The House Ways and Means Committee has unveiled its section of the budget reconciliation bill, providing updates relevant to the Inflation Reduction Act. This legislation appears to be favorable for sectors including solar, wind, storage, and geothermal energy, according to JPMorgan analyst Mark Strouse. Key provisions ensure that while the Production Tax Credit and Investment Tax Credit definitions have been refined, the credits will remain unchanged until 2028 before gradually phasing down by 2032. A notable addition is the inclusion of language addressing foreign entities of concern, effective a year post-enactment.
For Array Technologies (ARRY, Financial), these legislative changes are anticipated to be beneficial. The bill's constraints on products from foreign-influenced entities are viewed as advantageous for companies like Array Technologies, aligning well with investor expectations. Such measures potentially deter competition from less favorable sources, supporting domestic providers in the renewable energy sector. Overall, the proposal is expected to strengthen the position of Array Technologies in the market.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for Array Technologies Inc (ARRY, Financial) is $8.02 with a high estimate of $13.00 and a low estimate of $5.00. The average target implies an upside of 17.20% from the current price of $6.84. More detailed estimate data can be found on the Array Technologies Inc (ARRY) Forecast page.
Based on the consensus recommendation from 27 brokerage firms, Array Technologies Inc's (ARRY, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Array Technologies Inc (ARRY, Financial) in one year is $11.54, suggesting a upside of 68.71% from the current price of $6.84. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Array Technologies Inc (ARRY) Summary page.
ARRY Key Business Developments
Release Date: May 06, 2025
- Revenue: $302.4 million, a 97% increase year-over-year and a 10% increase sequentially.
- Adjusted Gross Margin: 26.5%, reflecting expected compression due to legacy agreements and international projects.
- Cash Position: Ending cash balance of $348 million.
- Order Book: Maintained at $2 billion, with an 18% increase in contracting compared to the previous quarter.
- Adjusted EBITDA: $40.6 million, with a margin of 13.4%.
- Net Income: $2.3 million, compared to a net loss of $11.3 million in the prior year.
- Diluted Income Per Share: $0.02, compared to a loss of $0.07 in the prior year.
- Adjusted Net Income: $19.7 million, up from $9 million in the prior year.
- Free Cash Flow: A use of $15.4 million, compared to $45.1 million generated in the prior year.
- Leverage Ratio: Net debt leverage ratio of 1.8 times.
- Full-Year Revenue Guidance: Expected to be between $1.05 billion and $1.15 billion.
- Adjusted Gross Margin Guidance: Expected to be within the range of 29% to 30% for the full year.
- Adjusted EBITDA Guidance: Expected to range between $180 million and $200 million.
- Adjusted Diluted Earnings Per Share Guidance: Anticipated to be between $0.60 and $0.70.
- Free Cash Flow Guidance: Expected to be between $115 million and $130 million for 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Array Technologies Inc (ARRY, Financial) reported a strong first quarter with a 97% increase in revenue year-over-year, reaching $302 million.
- The company achieved a 143% increase in volume growth over the prior year, marking the second largest quarter of volume shipped since Q2 of 2023.
- Array Technologies Inc (ARRY) maintained a robust order book valued at $2 billion, with an 18% increase in contracting compared to the previous quarter.
- The company has strengthened its management team with the addition of several solar industry veterans, enhancing leadership both domestically and internationally.
- Array Technologies Inc (ARRY) is seeing strong traction with its new product offerings, such as OmniTrack and SkyLink, which accounted for 15% of revenue in Q1 and 30% of new bookings.
Negative Points
- The company is facing near-term policy-related headwinds, including ongoing tariff negotiations and potential shifts in the Inflation Reduction Act.
- First quarter adjusted gross margin was compressed to 26.5% due to impacts from legacy volume commitment agreements and large international lower margin projects.
- Array Technologies Inc (ARRY) anticipates potential project delays due to current market uncertainties, including tariffs and commodity price increases.
- The devaluation of the Brazilian real and newly introduced tariffs on solar components have significantly slowed market growth in Brazil.
- The company is experiencing moderate commodity-related ASP declines in its legacy operations and slightly higher ASP declines internationally.
