Array Technologies(US:ARRY)2022-04-06 01:31Financial Data and Key Metrics Changes - Revenue for Q4 2021 increased by 22% to $219.9 million compared to $180.6 million in the prior year period, with an adjusted growth of approximately 57% when excluding ITC related orders from the previous year [19][20] - Gross profit decreased to $10.3 million from $35.5 million, leading to a gross margin drop from 19.6% to 4.7% due to lower-priced orders and higher input costs [20][21] - Net loss attributable to common shareholders was $32.1 million, compared to a net loss of $9.8 million in the prior year, with adjusted EBITDA decreasing to $500,000 from $20 million [21][22] - For the full year 2021, revenue decreased by 2% to $853.3 million, with gross profit down to $82.9 million from $202.8 million, resulting in a gross margin decline from 23.2% to 9.7% [23][24] Business Line Data and Key Metrics Changes - The order book for the legacy Array business more than doubled from $705 million to over $1.4 billion, with the total order book including STI reaching over $1.8 billion, a 163% increase year-over-year [15][16] - Approximately 20% of the order book increase was attributed to price increases, with a significant portion of the order book now representing projects outside the U.S. [15][16] Market Data and Key Metrics Changes - The company added 20 new suppliers and expanded its supply base by over 40% with the acquisition of STI, increasing global capacity by 25% [12][14] - The tightening of global supply chains and logistics has led to increased lead times, impacting project delivery schedules [11][12] Company Strategy and Development Direction - The company has shifted to a fixed pricing model for trackers to mitigate volatility and ensure material availability, which has helped in winning more business [9][10] - The focus on long-term Master Service Agreements (MSAs) with key suppliers aims to ensure competitive pricing and supply availability [12][14] - The company is actively engaging with Washington DC to address regulatory uncertainties affecting module availability [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite industry challenges, highlighting a strong order book and proactive customer engagement [14][15] - The 2022 revenue guidance is projected to be between $1.45 billion and $1.75 billion, implying over 85% growth at the midpoint [29][30] - Adjusted EBITDA for 2022 is expected to range from $170 million to $210 million, reflecting increased SG&A expenses and project timing uncertainties [31][32] Other Important Information - The company announced a leadership transition, with Kevin Hostetler appointed as the new CEO, succeeding Jim Fusaro [40][41] - The company plans to enhance its ESG efforts, including publishing its full-year 2021 report and establishing ESG goals [36][38] Q&A Session Summary Question: What is the STI sales mix forecast for 2022? - Management indicated that while Brazil remains strong, Western Europe is expected to see increased activity in 2022 [45][46] Question: How is the company mitigating rising steel prices? - The company has engaged customers in a new LOI process, allowing for locked-in prices, which has been well received [48][50] Question: What is the potential downside risk to the 2022 revenue guidance? - Management stated that the guidance does not contemplate material impacts from the AD/CVD inquiry, focusing instead on project delays due to supply chain issues [54][55] Question: What is the expected margin trajectory for 2022? - Management expects a gradual recovery in margins, with historical levels anticipated in the second half of the year [62][82] Question: What is driving the uncertainty around legacy contracts? - The uncertainty is primarily related to project delivery schedules rather than revenue recognition policies [65][66]