Array Technologies, Inc. Reports Financial Results for the Second Quarter 2023 -- Strong execution delivers revenue of $507.7 million and record gross margin of 29.6%

Second Quarter 2023 Highlights

• Revenue of $507.7 million
• Net income to common shareholders of $52.0 million
• Adjusted EBITDA⁽¹⁾ of $115.6 million
• Basic and diluted net income per share of $0.34
• Adjusted diluted net income per share⁽¹⁾ of $0.47
• Executed contracts and awarded orders at June 30, 2023 totaling $1.7 billion

⁽¹⁾ A reconciliation of the most comparable GAAP measure to its Non-GAAP measure is included below.

ALBUQUERQUE, N.M., Aug. 08, 2023 (GLOBE NEWSWIRE) -- Array Technologies ( ARRY) (“Array” or “the Company”), a leading provider of tracker solutions and services for utility-scale solar energy projects, today announced financial results for its second quarter ended June 30, 2023.

“Array delivered another strong performance in the second quarter as we exceeded expectations across the board. Revenue grew 21% from the prior year, anchored by 124% year-over-year growth in our STI segment. Gross margin at 29.6% was particularly strong as we took advantage of cost-saving opportunities in the quarter and an increase in higher-margin non-tracker sales. Capitalizing on the strong margin performance, Adjusted EBITDA was $116 million for the second quarter, which was a $95 million improvement from the prior year. And finally, we generated $57 million of free cash flow in the first half of 2023, leaving us with an ending cash balance at June 30, 2023 of $156 million, which represents an improvement of $105 million from June 30, 2022,” said Kevin Hostetler, Chief Executive Officer.

Mr. Hostetler continued, “We also saw a meaningful increase in our sequential bookings, winning approximately $600 million in the quarter. We were happy to see the preliminary guidance come out on IRA domestic content which led to an improved momentum in our conversion of pipeline to orders. That said, we did see a larger proportion of these bookings represent 2024 deliveries than we had expected going into the quarter. This fact, combined with larger than anticipated pushouts due to module availability, further IRA clarity, and permitting issues, has negatively impacted anticipated revenue for 2023. However, it is important to note that despite a lower outlook for revenue, we are increasing our forecasted Adjusted EBITDA and Adjusted EPS as we have increased our full-year gross margin expectation. Further, by delivering more earnings on less revenue, we are able to drive better than forecasted free cash flow performance this year, which we will use to accelerate our deleveraging.”

Mr. Hostetler concluded, “While we are disappointed in the progression of the elements we cannot control, we steadfastly remain focused on the execution of our strategy. That includes delivering a strong 2023 while positioning ourselves for success as the industry moves into its next phase of growth. We will enter 2024 with strong bookings momentum, a much-improved balance sheet, a multi-product offering enabling us to expand our target market while delivering industry-leading gross margin, and a stronger operating system that will continue to improve shareholder returns.”

Second Quarter 2023 Financial Results

Revenue increased 21% to $507.7 million, compared to $419.9 million for the prior-year period resulting from both an increase in the total number of MWs shipped and an increase in ASP due to improved pass-through pricing to our customers.

Gross profit increased 276% to $150.0 million compared to $39.9 million in the prior year period, driven by both higher volume and an increase in gross profit as a percent of revenue. Gross margin increased to 29.6% from 9.5% driven by an improvement in pass-through pricing to customers, cost-saving opportunities, and an increase in non-tracker sales.

Operating expenses increased to $53.8 million compared to $53.3 million during the same period in the prior year. The increase is primarily related to higher census and professional fees, partly offset by $13.4 million in lower amortization expense in 2023 compared to 2022, which had elevated amortization costs related to the STI acquisition.

Net income to common stockholders was $52.0 million compared to a net loss of $17.2 million during the same period in the prior year, and basic and diluted income per share was $0.34 compared to basic and diluted loss per share of $0.11 during the same period in the prior year.

Adjusted EBITDA increased to $115.6 million, compared to $20.9 million for the prior-year period.

Adjusted net income was $71.1 million compared to adjusted net income of $12.9 million during the same period in the prior year and adjusted basic and diluted adjusted net income per share was $0.47 compared to adjusted diluted net income per share of $0.09 during the same period in the prior year.

Executed Contracts and Awarded Orders

Total executed contracts and awarded orders at June 30, 2023 were $1.7 billion, with $1.4 billion from our Array Legacy Operations segment and $0.3 billion from STI Norland.

Full Year 2023 Guidance

For the year ending December 31, 2023, the company expects:

• Revenue to be in the range of $1,650 million to $1,725 million
• Adjusted EBITDA⁽²⁾ to be in the range of $280 million to $295 million
• Adjusted net income per share⁽²⁾ to be in the range of $1.00 to $1.07
  

⁽²⁾ A reconciliation of projected adjusted EBITDA and adjusted net income per share, which are forward-looking measures that are not prepared in accordance with GAAP, to the most directly comparable GAAP financial measures, is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measures may include the impact of such items as non-cash share-based compensation, revaluation of the fair-value of our contingent consideration, and the tax effect of such items, in addition to other items we have historically excluded from adjusted EBITDA and adjusted net income per share. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments are inherently unpredictable as to if or when they may occur. As such, for our 2023 outlook, we have not included estimates for these items and are unable to address the probable significance of the unavailable information, which could be material to future results.

Conference Call Information

Array management will host a conference call today at 5:00 p.m. Eastern Time to discuss the Company’s financial results.
The conference call can be accessed live over the phone by dialing (877)-451-6152 (domestic) or (201)-389-0879 (international). A telephonic replay will be available approximately three hours after the call by dialing (844)-512-2921, or for international callers, (412)-317-6671. The passcode for the live call and the replay is 13739433. The replay will be available until 11:59 p.m. (ET) on August 22, 2023.

Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://ir.arraytechinc.com. The online replay will be available for 30 days on the same website immediately following the call.

To learn more about Array Technologies, please visit the company's website at http://ir.arraytechinc.com.

About Array Technologies, Inc.

Array Technologies ( ARRY) is a leading American company and global provider of utility-scale solar tracker technology. Engineered to withstand the harshest conditions on the planet, Array’s high-quality solar trackers and sophisticated software maximize energy production, accelerating the adoption of cost-effective and sustainable energy. Founded and headquartered in the United States, Array relies on its diversified global supply chain and customer-centric approach to deliver, commission and support solar energy developments around the world, lighting the way to a brighter, smarter future for clean energy. For more news and information on Array, please visit arraytechinc.com.

Investor Relations Contact:
Array Technologies, Inc.
Investor Relations
505-437-0010
[email protected]

Forward-Looking Statements
This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our projected future results of operations, business strategies, and industry and regulatory environment. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” "seek," “should,” “will,” “would” or similar expressions and the negatives of those terms.

Array’s actual results and the timing of events could materially differ from those anticipated in such forward-looking statements as a result of certain risks, uncertainties and other factors, including without limitation: changes in the demand for solar energy projects; a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment; failure to retain key personnel or failure to attract additional qualified personnel; defects or performance problems in our products that could result in loss of customers, reputational damage, a loss of revenue, and warranty, indemnity and product liability claims; a drop in the price of electricity derived from the utility grid or from alternative energy sources; challenges in our ability to consolidate the financial reporting of our acquired foreign subsidiaries; delays, disruptions or quality control problems in our product development operations; the effects of a further increase in interest rates, or a reduction in the availability of tax equity or project debt capital in the global financial markets, which could make it difficult for customers to finance the cost of a solar energy system and could reduce the demand for our products; changes to tax laws and regulations that are applied adversely to us or our customers; existing electric utility industry policies and regulations, and any subsequent changes, that may present technical, regulatory and economic barriers to the purchase and use of solar energy systems; the interruption of the flow of materials from international vendors, including as a result of the imposition of additional duties, tariffs and other charges or restrictions on imports and exports; changes in the global trade environment, including the imposition of import tariffs; economic, political and market conditions, including the Russian-Ukraine conflict, uncertain credit and global financial markets resulting from increasing inflation and interest rates along with recent bank failures, and the COVID-19 pandemic; the reduction, elimination or expiration of government incentives for, or regulations mandating the use of, renewable energy and solar energy specifically; our ability to, obtain, maintain, protect, defend or enforce, our intellectual property and other proprietary rights; significant changes in the costs of raw materials; the implementation of the IRA may not deliver as much growth as we are anticipating; our ability to remediate our material weaknesses on a timely basis or at all; the effect of our substantial indebtedness on our financial condition; the occurrence of cybersecurity incidents, including unauthorized disclosure of personal or sensitive data or theft of confidential information; and the other risks and uncertainties described in more detail in the Company’s most recent Annual Report on Form 10-K and other documents on file with the SEC, each of which can be found on our website www.arraytechinc.com.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Non-GAAP Financial Information
This press release includes certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share. We define Adjusted EBITDA as net income (loss) plus (i) other (income) expense, (ii) foreign currency (gain) loss, (iii) preferred dividends and accretion, (iv) interest expense, (v) income tax (benefit) expense, (vi) depreciation expense, (vii) amortization of intangibles, (viii) equity-based compensation, (ix) change in fair value of derivative assets, (x) change in fair value of contingent consideration, (xi) certain legal expense, (xii) certain acquisition costs, and (xiii) other costs. We define Adjusted Net Income as net income (loss) plus (i) amortization of intangibles, (ii) amortization of debt discount and issuance costs (iii) preferred accretion, (iv) equity-based compensation, (v) change in fair value of derivative assets, (vi) change in fair value of contingent consideration, (vii) certain legal expense, (viii) certain acquisition related costs, (ix) other costs, and (x) income tax (expense) benefit of adjustments. A detailed reconciliation between GAAP results and results excluding special items (“non-GAAP”) is included within this presentation. We calculate net income (loss) per share as net income (loss) to common shareholders divided by the basic and diluted weighted average number of shares outstanding for the applicable period and we define Adjusted Net Income per share as Adjusted Net Income (as detailed above) divided by the basic and diluted weighted average number of shares outstanding for the applicable period.

We believe that these non-GAAP financial measures are provided to enhance the reader’s understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing the Company’s performance, as well as in planning and forecasting future periods. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

Among other limitations, Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; do not reflect income tax expense or benefit; and other companies in our industry may calculate Adjusted EBITDA and Adjusted Net Income differently than we do, which limits their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA and Adjusted Net Income on a supplemental basis. You should review the reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income below and not rely on any single financial measure to evaluate our business.

Array Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
(in thousands, except per share and share amounts)

Array Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts)