chain is focused on our center-rexeled strategy where we can solidate our purchasing volume with key partners in Asia and around the world.
Ray: We have over 75 supply partners supporting our international businesses and together with our 50 in the United States, we maintain a total supply capacity 75 gigawatts.
Ray: This offers us tremendous optionality to drive the lowest-lantic cost solutions for our customers.
Ray: and the ability to adapt to a wide range of potential supply shocks and impacts, including tariffs.
Moving to slide 11.
I'll pivot to some exciting product and innovation updates.
Ray: Our Innovative SkyLink platform is seeing strong customer interest in the market.
Ray: Skylink was launched in Q3 of last year, and we currently have our initial installation underway, the healthy pipeline developing.
Ray: Your call, Skylink offers an 8-link row, stream-powered solution with wireless capability that eliminates the need for trenching and grid-based power.
Ray: Mark Reception has been very positive with major utilities for Skylings capabilities are making it a solid new participant within Array's product portfolio.
Ray: Our Patented Hail Alert Response continues to be well received by customers since its initial installation in 2024.
Ray: The high cost-related extreme weather events continue to be a factor in the economic model for projects.
Ray: and Array is at the forefront in his critical space, particularly with software. [inaudible]
Ray: SmartTrack is our IT protected software platform that enables our differentiated offerings, including automated snow response, Hellstone, the fuse, and back directing.
Ray: We're very pleased that we surpassed five gigawatts deployed a smart track and are well in our way to ten gigawatts by the end of the year.
Ray: We held our second insurance forum event at a office in Chandler in April , where we reviewed double participation from our initial event in 2024.
Ray: We're pleased to host 59 attendees and there's broad appreciation for the information shared to an industry participants with a rate leading the way from both the technical and knowledge sharing standpoint.
Moving to Repowering
Ray: Raid Long Gemini in the market, coupled with our flexible architecture, Megas ideally suited to sport customers considering a site refurbishment. We're going to talk about this in a minute.
Ray: I'll remind everyone that, unlike competitors, race architecture does not require drilling into the torque tube to support bespoke module dimensions.
Ray: RIP Protected Design allows us to readily ship from module versions and dimensions. They're adaptable
Ray: This adaptability, coupled with our 87 gigawatts of deployed solutions, makes repowering exciting opportunity for both plan operators and array in the coming years.
Ray: Finally on this slide, I'm pleased to report that it raised the first tracker provider to complete the process, to have our Dora Track and OmniTrack platforms fully verified, as compatible with the UL-3703 standard for 2000 volts.
Ray: So why did this matter? This 2000 vote capability offers a raise the ability to increase power identity with more modules per string, lower balance of systems costs, and higher operating
Leading to an approved, levelized cost of energy. [inaudible]
Rae continues to lead the way with product evolution. [inaudible]
Ray: and Drive Important Industry Innovations for the benefit of our customers and stakeholders.
Ray: With that, I'll turn it over to Keith to provide more details on first quarter results. Thank you very much.
Thank you, Neil. Good morning.
My commentary begins on slide 13. [inaudible]
Ray: First, like Neilin Kevin, I must commend the Array team for the focus execution across the quarter to start 2025.
Ray: My comments will focus on key financial highlights of the first quarter, 2025 results, and sharing some thoughts on the strength of our liquidity position and capital structure.
Revenue in the first quarter was 302.4 million dollars. [inaudible]
Growth of 97% from the prior year. [inaudible]
Ray: largely due to the substantial increase in volume shipped in the quarter, indicating market share recovery from our customer initiatives and delivering on approximately $60 million of projects that were previously on hold from 2024.
When compared to the prior quarter, revenue accelerated by 10%
Ray: Delivered volume, measured in megawatts of generation capacity for the quarter, was up 143% over the prior year, achieving the second largest quarter of volume ship since 2023, and up 7% over the prior quarter.
Ray: Year over year, we continue to experience moderate commodity related ASB declines in array legacy operations and slightly higher ASB declines internationally.
Ray: When compared with the prior quarter, ASP increased slightly, Sales in North America represented approximately 65% of our revenue in the quarter.
Ray: This lower than average amount of US proportion of revenues was primarily from two large ATI international projects in the quarter.
Ray: This makeshift in Paxidoa gross margins in the quarter. However, we do not anticipate this having a meaningful impact on our full-year margins.
In the first quarter, adjusted gross margin was 26.5%
Ray: When compared to the prior year, Gross Margin declined due to the roll-off of prior 45X benefits, the non-recurring benefit from a one-time legal settlement in the first quarter of 2024 and the commodity-driven compression of ASPs.
Sequentially, adjusted gross margin decline by 330 basis points.
Ray: Primarily due to the roll-off of prior year 45X immortalization benefits, the remaining balance of a large order being shipped in the quarter from a legacy fixed price volume commitment agreement and a higher mix of international projects.
Ray: Total operating expenses of $49.1 million were up approximately $2 million from $47 million in the same period last year driven by increased investment in our commercial capabilities offset by lower depreciation.
Ray: Adjusted EBITDA was $40.6 million representing an adjusted EBITDA margin of 13.4%, slightly above the high end of for a guidance range, provided on the 4Q poll.
Ray: This compares to an adjusted EBITDA of $26.3 million, an adjusted EBITDA margin of 17.1% for the first quarter of 2024.
Ray: Sequentially, adjusted EBITDA is 4.6 million lower, and adjusted EBITDA margin decline approximately 300 basis points.
Ray: Lewis, driven by a regional mix shift, higher bad debt expense, low law for 45x prior period amortization, slightly offset by higher volumes and ASP improvements.
Ray: On a gap basis, net income attributable to common stockholders in the first quarter of 2025 was $2.3 million, compared to a net loss of $11.3 million in the prior year.
Ray: Additionally, net income in the first quarter increased $143.6 million sequentially from the fourth quarter of 2024, which had been impacted by the intangible and goodwill write downs.
Dialuted in-compershare was two cents. [inaudible]
Ray: compared to the diluted loss per share of seven cents in the prior year. [inaudible]
Ray: Adjusted net income was $19.7 million, up from $9 million in the first quarter of 2024 in 2004.
Ray: Adjusted diluted net income per share was 13 cents compared to 6 cents in the prior year.
Ray: Netcash, use for investing activities, was $2.4 million, driven primarily by our investment in a new Albuquerque Manufacturing Facility.
Ray: Precache flow for the period was a use of $15.4 million compared to $45.1 million generated for the same period last year driven by working capital investments.
Sly 15 summarizes our leverage and liquidity position.
Ray: We ended the quarter with approximately $348 million in total cash on hand and total liquidity of approximately $510 million including our Andron revolver
Ray: Throughout the quarter, Netcash used in financing activities was $1.7 million, primarily driven by reduction of other debt. We ended the quarter with net debt leverage ratio of 1.8 times. We ended the quarter with net debt. We ended the quarter with net debt leverage ratio of 1.8 times.
Ray: On May 1st, we successfully close your amendment and extension of our revolving credit facility. Thank you very much.
Ray: I want to express my appreciation to our agents, Goldman Sachs, and our banking partners who renewed or are new commitments to the facility.
Ray: The new facility will expire in October , 2028 unless the term loan remains outstanding then the facility will mature in July , 2027.
Ray: The updated facility currently will have a capacity of $166 million. The financial covenant of first-lean net leverage ratio has been reduced to 5.5 times trailing EBITDA from 7.1 times.
All other substantial terms remain largely unchanged. [inaudible]
Ray: As we navigate a period of broader uncertainty, I want to emphasize a strength of all liquidity position and capital structure.
Ray: We have strong, consistent cashflow generation driven by positive earnings which will continue to support our strategic priorities.
Ray: We have a healthy cash balance with full access to our revolving credit facility, which we successfully renewed in this difficult micro and credit environment.
Ray: This amount of available equity provides us with optionality and flexibility to navigate near-term volatility while preserving our ability to invest strategically for long-term growth.
Ray: There are additional banking partners who are still going through their credit review processes and may join the facilitate in the coming weeks.
Ray: This initial close was important to support our operational requirement, the issue letters of credit beyond the maturity date of the existing revolver, which was to expire in October 2025.
Array has no near-current death materialities. [inaudible]
Ray: and we are comfortable with our current leverage profile and require debt service more interest coverage.
Ray: To sum up, we are confident in our bills to remain agile, with ample capacity to respond to both risks and opportunities.
Ray: For the full year 2025, we are reaffirming and maintaining our original guidance provided on our last call.
Ray: While the current business environment is challenging, we have communicated with several of our significant customers or scheduled for deliveries in the second half of the year and have confidence that the 2025 project schedule will hold, particularly those in North America.
Ray: We closed Q1 2025, maintaining $2 billion in our order book, which includes $640 million of remaining performance obligations of which we expect to recognize revenue on approximately 97% in the next 12 months.
Ray: Given this confirmed delivery schedule, we continue to expect full year 2025 revenue within the range of $1.05, $1.15 billion.
Ray: We maintain adjusted gross margin guidance for the year to be within the range of 29 to 30 percent.
Ray: As a reminder, the roll-off of prior year 45X amortization drives the year-on-year reduction in adjusted gross margin.
Ray: We also expect margins to fluctuate slightly quarter to quarter due to pull-ins or push outs of products, product and geographic mix, as well as fixed cost absorption.
Ray: For adjusted GNA, we expect a range of 144 to 152 million dollars. We expect a range of 252 million dollars. We expect a range of 252 million dollars.
Ray: Adjusted EBITDA is still expected to range between $180 and $200 million .
Ray: This guidance reflects improved profitability driven by our structural cost announcements to improve efficiency and scale as well as the benefits from 45X
Ray: For adjusted diluted earnings per year, we anticipate a range of 60-70 cents, representing an 8% year-over-year increase at the midpoint.
Ray: We expect our effective tax rate for Justinette Incompershier for the year to be between 24 and 25 percent.
Ray: Preferred dividends are expected to total approximately $15 million per quarter with approximately $30 million as the cash or pick portion for the full year and the remainder attributable to the accretion of the instrument.
Ray: Free cash flow is expected to be between $115 and $130 million on 2025 after capital expenditures, which are expected to be in the range of $30 to $35 million for the next $30 million.
Overall, we are proud of our strong first quarter results.
Ray: We will continue to adapt as the business environment requires and try to decide results for the remainder of 2025. Now back to Kevin for closing remarks.
Kevin Hostetler: Thank you, Keith. All the wrap up with Slide 17. As you have heard today, we believe we are well positioned to weather this storm of uncertainty.
Kevin Hostetler: We have the people and capabilities in place to continue capturing new opportunities given the demand growth momentum of the utility scale solar industry and we remain optimistic about our ability to deliver value to our shareholders.
Kevin Hostetler: Looking ahead, with the volume growth we experienced in the first quarter, at the midpoint of our forecast, we expect approximately 30% volume growth in 2025 and 9.5% of adjusted EBITDA growth in 2025.
Kevin Hostetler: This translates to 8.5% adjusted net income per share growth in 2025.
Kevin Hostetler: As Neil mentioned, momentum remains strong with our new product and innovation pipeline.
Kevin Hostetler: As a proof point, we are seeing great traction with our OmniTrack product.
Kevin Hostetler: I'd expect this to represent approximately 30% of our deliveries in 2025.
Kevin Hostetler: We are laser focused on what we can control, prioritizing business growth, customer relationships, product innovation, and operational efficiency.
Speaker Change: With that, we will now open the call-up for questions. Operator? We will open the call-up for questions.
Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue and for a participant using speaker equipment and maybe necessary to pick up your handset before pressing the star keys. One moment, will we pull for questions? Let's begin.
Speaker Change: Our first question is from Mark Strouse with JP Morgan, please proceed.
Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please click the Like button and subscribe to my channel.
Good morning. Thank you very much for taking our questions [inaudible]
Speaker Change: Are you able to provide any more color on the commentary that you mentioned, the press release about kind of the growing interest in VCA's? Any color on kind of timelines that those might cover potential kind of state harbor orders?
Speaker Change: It did to the extent that this plays out. Are you thinking about kind of providing us a new metrics that can kind of help show investors kind of the increased level of visibility that you have? Then I have a quick follow up. Thank you.
Speaker Change: Yeah, let me take that one Mark. So we're an active discussions with several customers now who are approaching us to go back into the mode of longer term commitments between the customer and array.
Speaker Change: I think, depending upon the size and relativity of those, we'll do some announcements on those CCAs as they...
as we info.
Speaker Change: I don't think we're contemplating any new metrics that we would provide. What we want to do is maintain the integrity of our order book number and the ability to translate that to revenues over the coming periods. So we don't want to just
Speaker Change: State that we have this huge backlog full of VCA's without very defined projects to be delivered in the defined time period. So we'll work our way through that as we look to ink some of those VCA's in the coming months.
Speaker Change: The Low Margin Legacy VCA deal that you had, that you called out on the last quarter. Did you wrap that up in 1Q, or is there any kind of lingering deliveries in 2Q as well? Thank you.
Morning, Mark.
So the first question is...
Speaker Change: Second Quarter Guidance, we have not given specific guidance for the second quarter. We maintain the general guidance that we gave last quarter, which says that the first half will be about 55% of the revenue split. And so we think that
on the second question regarding the legacy law-priced BCA. [inaudible]
Speaker Change: The customer still has the ability to call off on that contract but we do not believe that there will be another call off in 2025.
Speaker Change: We have non-schedules in our delivery portfolio for 2025 and so we think that that impact on our margins is behind us for 2025.
Colin Rush: Our next question is from Colin Rusch with Oppenheimer Company, please proceed.
Colin Rush: Thanks so much. Can you talk a little bit about the size of orders that you're starting to see in lead times? I'm just curious about any sort of shifts, either up or down, both in terms of project size and if folks are trying to accelerate projects or seeing lead times extend out.
Yeah, I would say our lead times...
We still have industry leading lead times of 14 weeks.
Colin Rush: And obviously, we have customers pressure testing that and saying, if we were, can you do it in 12 and things? So, you know, we're certainly in a lot of dynamic discussions about that. We have yet to have a meaningful amount of influx of safe harbor or early pull-ins into 25, although those conversations continue to do. [inaudible]
to go on. [inaudible]
Colin Rush: Relative to what we're seeing more broadly. While we saw a good book to build domestically, as Keith mentioned in his prepared remarks.
Um...
Colin Rush: I think that the domestic business from an inbound order, look, it's going to be a little bit challenging here in terms of our customer's ability to price PPAs effectively given the level of uncertainty and therefore then to press orders on it. So what we're focused on is looking at their backlogs, looking at which portions of their backlogs really fit Array. Okay.
Colin Rush: and being ready to serve them when that clarity comes. That's the type of discussions we're having with our customers, their backlogs, their volume of business.
Is as big as it's ever been.
Colin Rush: So right now it's really about getting clarity on the tariff and IRA elements that will allow them to appropriately price PPAs and have those orders flow down to array. But we're certainly working with our customers on what those projects look like at this point.
Colin Rush: Thanks so much, and then some more product perspective. Can't talk a little bit about the areas of focus where you are seeing some opportunity for incremental competitive advantage, an opportunity to simplify installation.
Colin Rush: Or get some incredible performance, just curious about that, you know, product, you know, relative to other folks and where there's some evolution.
Colin Rush: Yeah, hey, it's Neil, I'll take that one. So, you know, we've talked quite a bit about our focus on extreme weather [inaudible]
Colin Rush: and when he looked at our prepared remarks and some of what we've been talking about over for our quarters,
Colin Rush: We really believe that array provides a differentiating capability in this area, particularly with our architecture, with passive stone along with what we've announced as...
Colin Rush: The highest dough angle, the industry at 77 degrees for hail, along with the other software capabilities we brought to market in recent quarters, we feel that that brings a really advantageous avenue for arraying in the market and our customers are really indicated a lot of interest with us for that.
Colin Rush: And so separately to that, then when we talk about Skylink and simplified installation, the Skylink offers the ability for wireless connectivity that minimizes trenching and difficult soil environments.
Colin Rush: So when you look at where we really stick to ground, it's around you either ease of installation for our EPC partners.
for you helping our overall clients to mitigate.
Colin Rush: Really challenging weather environments, which are happening more and more frequently, particularly in the southern part of the United States. So, we feel really happy with how our technology and innovation pipeline has continued to proceed. You'll expect us to continue to focus on that area, and we feel really good about the progress we've made on that front. Thank you very much.
Speaker Change: I think the one thing I'll add to that is the only track. It's it.
Speaker Change: It's significant, and we've put it in our prepared remarks, but the fact that we launched a product.
You know just under two years ago now.
Speaker Change: and it's already accounting for 30% of our revenues in the year 2025. It's quite significant and really indicative of a really rapid level of adoption for that product line. We're seeing a lot of great success in that. Not only domestically, but we began installing that this year internationally as well. So we're really excited about that. We're really excited about that. We're really excited about that. We're really excited about that.
The Family Track Product in our portfolio at this point.
Thanks so much, Chris.
Speaker Change: As a reminder to star one on your telephone keypad, if you would like to ask a question, our next question is from Maddie Mandol with Manzooho Securities, please proceed.
Speaker Change: Hi, this is David Benjamin from Maheep. Can you talk about your cashews plan and especially any plan to deliver your term loans?
Emily, so we've just successfully... [inaudible]
Speaker Change: and then did an extended day, revolving quite a facility, so we short of our... [inaudible]
Our liquidity.
Speaker Change: We're looking at all options. We have the perverts that are trading in a discount, which represent a good return for shareholders if we address a portion of those.
Speaker Change: We are looking at how to manage the term loan however as you can imagine the debt markets today are not as open for renewable companies as they once were so we're thinking carefully about how we do that.
Speaker Change: And, of course, we're looking at strategic opportunities to draw our business in organically.
Speaker Change: So we are pleased with where we are in terms of the balance sheet, you know, unbalance sheet liquidity, all balance sheet liquidity in the revolver. We're pleased with our catchable generation and so we're taking our time and looking at all our options.
Speaker Change: Thanks, and then I have a separate question. You mentioned talking to customers. Are you noticing the same kind of comments, regardless if it's an NEPC or developer in terms of project schedules or is there any, you know, daylight between the two? Let's go.
In my conversations, I think the conversations... [inaudible]
Speaker Change: and Tonne have been very similar in terms of the commitments to their 2025 outlook.
I think what I...
Speaker Change: I've learned in this journey, speaking to the customers, is one of the differences that affect the project near term versus what affect the project long term.
Speaker Change: and so we focused on one of the things that would affect the project near term.
Speaker Change: and those things all seem to be really aligned, so like the PPA agreements and so forth.
Speaker Change: Both the EBC, both the developers, I'll see them align that the interconnections and the TPAs are in line and that the 2025 schedule looks like it will hold at this point in time
Thanks very much.
Kashi Harrison: Our next question is from Cassie Harrison with Paper Sandler, please proceed.
Kashi Harrison: Hey, this is Luke on Fertashi, good morning. I want to circle back to your comments on how the domestic bookings environment might be challenged with all the uncertainty which makes sense.
Kashi Harrison: Do you think that the uncertainty is driven by the IRA, or is it primarily being driven by tariffs?
Look, it's both. So as Keith mentioned, we...
Kashi Harrison: We've had conversations with handfuls of both EPCs and developers and they're challenging in your term and the real, I mean it couldn't put in any other way but look how do I really understand what my costs are going to be and it's not. Thank you.
Kashi Harrison: To be clear, this isn't a 25, it's probably not even as much a first half, 26, but it's really back half, 26, 20 small-in-projects that we're focused on now that they'll be filling in the order book.
Kashi Harrison: and they are really struggling with understanding not the tracker portion of the cost, right? That's 10% of the project cost. But you have lots of other components that they're struggling with understanding the full price, be they, you know, the inverters, the modules.
Kashi Harrison: The Transformers, some of those other things, but still it's not settled on what the full tariff impact of some of those imported components will be yet. [inaudible]
Kashi Harrison: Secondarily, the understanding of the timing and what changes would happen to the IRA.
Kashi Harrison: So I think their view is look as long as you will be able to respond to us quickly. When we get that clarity, it may be a quarter or two way before we get that full clarity, but Array, we're going to need you guys to respond quickly when we have it because things are going to move fast.
Kashi Harrison: We're like, absolutely, let's have a peek into what types of projects and scale of projects you're thinking of, so we'll be ready for you. That's the type of conversations we're having at this point.
Kashi Harrison: Okay, that makes sense. And then just as a follow-up, can you remind us when the deferred stock distribution doesn't have to be paid in cash, birthpicked?
I think it is in the summer of 2026.
Thank you.
Speaker Change: Our next question is from Philip Shen with Russ MKM, please proceed. Star Star X.
Hello.
Speaker Change: Good bye. Hey guys, do you hear me? We're having some fun. Yes, I can look at them.
Speaker Change: Okay, great. Sorry about that. Okay, so thanks for taking my questions. Wanted to check in on...
Speaker Change: The exposure you guys might have to projects starting construction or being delivered in 25 or early 26 that may be exposed to
The Battery Cell Pack Challenges, where...
145% China tariff is limiting supply of cells. [inaudible]
into the country, and so...
I know some Solar and Storage projects. Thanks.
Speaker Change: The Solar and Storage can see a D separately independently, but there are some projects where they need to develop together. And so I was wondering what kind of risk there might be with that kind of exposure. Thanks.
Speaker Change: and more. Thank you for watching. I hope you enjoyed this video. If you did, please click the like button, share it with your friends, and subscribe to my channel.
Speaker Change: So Phil, what we focused on as a team was going project by project through the balance of 2025 and certainly we looked a little bit forward into 2026, but we felt that we were really trying to do a sure part of our guidance here in 25 and for those projects
Speaker Change: Better Solar, and Solar and Storage in 25. Our customers are still saying that the projects that we have in pipeline are still going forward as planned because most of what they needed for those projects were already in country. Thank you.
for your component. Thanks. Good to hear.
Thanks, Kevin. So, we felt, cheers, we did our part. Go ahead.
Speaker Change: Yeah, so that's great, really sorry for cutting off there. If we get the reciprocal tariffs back at the end of the 90 days, how could that impact back half?
Clemens, and Bradley, thanks.
Speaker Change: Look, I think we put a stat in the presentation at about 87% of stuff is already in motion. We're already beginning to deliver to those sites, our portion of the components that comes pretty early in the cycle.
Speaker Change: And most of that's already beginning to get in motion. Our customers have even indicated on these calls to keep it I had that in many cases it would cause more heartache to try to slow down than it would to speed up because so much is in motion. These are either labor for the field and everything's scheduled out for this year.
Speaker Change: So, the view of most of the EPCs and developers that we spoke to were that 25 looks fairly solid at this point.
Speaker Change: in terms of continuing the projects on pace to the schedule that they previously provided us. So that's as far as we're willing to go at this point is 25 seems fairly solid at this point.
Speaker Change: OK, thank you for the color and detail, Kevin. I'll pass it on. Yeah. Thank you.
Speaker Change: Our next question is from Brian Lee with Goldman Sachs, please proceed.
Brian Lee: Hey guys, good morning. Thanks for taking my questions. It's been a busy morning, so I was unfortunately up on late. I apologise.
Brian Lee: Some of these things were covered. But I had two questions. On steel pricing, maybe the pricing capture potential, you're now into May.
Speaker Change: Kevin, how are you thinking about the impact in 3Q and 4Q on your business? Have you seen the sort of 9-11% price increase you kind of alluded to in the last call? Is that playing into bookings already and then you know what sort of impact on Gross margins could that have and I had a follow-up? [inaudible]
Speaker Change: Yeah, so remember the steel prices that we're purchasing still in the US largely for our domestic business and what you've seen here today is still a pretty substantial increase in steel prices on a year-to-date basis while it's back down slightly in the last couple of weeks.
Speaker Change: It's still predicted on a full-year basis to be up circa 25 to 28 percent. So that does translate into some ASP increases.
Speaker Change: So for the projects that we would be booking now, you'll see those at a higher ASP than you would have prior and you even saw that in...
Speaker Change: Q1 had a sequential very slight but beginning the uptick of ASPs as you started to see that so but as you know with our cycles you won't see that for a couple of quarters before it starts rolling through the real PNL. [inaudible]
Speaker Change: because a lot of the stuff we're booking now at those higher steel things are going to be set for 2026. There may be some, they'll be shipping in, say, Q4 of 25 as well. But we are seeing in the borders that the ASPs are beginning to increase slightly. [inaudible]
Awful movie
Speaker Change: to play out, that's good to hear. And then, yeah, my second question was around the bookings here. You know, they were pretty solid, I think.
Speaker Change: There was some concern coming into the year that, you know, uncertainty levels across the industry, tariffs, etc. Just, you know, it's a tougher backdrop than what you had the past few quarters and yet bookings seem to be, you know, slightly modestly moving back up. So,
Speaker Change: Should we expect further momentum here, just off of these levels, even off of what?
Speaker Change: Again, we were kind of thinking it might be a season we saw for the Q1 period. I think you exceeded expectations. At least what seemed to be pretty much expectations going in. What sort of the. [inaudible]
Speaker Change: The forward momentum of these levels that we should maybe be anticipating. Thanks guys.
Speaker Change: I think the honest answer is it's too early to tell. As I said, as we're talking to our customers and our partners, the amount of quotes is still really high, so the activity level is really high.
Speaker Change: that tariff impact is fairly minimal on even on an unmitigated basis. [inaudible]
Speaker Change: Our view is that we are not the issue that's going to hold up our customers being able to price their projects effectively. It's a lot of the other components, you know, again, that the modules that are 30% of the cost of a site, it's the transformers, it's the inverters, those other components and
Speaker Change: As Phil indicated earlier in his question, the batteries are probably one of the biggest question marks out there in terms of how do you price these projects going forward knowing that
Demand Momentum is still very, very strong.
Speaker Change: It's whether or not customers can convert them, you know, for example, this quarter, given the uncertainty around IRA and given the uncertainty around tariffs [inaudible]
Speaker Change: Or are we going to have this period of a low and bookings followed by hyper acceleration when we get a level of clarity there? That's what we're not sure. We're talking to our customers every day. They're certainly focused on now that pivot towards...
Speaker Change: A few more talking to us about longer term VCA's to preserve capacity. That's kind of the discussions we're currently having with our partners.
OK, appreciate all that color. Thanks a lot, guys.
Thank you. Bye.
Speaker Change: With no further questions, I would like to turn the conference back over to management for closing comments.
Speaker Change: Thank you once again. I just want to thank the Array team globally for delivering such a strong quarter and I look forward to talking to you guys again at the end of Q2. Thanks everyone.
Speaker Change: Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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Till then, that's their own story