Array Technologies(US:ARRY)2025-03-01 01:15Revenue Sources - The company generated 70% of its revenues from U.S. customers and 30% from international customers as of December 31, 2024, having shipped approximately 83 gigawatts of trackers worldwide[251]. - As of December 31, 2024, the largest customer accounted for 9.0% of total accounts receivable, while the top five customers represented 31.0%[271]. - Two customers accounted for 15.6% and 11.9% of total revenue for the year ended December 31, 2024[272]. - The largest customer accounted for 9.0% of total accounts receivable as of December 31, 2024, up from 2.7% in 2023, while the top five customers represented 31.0% of total accounts receivable, compared to 29.6% in the previous year[341]. - Two customers contributed 15.6% and 11.9% of total revenue for the year ended December 31, 2024, compared to one customer accounting for 13.4% in 2023[342]. Financial Performance - Consolidated revenue for the year ended December 31, 2024 decreased by $660.7 million, or 42%, compared to 2023, primarily driven by lower revenue from Array Legacy Operations of 44% and STI Operations of 37%[295]. - Array Legacy Operations revenue decreased by $511.2 million, or 44%, primarily due to a 39% decrease in volume shipped and an 8% decrease in average selling prices[296]. - STI Operations revenue decreased by $149.5 million, or 37%, primarily due to a 12% decrease in volume shipped and a 24% decrease in average selling prices[297]. - Consolidated gross profit decreased by $117.9 million, or 28%, but gross margin increased to 33% for the year ended December 31, 2024, compared to 26% in the prior year[299]. - Array Legacy Operations gross margin increased to 41% from 27%, driven by the realization of 45X benefits associated with torque tubes and structural fasteners, totaling $137.8 million for 2024[300]. - STI Operations gross margin decreased to 11% from 24%, impacted by a 24% decline in average selling prices and a 12% reduction in volume[301]. - Consolidated interest income increased by $8.4 million, or 101%, due to higher cash balances and yields on the cash management program[306]. - Consolidated interest expense decreased by $9.4 million, or 21%, in 2024 compared to the prior year, due to principal pay downs on the Term Loan Facility[310]. - Consolidated income tax benefit of $10.2 million was recorded in 2024, a decrease of $50.1 million, or (126)%, from the previous year[311]. - Cash provided by operating activities was $154.0 million in 2024, with a net loss of $240.4 million[320]. Expenses and Costs - Total engineering expenses were $17.0 million, $16.7 million, and $11.8 million for the years ended December 31, 2024, 2023, and 2022, respectively, with R&D costs of $6.7 million, $8.5 million, and $4.2 million during the same periods[257]. - Consolidated general and administrative expenses increased by $1.0 million, primarily due to higher legal and professional fees of $6.3 million[302]. - Consolidated cost of revenue decreased by $542.9 million, or 47%, in line with lower revenue, partially offset by lower input costs per watt[298]. Impairments and Losses - The company identified impairment indicators, resulting in a total impairment of goodwill and long-lived assets of $327.9 million[304]. - Goodwill impairment of $236.0 million was recorded in 2024 due to a decline in market capitalization and updated long-term projections[332]. - The company recorded an impairment loss of $91.9 million for the asset group as of December 31, 2024, based on a DCF analysis and market EBITDA multiples[336]. Market and Economic Factors - The Inflation Reduction Act (IRA) raised the Investment Tax Credit (ITC) to 30% with no step-downs before 2032, positively influencing customer orders[258]. - The ongoing Russian-Ukraine war has increased logistics costs and affected material availability, impacting the company's operations[263]. - Inflationary pressures are expected to negatively impact results in the near term, prompting the company to accelerate productivity initiatives[265]. - The company is exposed to commodity price risk, particularly from fluctuations in steel and aluminum prices, which could adversely affect operating margins if costs cannot be passed on to customers[344]. - The company does not enter into hedging arrangements to mitigate commodity risk, exposing it to potential significant price changes for raw materials[344]. - The company is indirectly exposed to interest rate risk as many customers rely on debt financing, which could impact demand and pricing for its products[346]. - The company is subject to foreign currency exchange rate fluctuations due to operations in various countries with different functional currencies[347]. Cash Flow and Financing - Cash used in investing activities was $9.6 million in 2024, primarily for property, plant, and equipment purchases[321]. - Net cash used in financing activities was $11.8 million in 2024, driven by debt reduction and payments on the Term Loan Facility[322]. - As of December 31, 2024, cash balance was $363.0 million, with $172.0 million available under the Revolving Credit Facility[318]. - Total contractual obligations as of December 31, 2024, amounted to $801.5 million, including debt obligations and lease commitments[325]. - As of December 31, 2024, the company's long-term debt was $646.6 million, with $249.1 million subject to variable-rate interest agreements, indicating a potential annual interest expense increase of approximately $1.2 million for a 50 basis point rise in interest rates[345]. Strategic Initiatives - The company completed the acquisition of STI on January 11, 2022, enhancing its product portfolio and accelerating international expansion[252][254]. - The company is negotiating agreements with suppliers to share economic benefits from the Section 45X manufacturing tax credit, which applies to certain components[259]. - The company is actively managing risks associated with multi-year contracts that require fixed pricing to maintain consistent margins[261].