Array Technologies(US:ARRY)2022-05-11 00:56Financial Data and Key Metrics Changes - Revenues for Q1 2022 increased by 21% to $300.6 million compared to $248.2 million in the prior year period, with $251 million from the legacy Array business and $50 million from the STI business [16] - Gross profit decreased to $26.6 million from $46.2 million in the prior year period, leading to a gross margin decrease from 18.6% to 8.8% [16][17] - Net loss attributable to common shareholders was $33.7 million compared to a net income of $4.6 million during the same period in the prior year, resulting in a basic and diluted loss per share of negative $0.23 [18] - Adjusted EBITDA decreased to $700,000 compared to $36.6 million for the prior year period [19] Business Line Data and Key Metrics Changes - The legacy Array business revenue increased by 21% year-over-year, marking the third consecutive quarter of revenue growth [16] - The STI business had a gross margin of 10.7%, negatively impacted by higher labor costs and construction cost overruns [17] Market Data and Key Metrics Changes - The company anticipates that approximately $225 million to $250 million of revenue will be at risk due to module uncertainty, representing about 15% of the previous outlook [22] - The order book has increased to $2 billion, indicating strong demand in both U.S. and European markets [38] Company Strategy and Development Direction - The company aims to differentiate itself from competitors by actively collaborating with customers to address module challenges and enhance customer experience [13] - A focus on operational efficiencies and a comprehensive review of operating systems and core business processes is planned to drive improvements [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledges near-term challenges due to a volatile cost and logistics landscape, but remains confident in executing within their control [11] - The company expects continued revenue growth and margin improvement in both legacy Array and STI businesses despite short-term headwinds [27] Other Important Information - The company has made significant progress since becoming public but recognizes the need for further improvement [14] - The AD/CVD investigation has created uncertainty around project timing and increased supply chain complexity [12] Q&A Session Summary Question: Visibility on project delays and their timing - Management indicated that projects are moving into 2023, with some pushed further out, but specific timelines remain uncertain [30] Question: Impact of revenue guidance changes on EBITDA margins - Management clarified that the $200 million revenue pushout reflects legacy margins, with expectations of below 20% margins [34] Question: Liquidity and cash flow management - Management confirmed a cash balance of $50 million and indicated confidence in achieving positive cash flow for the year, with a back-half weighted outlook [36] Question: Demand trends in Europe - Management reported strong bookings in both U.S. and European markets, with a positive outlook for STI business in Europe [38] Question: Construction costs and EPC involvement - Management explained that while construction is not a core competency, they are involved in certain large projects, which has impacted margins [56]