Array Technologies(ARRY) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $515 million, representing a year-over-year growth of 173% and 12% on an organic basis [8][22] - Gross margin increased to 15.6%, marking the fourth consecutive quarter of growth [10][23] - Adjusted EBITDA improved to $55 million, a year-over-year increase of $59 million [10][25] - Free cash flow for the quarter was $102 million, significantly strengthening the balance sheet [10][25] - Net income attributable to common shareholders was $28.6 million compared to a net loss of $33 million in the prior year [24] Business Line Data and Key Metrics Changes - The legacy Array segment generated $400 million in revenue, reflecting organic growth of 112% year-over-year [22] - The FTI segment contributed $115 million, a growth of 58% from the second quarter [22][23] - Gross margin for the legacy Array business was 16%, while the FTI business had a gross margin of 14.2% [23] Market Data and Key Metrics Changes - The order book at September 30 was $1.8 billion, a year-over-year increase of 77% [8] - New orders totaled almost $400 million in Q3, reflecting a sequential increase from the second quarter [9] Company Strategy and Development Direction - The company is actively engaging with governmental agencies and trade associations regarding the Inflation Reduction Act (IRA) to maximize benefits for the solar industry [11][12] - Focus on improving working capital efficiency, with a 12-day improvement in cash conversion cycle from the previous quarter [17] - The company is evaluating its manufacturing footprint to ensure strategic relationships are maintained while maximizing benefits from domestic manufacturing credits [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the impact of the IRA on solar deployments over the next decade, although implementation details are still pending [11][12] - The company raised its full-year revenue outlook by $150 million despite expected headwinds from the UFLPA [15] - Management indicated that the delays caused by the UFLPA will continue to impact deliveries into early 2023 [15][69] Other Important Information - The company restated financials due to a clerical error that overstated revenue and gross profit for the quarter ended June 30, 2022 [5][6] - The company has been granted 15 new patents over the past three years, increasing its active patents to 21 [20] Q&A Session Summary Question: Guidance update on AD/CVD project deliveries - The company expects to capture about $140 million in 2023 from AD/CVD projects [34] Question: Factors driving revenue growth - Projects are converting faster in the order book, contributing to revenue growth [36] Question: STI business margin recovery - Expected normalized margins for the STI business are in the low 20s [39] Question: FEMA decision implications - The company believes it has a competitive advantage in structural integrity, which may mitigate cost increases [40] Question: Initial feedback on Omnitrack - The company is receiving opportunities for qualification but not yet orders [44] Question: Demand pull-in from Q4 to Q3 - Part of the increase in Q3 was due to the availability of projects that were originally scheduled for Q4 [67] Question: Outlook for bookings in Q4 - The company expects bookings to remain strong and consistent through Q4 [75] Question: Implications of Brazilian election on solar development - The company is optimistic about prospects in Brazil regardless of the election outcome [77]