Array Technologies(ARRY) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 2022 was $402 million, an increase of 83% from $219.9 million in Q4 2021, with organic growth of 22% in the legacy Array segment [6][22] - Full year revenue reached $1.638 billion, exceeding guidance and representing a total growth of 92% and organic growth of nearly 50% from 2021 [6][25] - Adjusted EBITDA for Q4 2022 was $52 million, up from $0.5 million in the prior year, while full year adjusted EBITDA grew to $129 million from $43 million in 2021 [9][26] - Gross margin for Q4 2022 was 20%, a significant increase from 4.7% in Q4 2021, with full year gross margin at 13.9%, up from 9.7% [8][25] - Free cash flow for 2022 was $131 million, with $86 million generated in Q4 alone, indicating improved profitability and working capital efficiency [9][27] Business Line Data and Key Metrics Changes - Revenue from the legacy Array segment was $269 million in Q4 2022, while the FTI segment contributed $133 million [22] - Gross margin for the legacy Array business was 18.2%, while the FTI business had a gross margin of 23.8% in Q4 2022 [22] - Operating expenses increased to $64.2 million in Q4 2022, primarily due to a $24.7 million increase in amortization expense related to the STI acquisition [23] Market Data and Key Metrics Changes - The company reported approximately $500 million in orders received in Q4 2022, indicating steady order activity despite uncertainties [12] - The UFLPA has shown positive signs, but module availability remains a concern for customers [10][11] - The company expects strong growth in Brazil and Australia, with significant utility-scale projects moving forward [15][16] Company Strategy and Development Direction - The company aims to maintain its largest market share in the US and expects significant volume gains in the coming years [10] - Future growth will focus on offering a diverse set of products to maximize energy output from solar sites [14] - The company is committed to building long-term partnerships across the supply chain to maximize benefits from the IRA [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term demand for solar energy, expecting it to become a 50-state solution [14] - The company is cautious about including potential benefits from the IRA in its 2023 guidance due to uncertainties [30] - Management noted that while lead times for US shipments remain around 14 weeks, clarity on domestic content definitions is needed for future pricing power [38][60] Other Important Information - The company introduced new products, OmniTrack and H250, to address diverse customer needs and improve market competitiveness [18][19] - The SmarTrack software suite will be enhanced to provide weather response capabilities, further strengthening the company's value proposition [20][21] Q&A Session All Questions and Answers Question: Can you provide color on volume versus price trends in your 2023 outlook? - Management indicated that overall pricing is expected to be flat, with some potential upside on the FTI side [36] Question: What are the lead times for US shipments? - Lead times remain around 14 weeks for US projects, with ongoing discussions with customers [38] Question: How are bookings year-to-date? - Management reported solid bookings for the quarter, with strong momentum heading into 2023 [41] Question: Can you clarify the backlog margins and their impact on future guidance? - Margins in the backlog are project-specific, with expectations of low 20s margins for the full year [42][44] Question: What is the outlook for free cash flow in 2023? - The company expects to deliver over $100 million in free cash flow for 2023 [30] Question: Can you comment on the new products and market receptivity? - The new products are well-received, with customers expressing high demand for the OmniTrack and H250 [50][52] Question: What is the status of the domestic content definition and its implications? - Management is awaiting clarity on domestic content definitions, which will impact pricing power and market share [60][62]