ARRY Q1 Earnings Call: Revenue Beats Expectations, Margin and Cash Flow Pressures Persist

Solar tracking systems manufacturer Array (NASDAQ: ARRY) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 97.1% year on year to $302.4 million. The company’s full-year revenue guidance of $1.1 billion at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP loss of $0.01 per share was significantly below analysts’ consensus estimates.

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StockStory’s Take

Array’s first quarter results were shaped by exceptional sales volume growth and a continued recovery in market share, with management crediting disciplined execution and robust customer demand as key factors. CEO Kevin Hostetler pointed to a 143% increase in shipped volumes compared to last year and emphasized the company’s ability to navigate ongoing regulatory and policy uncertainty, particularly surrounding tariffs and the Inflation Reduction Act. Hostetler underscored that "our order book is resilient," highlighting Array’s operational agility and product traction, especially with recently launched offerings like OmniTrack and SkyLink.

Looking ahead, management is maintaining its full-year guidance, attributing their confidence to the company’s strong backlog and customer commitments. Hostetler noted that approximately 75% of 2025 domestic deliveries are for projects with U.S.-manufactured panels or those already in the country, reducing near-term supply risks. CFO Keith Jennings reiterated that the company’s liquidity position and extended credit facility provide flexibility amid market volatility. However, management acknowledged continued uncertainty in international markets, particularly Brazil, and the potential for project delays if policy clarity remains elusive.

Key Insights from Management’s Remarks

Array’s management identified volume acceleration, product adoption, and effective supply chain planning as primary drivers of the first quarter’s performance. Forward-looking commentary focused on product innovation and managing policy-related headwinds.

• Sales Volume Recovery: Shipped volumes grew 143% year over year, as management attributed gains to improved customer engagement and the delivery of previously delayed projects.
• Product Portfolio Expansion: Newer products like OmniTrack and SkyLink accounted for a growing share of revenue and bookings, with OmniTrack expected to represent roughly 30% of 2025 deliveries. Management emphasized these products’ adaptability and appeal in both domestic and international markets.
• Tariff and Supply Chain Management: The company highlighted its high proportion of domestically sourced materials—over 93% for U.S. projects—and contractual structures that allow tariff costs to be passed to customers. This has limited the financial impact of recent trade policy changes.
• Order Book Stability: The order book remained at $2 billion, with over 40% of it scheduled for delivery in the rest of 2025. Management reported positive customer feedback and a solid project win rate, despite broader industry uncertainty.
• International Market Challenges: Management cited slowed growth in Brazil due to currency devaluation and new tariffs, while noting steady performance in Europe and early-stage opportunities in the Middle East. These dynamics are expected to persist for several quarters.

Drivers of Future Performance

Management’s outlook for the coming quarters hinges on sustained demand for utility-scale solar, the ability to mitigate policy and supply chain risks, and the continued adoption of new products.

• Domestic Policy Clarity: Forward guidance depends heavily on the resolution of uncertainties surrounding U.S. tariffs and potential changes to the Inflation Reduction Act. Management believes clarity could accelerate customer orders and project timelines.
• Innovation and Product Adoption: The company expects new product offerings—particularly OmniTrack and SkyLink—to underpin growth and margin improvement, as these solutions address customer needs for installation flexibility and extreme weather resilience.
• International Volatility: Exposure to foreign markets, especially Brazil, represents a risk due to fluctuating currency values, shifting tariffs, and evolving regulatory conditions. Management is closely monitoring these trends and adapting strategy as needed.

Top Analyst Questions

• Mark Strouse (J.P. Morgan): Asked about customer interest in long-term value commitment agreements (VCAs) and whether new metrics would be reported. Management clarified VCAs are under discussion but no additional metrics are planned, prioritizing defined project delivery timelines in order book disclosures.
• Colin Rusch (Oppenheimer & Co.): Inquired about changes in order size and project lead times. CEO Hostetler responded that lead times remain competitive at 14 weeks, but customers are waiting for policy clarity before finalizing orders, although underlying demand remains robust.
• David Benjamin (Mizuho Securities): Asked about cash deployment and debt reduction plans. CFO Jennings noted the revolving credit facility extension and emphasized maintaining liquidity, while evaluating options for debt management and potential strategic investments.
• Luke Anneser (Piper Sandler): Sought clarity on whether uncertainty is driven more by tariffs or the Inflation Reduction Act. Hostetler said both factors are causing hesitation for projects beyond 2025, with customers seeking rapid responses once policies are settled.
• Phillip Shen (ROTH MKM): Questioned exposure to projects affected by U.S. tariffs on battery cells. Hostetler stated that most 2025 projects are shielded by having necessary components already in-country, with customers committed to current schedules.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) progress on resolving U.S. policy and tariff uncertainties, as any clarity could prompt a surge in bookings; (2) adoption rates and commercial impact of new product platforms like OmniTrack and SkyLink; and (3) the company’s ability to navigate challenges in international markets, particularly Brazil. Execution on supply chain flexibility and margin stabilization will also be important indicators of operational success.

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