Array Technologies(ARRY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company achieved $275 million in revenue for Q4 2024 and $916 million for the full year 2024, exceeding the midpoint of previously communicated guidance [12][52] - Q4 adjusted gross margin improved by 410 basis points year-on-year to 29.8%, while full year adjusted gross margin reached 34.1%, an increase of 680 basis points compared to 2023 [12][53] - Adjusted EBITDA for Q4 was $45.2 million, with a margin of 16.4%, compared to $48.2 million and a margin of 14.1% in Q4 2023 [50] - The net loss attributable to common shareholders in Q4 was $141.2 million, compared to a net income of $6 million in the prior year [51] Business Line Data and Key Metrics Changes - The order book ended the year at $2 billion, up 10% from 2023, with over 20% growth in the domestic portion [17] - The OmniTrack terrain following tracker contributed almost 10% of 2024 revenue, reflecting strong market traction [18] Market Data and Key Metrics Changes - Utility scale solar remains the cheapest and fastest-growing energy source, with a projected 50% increase in annual electricity production needed by 2035 [20] - Solar and solar plus battery storage accounted for 64% of all new electricity deployment in the U.S. [21] - The Brazilian market is experiencing slow growth due to currency devaluation and tariffs, expected to continue for 3 to 4 more quarters [27] Company Strategy and Development Direction - The company is focused on supply chain resiliency, with a new manufacturing facility in Albuquerque, New Mexico, aimed at reducing costs and risks [13] - Continued investment in innovation, including a significant investment in SWAP robotics to enhance operational efficiency [37] - The company aims to provide 100% domestic content trackers in the U.S. by the first half of 2025 [26][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the stabilization of the market towards the end of 2024 and expects continued momentum in 2025 [22][29] - The company anticipates a 20% top-line growth in 2025, driven by a recovery in market share and shipments from delayed projects [29][59] - Management noted that the competitive environment remains disciplined, particularly in North America, despite challenges in other regions [82] Other Important Information - The company ended 2024 with a strong cash balance of $364 million, an increase of $115 million from the previous year [55] - Total operating expenses for Q4 were $220.7 million, significantly impacted by noncash impairment charges related to the 2022 STI acquisition [49] Q&A Session Summary Question: Can you discuss the EBITDA margin in Q1 compared to the rest of the year? - Management indicated that Q1 EBITDA margins are forecasted to be lower due to the continuation of large shipments from Q4 and the roll-off of some amortization [70] Question: Were there any safe harbor orders received in Q4 or into Q1? - Management noted that less than 10% of the order book consists of safe harbor orders, with no new orders currently in the book but ongoing discussions with customers [72][74] Question: Why did the new orders backlog lag behind despite a growing pipeline? - Management explained that while the win rate for new orders is improving, there were debookings in Brazil that masked strength in the North American order book [78][80] Question: What pricing dynamics are expected in 2025? - Management stated that pricing remains disciplined, with ASP declines primarily driven by commodity prices rather than market competition [82] Question: How does the company view the competitive environment following Soltec's exit in Europe? - Management acknowledged a change in competition in Brazil, with opportunities to pick up projects, but noted legal constraints in Spain [108][110]