Array’s Q2 2024 revenues declined 50% annually due to lower volumes and ASP decline on lower input costs
Market uncertainty arising out of AD/CVD petitions and new IRA domestic content elective safe harbor are impacting project timelines
Management has lowered its annual guidance for FY 2024 expecting lower volumes
Array Technologies, the leading global solar PV tracker manufacturer from the US, exited Q2 2024 with its revenues of $256 million exceeding guidance of $225 million to $235 million, even though these declined 50% Year-over-Year (YoY). The annual drop was attributed to lower volumes and ASP decline on lower input costs.
Expecting lower volumes due to project timelines at the customers end and declining ASPs compared to 2023, the management has lowered its full year 2024 guidance.
Array CEO Kevin Hostetler explained, “While we’re seeing positive long-term momentum in the market, our customers continue to report struggles with short-term dynamics causing project delays, which has caused us to reduce our revenue outlook for the year. Notably, the recent AD/CVD petitions and the interpretation of the new IRA domestic content elective safe harbor table are new factors that have created some uncertainty in the U.S. market and changed timelines for some customers’ projects.”
He also pointed at the rapid devaluation of the Brazilian real (BRL) which he said has caused developers to delay projects in Brazil as they work through renegotiating power purchase agreements (PPA).
Adjusted EBITDA for the quarter went down by $60.2 million to $55.4 million while adjusted net income dropped to $30.6 million, compared to $74.3 million in the previous year.
Backlog and bookings
At the end of June 2024, its total executed contracts and awarded orders were a total of $2 billion, about 80% of which is scheduled for delivery between now and 2025-end. The management said that it expects to receive orders for 2025 delivers for several more quarters to come, which gives it confidence for future growth.
It registered $429 million in new bookings since the last call, however the total orderbook was impacted by adjustments related to commodity price updates, project scope changes, and foreign exchange impacts.
Analysts at Roth MKM caution for risk of more pushouts, especially from 2025 to 2026. Nonetheless, they praise the company on ‘controlling what it can control’, but points at industry uncertainty causing substantial challenges with the company’s ability to forecast business.
Nevertheless, the company is happy with the new bookings for its OmniTrack product. It has also launched a new tracker system called SkyLink that can design to an 8 linked row configuration. This, it claims, comes with a PV power control to ensure tracker stow capability during grid power outages, especially helpful in areas with heavy snow load and extreme weather potential.
Guidance
Despite exceeding its Q2 revenue guidance, Array is cautious in its outlook as the company expects to report Q3 2024 revenues as between $220 million to $235 million.
Adjusted gross margin is likely in the low-to-mid 30s, inclusive of torque tube and structural fastener 45X benefits.
For full year 2024, its revised guidance is now within $900 million to $1,000 million, down from the previous guidance of $1.25 billion to $1.4 billion. Adjusted EBITDA is also down to $185 million to $210 million, as compared to $285 million to $315 million guided earlier.