Array Technologies(US:ARRY)2025-11-05 22:16Revenue and Financial Performance - For the nine months ended September 30, 2025, the company derived 79% of its revenues from U.S. customers and 21% from international customers, having shipped approximately 95 gigawatts of trackers worldwide [197]. - Total revenue for the nine months ended September 30, 2025, was $1,058.1 million, a 65% increase from $640.6 million in the same period in 2024 [248]. - Revenue for the three months ended September 30, 2025, increased by $162.1 million, or 70%, compared to the same period in 2024, primarily driven by a 120% increase in revenue from Array Legacy Operations [251]. - Revenue from Array Legacy Operations increased by $193.1 million, or 120%, for the three months ended September 30, 2025, primarily due to a 122% increase in volume [252]. - Revenue from STI Operations decreased by $31.0 million, or 44%, for the three months ended September 30, 2025, driven by a 61% decrease in volume despite a 39% increase in ASPs [253]. - Consolidated revenue increased by $417.5 million, or 65%, for the nine months ended September 30, 2025, compared to the same period in 2024, driven by Array Legacy Operations' revenue growth of 87% and STI Operations' growth of 10% [254]. - Revenue from Array Legacy Operations increased by $398.7 million, or 87%, for the nine months ended September 30, 2025, primarily due to a 104% increase in volume, despite a 19% decrease in average selling prices (ASPs) due to commodity price declines [255]. - STI Operations revenue increased by $18.9 million, or 10%, for the nine months ended September 30, 2025, mainly driven by a 12% increase in volume [256]. - Gross profit for the three months ended September 30, 2025, was $105.7 million, a 35% increase from $78.3 million in the same period in 2024 [250]. - Consolidated gross profit increased by $59.9 million, or 27%, for the nine months ended September 30, 2025, but gross margin decreased to 26.4% from 34.2% in the prior year [261]. - Array Legacy Operations gross profit increased by $59.7 million, or 31%, for the nine months ended September 30, 2025, with gross margin decreasing to 29.3% from 41.8% due to a 19% decrease in ASPs and an 11% increase in cost per watt [262]. - Net income for the three months ended September 30, 2025, was $33.5 million, compared to a net loss of $141.4 million in the same period in 2024, representing a turnaround of $174.9 million [248]. Expenses and Investments - Research and development expenses for the three months ended September 30, 2025, were $2.3 million, compared to $1.6 million for the same period in 2024, reflecting an increase in investment in product development [204]. - Total engineering expenses for the nine months ended September 30, 2025, were $13.7 million, up from $12.7 million in the same period in 2024, with R&D activities accounting for $7.2 million and $5.3 million respectively [204]. - Operating expenses for the three months ended September 30, 2025, decreased by 71% to $60.2 million from $210.99 million in the same period in 2024, primarily due to the absence of goodwill impairment [249]. - Consolidated operating expenses increased by $12.1 million, or 30%, for the three months ended September 30, 2025, primarily due to higher personnel-related and acquisition-related expenses [264]. - Cash provided by operating activities was $58.1 million for the nine months ended September 30, 2025, compared to $96.4 million in the same period of 2024 [284]. - Net cash used in investing activities was $179.4 million for the nine months ended September 30, 2025, primarily due to acquisition-related expenses and capital expenditures [286]. Acquisitions and Business Development - The company completed the acquisition of APA Solar for a total purchase consideration of approximately $186.1 million, including an earnout provision estimated at $20.0 million [198]. - The acquisition of APA Solar expands the company's product portfolio to include solar racking, mounting, and foundation systems, addressing evolving industry needs [201]. - The company completed a business combination for a purchase consideration of $186.1 million during the nine months ended September 30, 2025 [298]. - The Purchase Agreement includes Earnout Consideration and Deferred Consideration totaling approximately $40 million [291]. - The maximum Earnout Consideration is 4,686,530 shares of common stock, contingent on APA achieving specific financial performance targets by September 30, 2028 [292]. - Deferred Consideration will be paid in three installments, with the first installment equal to 50% of the Deferred Consideration due within five business days after the first anniversary of the Closing Date [293]. - The company issued 400,000 shares of Series A Redeemable Perpetual Preferred Stock and 9,000,000 shares of common stock for approximately $395.4 million [294]. Market and Regulatory Environment - The One Big Beautiful Bill Act (OBBB) changes the solar Investment Tax Credit (ITC), terminating it for facilities placed in service after December 31, 2027, unless construction begins before July 4, 2026 [208]. - The OBBB imposes foreign entity limitations on claiming the ITC, affecting entities from covered nations like China and Russia, which could impact solar facility claims [208]. - The Section 45X manufacturing production tax credit applies to eligible components, with the company negotiating agreements to share economic benefits with suppliers [212]. - The OBBB did not modify the phase-out of the Section 45X credit but imposed foreign entity limitations, affecting future claims [213]. - The IRS issued guidance on domestic content bonus tax credits, which may cause project delays as customers navigate the requirements [214]. - The OBBB increased the domestic content threshold for solar facilities starting construction after June 16, 2025, impacting business evaluations [215]. - The U.S. Department of Commerce issued AD/CVD orders affecting certain solar photovoltaic cells and modules, with potential cash deposit rates exceeding 250% for imports from specific countries [220][221]. - The ongoing Russian-Ukraine war has increased logistics costs and material availability issues, prompting a reevaluation of procurement strategies [217]. - Disruptions in shipping lanes have led to increased transit times and costs, with the company increasing local sourcing efforts to mitigate delays [218]. - The company faces risks related to project timing, including potential delays due to weather, interest rate fluctuations, and local permitting challenges [205]. - The company has experienced competitive pressures and uncertainties related to tariffs and trade policies that could impact sourcing and pricing of components [207]. Financial Position and Liquidity - As of September 30, 2025, the company had a cash balance of $221.5 million, with $145.3 million available under its $166 million Revolving Credit Facility [277]. - The company completed a private placement of $345 million in aggregate principal amount of 2031 Convertible Notes, resulting in net proceeds of $334.6 million, which were used to repay debt and repurchase Convertible Notes [280]. - The company has contractual obligations and commitments as of September 30, 2025, with no material changes reported [290]. - As of September 30, 2025, the company posted surety bonds totaling approximately $227.4 million, which do not adversely impact liquidity [296]. - The Earnout Consideration was estimated to have a fair value of $20.4 million as of September 30, 2025, using a Monte-Carlo simulation method [301]. - The company is exposed to market risks primarily due to fluctuations in steel and aluminum prices and customer concentrations [303]. - There have been no material changes to the information previously provided under Item 7A of the 2024 Annual Report [304].