Array Technologies, Inc.

Greetings. Welcome to Array Technologies' first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Julia Ward, Investor Relations at Array. Please go ahead.

Thank you. I would like to welcome everyone to Array Technologies' first quarter 2025 earnings conference call. I am joined on this call by Kevin Hostetler, our CEO, Keith Jennings, our CFO, and Neil Manning, our president and COO. Today's call is being webcast via our investor relations website at ir.arraytechinc.com, including audio and slides. In addition, the press release and the presentation detailing our quarterly results have been posted on the website. Today's discussion of financial results includes non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures can be found in the accompanying presentation and on our website. We encourage you to visit our website at arraytechinc.com for the most current information on our company. As a reminder, the matters we are discussing today include forward-looking statements regarding market demand and supply, our expected results, and other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made on this call. We refer you to the documents we file with the SEC, including our most recent Form 10-K, for a discussion of risks that may affect our future results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, We cannot guarantee the future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements to conform these statements to actual results, except as required by law. I'll now turn the call over to Kevin.

Thank you, Julia. Good morning, everyone, and thank you for joining us today. I'll begin with a brief business and market update. Then Neil Manning, our President and Chief Operating Officer, will provide some updates on market strategy, supply chain, product, and commercial execution for the quarter. Keith Jennings, our Chief Financial Officer, will provide our first quarter 2025 financial highlights and comments on our full year 2025 financial guidance. Then we'll open up the line for your questions. Starting on slide four, I'll begin with the summary and key highlights of the quarter, followed by a discussion on the latest near-term market dynamics and the industry environment. In today's rapidly evolving policy environment, including ongoing tariff negotiations and potential shifts in the Inflation Reduction Act, we remain focused on what we can control, executing our strategy with discipline, maintaining operational agility, and delivering long-term value for our shareholders. While near-term volatility is a reality, we are confident in the strength of our fundamentals and the resilience of our company. Integrity and transparency remain at the core of how our team operates. Through this complex and dynamic environment, we believe staying the course on our mission will continue to earn the trust of our customers and shareholders alike. As shown on slide five, we had a strong first quarter driven by focused execution, coupled with robust demand for our offerings, which accelerated volume growth to 143% over the prior year first quarter, achieving the second largest quarter of volume shift since Q2 of 2023. This strong momentum is reflected in achieving $302 million of revenue in the first quarter, a 97% increase over the prior year first quarter, and a 10% increase sequentially over the fourth quarter of 2024. First quarter adjusted gross margin came in at 26.5%, indicative of the compression we expected in the quarter due to the impacts of the previously mentioned legacy volume commitment agreement project and some additional large international lower margin projects. our cash position is strong, with a quarter-ending cash balance of $348 million. Turning to slide six, I'll provide some details on our order book. Despite near-term policy-related headwinds, our order book is resilient and maintained at $2 billion. Robust sales and operational performance delivered accelerated contracting of an 18% increase in the first quarter when compared to the fourth quarter of 2024. This is despite some customers having difficulty in pricing their PPAs and fully understanding their forward project costs in the current environment. We continue to strengthen our management team with the addition of several solar industry veterans, both domestically and internationally, throughout the first quarter. We are already seeing the benefits from these leadership additions to the organization. Our discipline and customer-centric approach continues to gain traction as new and existing customers are seeing the benefits of Array's innovative products, software, and services portfolio combined with our outstanding on-time delivery and ease of doing business. Our domestic order book continues to build on the momentum we experienced through the end of last year with over 9% growth in the first quarter. As of quarter end, over 40% of our order book is set to be delivered in the remaining quarters of 2025, and we would still expect to book some additional DG projects over the next couple of quarters for delivery in 2025. We remain pleased with our project by project win rate, and we're seeing great traction with our recently expanded product offerings such as Omnitrack and Skylink, which together accounted for 15% of revenue in Q1 and 30% of new bookings in the quarter. We are encouraged by our momentum, which we believe is resulting from our strength in organization, high customer engagement, and innovative and differentiated solutions for our customers. Transitioning to slide seven, I want to reemphasize the need for solar energy as a major portion of an effective all of the above energy strategy. The increasing energy demand globally is unmistakable. According to the Brattle and Conserve America study, the U.S. alone will need 50% more annual electricity production than today to meet demand in 2035, created mostly by manufacturing reshoring, industrial and transportation electrification, and data center growth. While the demand growth may slow slightly and the mix of generation capacity may change slightly, utility-scale solar is still faster to deploy, lower in cost both with and without tax credits, has no ongoing variable input costs, and utilizes a proven domestic supply chain. we see continued growth to meet the increased electricity demand in the coming decade. Despite this demand growth long term, market research from organizations such as Wood Mackenzie and the Solar Energy Industries Association are forecasting U.S. utility scale installations to be flat in 2025, largely due to the uncertain regulatory environment. With this being said, let's take a look at how we are managing the market dynamics both in the near-term and the long-term. I'm on page eight of the presentation materials, where we summarize our thoughts in two distinct buckets, near-term uncertainty and long-term confidence. While utility-scale solar remains the lowest cost and fastest-growing energy source to meet our rapidly increasing demand for electricity, the current geopolitical headwinds have created an unusual amount of uncertainty and volatility. the potential impacts of the current market uncertainty may lead to some project delays in the short term until there is better understanding of tariffs, the associated commodity increases, and the potential reform to IRA tax credits. Having said that, early sunsetting of tax credits could potentially accelerate sales as customers seek to safe harbor projects. Additionally, given the cost structure of utility-scale solar projects, we do not anticipate a significant impact from tariffs as equipment typically only accounts for approximately 50% of a utility-scale project. As such, a 15% increase in equipment costs would result in less than an 8% increase in the overall cost of a project. We believe developers will have the leverage to increase PPA prices to accommodate higher equipment costs if tariffs and or commodity price increases remain in place for the longer term. We are actively engaging with our customers to help understand the potential impacts of interest rates, tariffs, and commodity price increases on their business models and individual project timing. In the last few weeks, through these conversations with customers, we have confirmed that at least 75% of our remaining 2025 domestic deliveries are for projects that either have domestic panels or panels currently in the United States. We are also active participants with industry association partners like American Clean Power and the Solar Energy Industry Association to publicly share the impact that Array and other U.S. solar manufacturers are having on the American economy delivering both jobs and secure, reliable energy. We continue to monitor developments on the IRA tax credits and tariffs, and we are having direct conversations with policymakers in Washington to communicate our support for the energy tax credits. To this end, I was in Washington, D.C. last week and had constructive meetings at the White House and with several members of both the House and the Senate on both sides of the aisle to discuss our perspective on the importance of the energy tax credits and the alignment of these credits with the administration's goals of growing American manufacturing and meeting rapidly rising electricity demand. As the legislative reconciliation process moves forward, we will continue our direct engagement in D.C. on this topic and share information as it becomes clearer. However, I would note that given the current plan reconciliation process and the necessary steps to clear any required voting thresholds, it will likely be a bit cloudier and chaotic initially before negotiations ensue and it becomes both clearer and more supportive over time. On the international front, in Brazil, the devaluation of the Brazilian real, the volatile interest rate environment, and the newly introduced tariffs on solar components have significantly slowed market growth in what was traditionally one of the largest solar markets globally. This is expected to continue for three to four more quarters as purchase price agreements are renegotiated across the region and as Brazil enters a presidential election cycle in 2026. In Europe, our business is performing as expected, and we are seeing solid market growth in 2025. We believe we are well positioned to continue to capture market share in the region. We are actively evaluating additional markets for international expansion, including the Middle East, where we announced opportunities in the first half of 2024. We're excited by the positive reception and the potential growth in the region. Amidst this period of global economic uncertainty, Our continued focus on what we can control has Array well positioned to navigate the changes in the utility scale and distributed generation solar landscapes, which is why we are reaffirming our full year 2025 guidance. Given this backdrop, I'll turn it over to Neil to go into more detail on how we are responding to the near-term uncertainty and to review our products and commercial updates.