Array Technologies Adjusts 2024 Guidance Amid Challenges
Array Technologies, Inc. (ticker: ARRY), a renowned name in solar technology, has recently shared its Q2 2024 earnings, highlighting both progress and challenges. The company reported $256 million in revenue with an adjusted gross margin of 35%, coupled with an adjusted EBITDA of $55.4 million.
Financial Performance Highlights
The company's free cash flow stood at $1.8 million, while maintaining a cash balance of $282 million. Despite strong new bookings worth $429 million, Array has been compelled to revise its full-year 2024 guidance downward due to short-term project delays and other macroeconomic headwinds.
Company Outlook
Array's updated financial outlook for 2024 projects revenues between $900 million to $1 billion and an adjusted EBITDA ranging from $185 million to $210 million. The adjusted EPS (Earnings Per Share) is anticipated to be between $0.64 and $0.74, with a free cash flow projection of $60 million to $100 million. Furthermore, the search for a new CFO is currently in progress.
Bearish Highlights
Array faces challenges with a reduction in backlog due to changes in pricing, project scope, and foreign exchange (FX) impacts. Delays in project timing are attributed to issues such as AD/CVD petitions, domestic content requirements, and macroeconomic conditions, particularly in Brazil. Additionally, there is a cautious approach related to the potential impacts of upcoming elections on customer behavior.
Bullish Highlights
On a more positive note, the company boasts a strong pipeline and robust order rate, with 80% of its backlog expected to be delivered by the end of 2025. Innovations like the SkyLink tracker, designed for smaller parcels and capable of operating without grid power during storms, exemplify Array's adaptive strategies. The company is also implementing cost-cutting initiatives to leverage operational efficiencies.
Recent Performance and Expectations
Despite a Q2 revenue of $255.8 million, which marks a 50% decrease from 2023, there was a notable 67% sequential increase from Q1 2024. While the adjusted gross margin has improved year-over-year, it is expected to stabilize in the low to mid-30% range moving forward.
Insights from Q&A
During the earnings call Q&A, Array highlighted the addition of structural fastener elements and clamps, which are set to enhance margins. There was also a discussion about concerns regarding potential defunding of the Investment Tax Credit (IRA). However, the company remains optimistic that backlog delays will be resolved mostly in the first half of next year.
Investor Insights
Despite current challenges, Array Technologies is well-positioned for future growth thanks to its strong market presence, strategic operational efforts, and product innovations like SkyLink. Analysts acknowledge a short-term decline in sales but maintain a positive outlook for profitability. Key metrics include a P/E Ratio of 65 and an adjusted P/E ratio of 24.45, with a P/B Ratio of 5.91.
Overall, Array Technologies is poised to overcome present obstacles while harnessing the long-term potential of the solar industry.
