Array Technologies Inc (ARRY) 2025 Q4 法說會逐字稿

Good afternoon. Welcome to Array Technologies fourth quarter and full year 2025 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sarah Sheppard, Investor Relations at Array. Please go ahead.

Thank you. I would like to welcome everyone to Array Technologies fourth quarter in full year 2025 earnings conference call. I'm 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 site at ir.arraytechinc.com where the related presentation and press release are also available.

In addition, the press release and the presentation detailing our quarterly and full year 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 related 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 statements made on this call. We refer you to the periodic reports we filed with the SEC 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 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, Sarah. Good afternoon, everyone, and thank you for joining us. I'll begin by highlighting our key achievements from 2025 before transitioning to our strategic imperatives for 2026. Neil will provide additional detail on these objectives, and Keith will conclude with an in-depth review of our financial results and introduce our 2026 financial guidance. Then we'll open the line for your questions.

I'll begin on slide 4. 2025 marked a year of pivotal growth, commercial momentum, and strategic execution for Array. We closed the year with nearly $1.3 billion in revenue, achieving an exceptional 40% year over year increase supported by 35% tracker volume growth. This result underscores our team's unwavering dedication and resilience as we continue to outpace broader industry growth trends.

Our profitability remains strong with adjusted gross margin, adjusted EBITDA, and adjusted net income per share, all landing within our guidance range, and adjusted net income delivering solid double-digit growth year over year.

After the regulatory-related uncertainty throughout 2025, commercial activity built meaningfully as we exited the year, driving strong bookings momentum across our core markets and enhancing our visibility entering 2026. Importantly, we closed 2025 with a record $2.2 billion order book reflecting both sustained customer demand and improved commercial execution across our portfolio.

This performance was enabled by the commitment and discipline of our commercial teams, as demonstrated by a 2 times book-to-bill for both total Array and our recently acquired APA business. As committed last quarter, APA is now incorporated into our order book, contributing approximately $100 million. We remain highly confident in APA's growth trajectory, and APA, along with our recent new product introductions, now comprise close to half of our total order book value.

Turning to slide 5, I'd like to reflect on what has been a standout year for Array. Our progress and achievements are a direct testament to the strength, resilience, and commitment of our employees. Together we didn't just meet challenges, we transformed them into opportunities to engage, evolve, and innovate, positioning Array for sustained growth.

I'm especially proud of the successful completion of the APA acquisition, which brought over 200 talented new team members to our organization. Our teams are seamlessly integrating, and we are already unlocking meaningful value and expanding our share of wallet with customers. At APA, continuous innovation extends beyond engineered foundations to fix tilt racking where the business holds a market leading position.

The team has some exciting new fixed tilt offerings slated to come out this year, and we look forward to sharing more details in the coming quarters. Complementing the progress made on our balance of systems strategy, we continue to elevate the organization by investing in both our leadership team and our product portfolio, while at the same time optimizing our capital structure.

We strengthen our leadership bench by bringing in seasoned executives with deep industry knowledge and relationships, fresh perspectives, and a proven execution capability, enhancing our ability to operate with discipline while accelerating growth. In parallel, driven by deep customer engagement, we broadened and upgraded our product portfolio to more effectively address the industry's most pressing challenges and better meet the evolving needs of our customers. Finally, by refinancing higher cost debt and proactively managing our debt maturity profile, we improved our financial flexibility to support our next phase of strategic growth.

I'm now on slide 6. Our results in 2025 demonstrate that the foundation we've built is working, anchored by a talented team, a stronger product portfolio, a more resilient supply chain, and meaningful expansion through APA. Now our focus shifts to how we build on that momentum, capture emerging opportunities across the industry, and create lasting impact. This brings us to our 2026 strategic imperatives. This year we're sharpening execution around three imperatives that operate as an integrated framework. Innovate our future, elevate our international business, and advance our customer first culture.

Against the backdrop of organizational and portfolio advancement, our first strategic imperative for 2026 centers around innovation. At this stage in our company's evolution, innovation remains paramount. It is the core engine driving growth and bolstering our competitive positioning. We will continue to invest both organically and inorganically in differentiated technologies and solutions that enhance customer value and reinforce our role as a trusted technology partner.

This does not just mean new product development, but also continually updating and improving our internal tools and processes. To this end, we've created a robust AI roadmap with plans to apply transformational technology in all areas of our business. I'm excited to share updates in the coming quarters of the enhancements we're making. Innovation is how we win, not only in product performance, but in customer experience, financial strength, and with the deliberate and targeted market expansion.

It's the unifying catalyst that connects every element of our strategy, which is why it stands first among our 2026 strategic imperatives. As we anchor our strategy and innovation, we are equally focused on our second imperative elevating our international business. While recent macro conditions in key markets such as Brazil and Spain have presented challenges, the broader international landscape presents compelling opportunities for growth.

Key international markets are maturing and demanding more feature-rich capabilities. This also brings further opportunity to refine and adjust our global supply chain for enhanced scale and efficiency and streamline research and development around a common leading platform. Our focus remains on discipline execution, positioning the right products in the markets where our differentiation and value proposition resonates with our customers and where they are willing to pay for it.

As we position our international business for enhanced performance, our third strategic imperative further strengthens our customer-first culture across the organization. At the end of the day, our growth depends on how we effectively satisfy our customers' needs, and to do this, we need to listen to, support, and partner with them.

In 2025, we saw very clearly that when we focus on our customers' outcomes strong business performance follows. We will continue to grow our order book and pipeline by engaging and thrilling our customers with our diverse offerings, quality level of service, and our differentiated value proposition that delivers measurable impact to our customers' economics. Together, our three strategic imperatives for 2026 form a unified strategy that drives our market leading performance, expands our opportunities, and supports durable long-term value creation.

With that, I'll now turn it over to Neil to provide a deeper look at our strategic imperatives and how we will evaluate our success. Neil?

Thank you, Kevin. Let's turn to slide 7. Our first strategic imperative, innovate our future is about ensuring a race stays ahead of where the solar industry is going. The demands on solar installations are rising, tougher terrain, more extreme weather, higher energy generation expectations, and tighter cost structures. Our innovation pipeline is designed to meet those realities head on.

We start by continuing to strengthen our core tracker technology. SmarTrack is a renowned platform in the industry, and we're continuing to expand its capabilities while broadening its reach to become our standard offering globally. This year we'll incorporate improvements like our next generation industry leading terrain following capabilities for OmniTrack and launch a new US tracker version to further address unique market needs. These are tangible upgrades that will improve energy yield, reduce operational risk, and simplify installation for our customers.

Second, we're executing on our balance of system strategy. With the APA integration well underway, we're on track to launch our optimized Tracker Plus Foundation integrated solution in the second half of 2026. This offering reduces engineering and installation complexity, simplifies customer procurement, and reinforces Array as a broader solution partner.

We continue to assess other balance of system market leaders as potential additions to your portfolio. The last component of this initiative is further commercializing software and services. Areas where customers want more support, more insight, and more automation. We're continuing to invest in our SmarTrack platform and beyond new deployments, we see a meaningful opportunity to retrofit SmarTrack across our extensive install base.

SmarTrack adoption is growing rapidly and with more opportunity in our order book and cumulatively deployed to date. We've proven the value of our technology, and now our transition to a subscription-based model reflects our customers' desire for greater flexibility, continuous innovation, and scalable deployment as we drive real project return on investment. All while generating recurring revenue for Array. Our innovation agenda powers all facets of our strategy. Executing on these investments today reinforces a raised strategic advantage for the years ahead.

Turning the slide 8. As innovation continues to drive our competitive advantage, our next imperative focuses on enhancing our presence and performance throughout global markets. One of the most important steps we're taking to elevate our international business is the introduction of our door truck technology globally. This is driven by direct customer feedback. They need higher energy production, simpler installation, and stronger resilience in some of the toughest terrain and weather conditions found across India and Latin America.

DuraTrack has delivered exactly that for years in the United States. Faster installation time, consistently maximizing power density with far fewer parts in the field, no scheduled O&M, and delivering among the lowest LCOE in the industry. And its patented wind stow technology provides up to a 4% increase in energy yield compared to active snow systems in high wind environments.

Bringing these capabilities to our international customers gives them a proven, feature-rich platform that protects their investment and enhances project economics. At the same time, phasing out older non-SmarTrack compatible configurations of the H250 tracker allows us to ultimately align around one global platform, consolidate our supply chain, and focus our R&D and operations on the products that drive the greatest values for customers.

We took a one-time inventory evaluation charge in Q4 as part of this transition, and now we're moving forward with a more differentiated and scalable product platform. With this broader expansion, we plan to launch a new international offering later this year featuring the strongest of the H250's capabilities with DuraTrack's patented technologies combining the best of the Array portfolio on a single global tracker platform.

Our international expansion remains selective. Prioritizing markets where differentiated technology and value resonates. We've made focused investments for our technical sales approach internationally, and we're already seeing clear signs of traction across key regions with increasing engagement and commercial momentum in select markets throughout EMEA and Latin America.

This early success reinforces our confidence in the long-term opportunity and validates our disciplined, returns-focused approach to international expansion. Our growing international pipeline reinforces the strength of our partnerships, our technical performance, and our relevance in global utility scale markets. Core multinational customers are pulling us to new markets and opportunities, and we stand ready to serve them.

Elevating our international business isn't just about expanding into new geographies. It's about bringing the full strength of raised technology, reliability, and customer partnerships to the fastest growing global markets that value it. By doing so, we diversify our revenue base, strengthen our competitive position, and capture a critical path for continued growth.

Turning to slide 9. Advancing a customer first culture means we're elevating how we show up for and with our customers commercially, technically, and operationally. We've already made solid progress strengthening customer engagement, as evidenced by our record order book and critical commercial wins in 2025. We closed the year with our highest quarterly new bookings since 2023 and a book-to-bill ratio of over 2 times.

This level of commercial momentum is driven by global commercial efforts. It reflects our targeted investments in the front end of our business and our deeper engagement with developers, IPPs, and utilities, and a growing level of trust in the reliability and performance of our products. The APA success story is only getting started now with the bankability of a rate behind APA, they've seen a significant increase in utility scale project interest.

APA's 2 times book-to-bill ratio in a quarter is a result of their expanded pipeline and accelerating bookings. The strong momentum has continued into the new year. In 2025, our domestic Array business experienced greater than 20% growth in early stage domestic project bids, providing further evidence of robust customer pipelines and a clear move towards engaging Array early on as a strategic partner.

As we continue to prioritize engaging with high-quality customers, we're securing more multi-project awards while increasing our average project size, which we expect to grow at a significant double-digit rate from 2025 to 2026. Our strengthened commercial organization with high impact industry veterans coupled with formalized technical sales function articulating our differentiated value validated by third-party engineering studies is driving a tighter alignment between what the market needs and what our product roadmap is delivering.

It shortens feedback loops and ensures we're solving the right problems at the right time. Advancing a customer first culture informs how we sell, how we serve, how we innovate, and ultimately how we win. As we move through 2026, this imperative ensures that every part of our organization is aligned around delivering exceptional customer outcomes, and that alignment will continue to translate into strong commercial momentum and order book growth.

With that, I'll now turn over to Keith to provide more details on our results, Keith?

Thank you, Neil. Good evening, everyone. I will begin on slide 11. In 2025, we took deliberate steps to align our capital structure with our operating strategy. After a very busy year in the capital markets, we are pleased with the resulting leverage, liquidity, debt maturity profile, and the cash cost of our debt as we continue to execute. We ended the year with over $380 million of available liquidity and net debt leverage of 2.3 times trailing 12 month adjusted EBITDA.

On February 18, we upsized and extended our revolving credit facility to $370 million from $166 million bringing our pro forma total available liquidity to nearly $600 million. This upsides not only right-size our total available liquidity, but also strengthened and expanded our bank group with three new banking partners to help support our strategic imperatives and global commercial operations. With this stronger capital structure, we are well positioned to continue pursuing organic and inorganic opportunities in support of driving long-term shareholder value.

Moving to slides 12 and 13 for financial highlights for the full year 2025, we delivered strong financial results exceeding the high end of our revenue guidance. Revenue in the fourth quarter was $226 million including $33 million of revenue from APA. For the full year 2025, revenue was $1.3 billion representing an impressive 40% growth over 2024. Of this, APA contributed $50 million.

Sequentially and year over year, ASDs were higher in both our legacy Array and STI segments, aligned with the forecasted effect of rising commodity prices experienced throughout 2025. Our impressive revenue growth was supported by a tracker volume increasing 35%, underscoring our market share gains throughout the year. For a full year 2025, adjusted gross profit increased 11% year over year to $347 million representing an adjusted gross margin of 27%.

When compared to the prior year, adjusted gross margins declined, primarily due to the falloff of prior year 45X amortization benefit recognized in 2024 that contributed approximately 550 basis points, and tariff impacts combined with ASP pressure added an incremental drag of approximately 80 basis points on the year. As expected, APA had a slight diluted impact on overall adjusted gross margin in 2025 and delivered an adjusted EBITDA margin a few 100 basis points ahead of the core business.

Reflecting the significant frontend investments we made throughout the year, adjusted SG&A was $163 million 12.7% of revenue, an improvement from 15.4% of revenue a year ago, and moving toward our near term target of 10% of revenue. Adjusted EBITDA was $188 million with an adjusted EBITDA margin of 15%. This represents 8% earnings growth when compared to adjusted EBITDA of $174 million and adjusted EBITDA margin of 19% in 2024.

As with adjusted gross margin, the adjusted EBITDA margin change was driven by the incremental prior year 45X amortization recognized in 2024. GAAP net loss attributable to common shareholders was $112 million driven primarily by a $103 million non-cash goodwill impairment charge and a one-time inventory valuation charge of $30 million both associated with the 2022 STI acquisition.

This compared to a net loss of $296 million in 2024, which included a $236 million non-cash goodwill impairment charge and a $92 million non-cash long-lived intangible asset write down also associated with the SDI acquisition. Diluted loss per share was $0.73 compared to the diluted loss per share of $1.95 in the prior year.

Adjusted net income was $103 million 13% growth above the $91 million in 2024. Adjusted diluted net income per share was $0.67, growing 12% when compared to $0.60 in the prior year. For the full year, free cash flow was $80 million which was lower than 2024, primarily due to timing of working capital and 45X rebates.

Turning to slide 14 for our full year 2026 guidance. We entered 2026 in a position of strength, supported by greater order visibility, a broader product portfolio to support our customers, accelerated contracting momentum, improved capital access and flexibility. We expect revenue within the range of $1.4 billion to $1.5 billion with adjusted gross margin between 26% and 27%.

Excluding the impact of prior year 45X amortization falloff, margins are roughly flat at the midpoint year over year, reinforcing our commitment to disciplined execution and cost management in an inflationary environment. Given the impact on contract signings from the regulatory uncertainty in 2025, revenue activity is trending toward an approximate 40 to 60 split between the first and second half of the year.

Adjusted G&A is expected to continue to gain leverage at approximately 12% of revenue. This brings our expected adjusted EBITDA to a range of $200 million to $230 million with an adjusted diluted earnings per share between $0.65 and $0.75.

Free cash flow conversion as a percentage of adjusted EBITDA is anticipated to be similar to 2025. In the first quarter of 2026, we expect revenue of approximately $200 million and as a result, adjusted EBITDA to be down slightly from Q4 2025. Looking ahead, we see multiple drivers of momentum across our global markets. Hardware, software, and services are all poised to grow. We will continue to opportunistically refine our capital structure to bolster liquidity, enhance strategic flexibility, and fuel disciplined investments.

Backed by our record $2.2 billion order book and powerful new capabilities, we are ready to capitalize on future opportunities, deliver industry leading market growth and sustainable value creation for our shareholders.

Thank you for your time today. Now back to Kevin for closing remarks.

Thank you, Keith. Looking ahead to 2026, our focus is clear. Continue innovating, deepen our global reach, and elevate the customer experience across every touch point. The foundation we are building positions us to capture the opportunities ahead and deliver durable long-term value for our customers, employees, and shareholders. Thank you all for your ongoing support and confidence in Array.

With that, we'll open the line for questions. Operator.

(Operator Instructions)

Mark Strouse, JP Morgan.

Keith, thanks for all the color on the gross margin put and takes. Just curious, when you're looking beyond 2026, in your backlog or you know how you're thinking about underwriting new. Can you just talk about kind of how we should think about gross margins over the medium term, and then just quickly on APA, I think you guys were saying with that deal that it was kind of immediately accretive to EBITDA but dilutive on the gross margin line. Can you talk about the impact of APA in your 2026 guide? Does that turn accretive at some point this year? And I have a quick follow-up. Thank you.

Thank you, Mark. Good evening. Good questions. So first, let's talk about our outlook for gross margins across the horizon. A few things to bear in mind as we entered 2026, our core margins remain intact. Any volatility that we've shown over 2025 and 2026 have all been driven by primarily accounting and one-time charges. And also the amortization of 45X for prior year performances played some part in that volatility. So if you look at 2026, and you remove the prior year 45X amortization, we're down roughly 50bps, which is at the mid, which takes us to the midpoint of our guide.

When you look across the medium term and outlook, we expect our gross margins to maintain at these core levels. So we are in a fairly competitive environment price wise. We are in an environment of rising commodity costs. We are in an environment of changing dynamics as we try to expand out into certain strategic markets internationally that have lower price points. So we are confident that our gross margins across the horizon can hold.

We're moving to your second question on APA. APA when we closed was yes, in 2025, slightly diluted on the gross margin level, but accretive immediately on the EBITDA level, because of their low commercial costs, or I should say, very, very streamlined commercial costs. When we look at 2026, we expect APA to be in line or slightly better than our core gross margins, because we've now been able to file for 45X.

45X in the APA context, when you're modeling, we need to remember that it only applies to the structural fasteners, so the A frame.That is used in utility scale only. And so, I recognize that some of the models out there have 45X across the entire APA platform, it does not apply that way. When we think about overall 2026, APA is now also more accretive at the EBITDA level because they continue to be streamlined in their operating costs.

Okay, thank you for that. And then, a quick follow-up for Kevin. The past two or three quarters you've talked about kind of the mix of your backlog that's coming from Tier 1 customers increasing, it at least directionally if you can't give us an exact number, can you just give us an update on that? Does that continue to trend higher? Is it flatlining? Any color would be great. Thank you.

Yeah, it does. So first of all, let me just begin saying we're really comfortable with the quality of our order book at this point. Record order book of $2.2 billion and the real positive book-to-bill on both Array and APA both being as 2 times book-to-bill. So very significant for us and that acceleration. A couple of tidbits I'd give you relative to the order book for me, one of the more interesting.

Tidbits would be, for example, in 2025 we received 4 gigawatts of orders from customers that historically were not customers of Array, meaning they were customers of our competitors, or new customers in the space, so clear market share gain, from just those 4 gigawatts already.

I think relative to our order book, the one other comment is on our last call there was some confusion of whether our increasing order book, even in that quarter was due to a changing definition. I want to take this opportunity with everyone on the call to reiterate that we have not made any changes to our order book and and how we define that order book and I'll reiterate that every chance I get that one, we have to have a confirmation of a named project awarded to Array.

Number 2, we have to have a target start date, and number 3, we look for there to be an existing CPA put in place prior to putting that into our order book. Now what we have talked about with some of our international orders that have been awarded to Array, so meaning we have a name project, we have a target start date, we've been notified that we've won the project, we're still holding some on the sideline until we're more confident in international markets that they will proceed as planned, and we're doing that as we've talked historically to reduce any de-bookings and associated volatility. As we noted in our presentation now, 95% of the order book with that new methodology is now domestic, so much higher quality.

In terms of we've also made in my prepared remarks that over 50% of our order book is now direct to what we call those Tier 1 customers and to be clear, when I say direct meaning that's the one directing the purchase, even if we get a purchase order from an EPC we're saying that over 50% of the order book is being now directed by those Tier 1s and that could be a tier one developer who is who has given the award to Array but we're executing that award through their chosen EPC but over 50% of our order book is now direct to those Tier 1s.

So between the high percentage of domestic order book, the new market share takeaway, the 2 times book-to-bill. The over 50% direct to what we call Tier 1, we're really pleased with the shape of the order book as we move forward here.

Julian Dumoulin-Smith, Jeffries.

Julian, you may be on mute. We don't hear you yet.

Sorry, you were right, I was double muted. I apologize about that. Good afternoon. Thanks for taking the time, guys. Appreciate all the details. Thanks, Kevin. Look, let me kick this off here. First and foremost, you talk about, nice momentum on backlog. Can you give us a little bit of a sense of market share, momentum with key clients? Could we potentially see some multi gigawatt orders here? How much of that is already reflected in what you all are disclosing here?

And then separately and adjacently, how do you think about the commercial strategy abroad, right? You've got this reinvigorated effort internationally. How should we expect to see this and realize this in as much as, disclosures in the in the coming quarter, right? Again, I get that you've offered some caveats about some of the legacy geographies. What would you expect in terms of the formal disclosures or announcements with key partners? I'll leave it there.

Yeah, so let me take the first part. So a few additional hints on our order book. So we are now engaging in more, multi-project deals, not all of those obviously reflected in the order book to date, but we are now looking at kind of multi-packs of deals, three, four, and five deals at a time with a lot of our core partners as we move forward. So that's working really well for us.

The second thing is the average size of a project is getting larger as well, so we expect both the size and quantity of deals to go up significantly this year, and that's what we're really seeing in our order book. I'll let Neil talk about the international and what we're specifically driving there in this regard.

Sure, so just to jump in. So we're optimistic overall internationally, but it's also really important to note that we're being intentionally selective. And so we look at that from the prism of that the US is the dominant profit center for solar tracking globally. So when we look at where we diversify in international markets, we're looking for that lens. So where we have the ability to differentiate based on terrain, capability for weather and extreme weather events along with installation and overall performance, we're being really targeted in countries where customers are willing to pay for that capability.

And not just get into a bake off on price. So as we diversify as the Spain and Brazil markets reset themselves, we're making some really good progress in Eastern Europe and also in Latin America based on the investments that we've made in sales resources over the last several quarters.

We've had some key wins with repeat customers, so customers from our legacy home markets that have brought us into new countries. We have awarded projects and contracts now that we're executing against. So you're going to continue to see that Julian, on over the next quarters as we continue to talk about that and see that and our early stage pipeline outside of Spain and Brazil is also increasing quite well as well. So I think that you'll see this continue to flow through, and we're pleased with the progress so far and we'll continue to see that in the coming quarters.

Joseph Osha, Guggenheim Securities.

One of the things that, has been turning up. And I heard this a lot at Intersolar is that, yes, this year looks like it's going to be okay building legacy 45 and 48 projects, but there is some uncertainty out there in terms of the ability to secure financing in particular tax equity financing, surrounding, some of the remaining uncertainty on (inaudible). So I'm wondering if you can comment on that at all and whether that's materializing in your conversations with your customers. Thank you.

Yeah, so look, the treasury guidance released last week, I mean, it clarifies a major source of the uncertainty which was really The level at which we have to focus our supply chain and certify for material assistance and that's really a product component supply. So not every nut and bolt, and that's one helpful, but there's still some uncertainties for the industry around ownership structure the treasury needs to address in the forthcoming years.

So it's, we don't have full clarity to say that. So what's happening for us, the The second part of your question relative to [fiat] is customers are proactively hedging and focusing on predominant US supply, or in some cases we're seeing customers add some language to their contract that allow them to shift late in the game to 100% US content at predetermined price points, and that's how they're hedging and giving themselves great flexibility to avoid the fiat.

The fact that our customer base is getting larger and larger and more capitalized, so some of the larger developers, IPPs, and utilities that are best capitalized, we are not yet seeing issues with financing projects for those customers, at least it's not coming up to my level that we're facing that. We review that on pipeline calls every other week, and we're still not seeing that show up as an issue in our business. So we'll continue to monitor it and report if we do, but as of now we're not having that issue with our Tier 1 customers.

Brian Lee, Goldman Sachs.

Maybe just on the seasonality here, you experienced some into the year end, and then. Also, here, given some indication that Q1, seasonality, maybe can you speak to, what's driving some of that, and then how much visibility you have on the implied pickup into 2Q in the second half, maybe how much, backlog of the 2.2 is expected to ship here over the next few months? And is there book and bill business here implied in the guide, or is everything covered by backlog? And then maybe I'll just squeeze in a second question around.

Just big picture thoughts on M&A going forward as part of the capital allocation strategy. I think there's been more news of, some of your peers in the tracker space, diversifying into other parts, of the stack. So wondering where you fit in terms of, looking at those opportunities and maybe, providing more, holistic solutions. Thanks guys.

Yeah, so I think let me address the seasonality. I think it's consistent with what you're seeing from our peer companies that have already reported in terms of a deceleration in Q4 and Q1. You have two things that drive us that are for those businesses that are largely North American. The first issue is that you do have a historical seasonality of the build season for North American focused businesses is really Q2 and Q3. That's the construction business that then gets finished in Q4.

Now for the last couple of years when our FTI business was running and gunning in Brazil, in particular, if you remember, we did well over $200 million annually in Brazil. You have the countercyclicality that we benefited from. So their construction season was Q4 and Q1, obviously on the other side of the equator. And that was very helpful in mitigating ray's historical seasonality that we had from the North American construction. So without that has a dampening effect and creates that seasonality in Q4 and Q1. The second and likely the larger contributing factor this year was the holdback.

That we saw last year leading into the OBBB. So as you recall, the industry paused, waiting for that to get figured out, which means they paused contracting, they paused orders, and then once that was figured out, as you all see in our results and our peer companies, you saw an acceleration of orders, but then they have to go through the engineering. Planning, development, construction process, and that's why you see the shape of the year and it's consistent between us and our and our peers that have already reported. You'll see an acceleration in Q2, then a further acceleration in Q3, and a further acceleration in Q4. So that's really the nature of the cyclicality. There's nothing unique to array in that cyclicality.

Yeah, that's really what you're seeing an experience playing out with that delay and pause in the market that we all experienced last year, relative to M&A, look, we're going to continue our focus on building out our balance of system strategy, and we're going to do that in a way that we think definitely benefits our customers. I guess if I could describe kind of our approach to it is when we think of this building out of the balance of the system strategy, there's kind of two approaches you could take and one would be a pure commercial integration and I kind of liken that to say do you want fries with that shake and you know that for us is weak over time it gets disintermediated.

Maybe you want the shake today and not the fries, but you're not, you still want it at the bundled price and it kind of flies in the face of a lot of our customers that are EPCs with the fact that the P in EPC stands for procurement. These are organizations that understand how to buy large scale construction projects. As such, I don't think EPCs really care if they're buying from three vendors or six vendors. That's not, meaningful. Our approach on M&A is going to be a little bit different in that we're really focused around technical integration in which we can bring products in, increase the value proposition through interoperable engineering with Array that makes compelling value proposition for our customers.

So we're just approaching it a little bit differently than others and ensuring that anything we're looking at in our balance of system has to have a technical interoperability opportunity. And what you're seeing that play out is APA. So the APA integration of the foundation with tracker will be a phenomenal new product for us this year that not only does it eliminate a number of components, but allows us to have an engineered foundation at at incredibly close to a standard foundation price point, and we think that'll help accelerate adoption of engineered foundations in in our portfolio. So that's a great example of how we're thinking about M&A in our business. So hopefully I'm answering your questions. If not, we'll take a follow-up if we're missing something.

Philip Shen, ROTH Capital.

Hey guys, thanks for taking the questions. Great job with the bookings. You have a good sense of the quarterly revenue cadence. Can you help us with the quarterly gross margin cadence? Should we expect lower margins on the lower revenues in Q1, and then should we expect that to ramp sequentially, as we get through the.

Year? Thanks. Hi Phil, good evening, Mr. Keith. Yeah, I think it is safe to say that the Q1, margins will look much like, Q4. Because of the level of the revenues, that should, scale up. So we have -- we're guiding to a 26% to 27%. On the full year, so that's the full year average, we think that is where we're currently operating, and hopefully that answers the question.

Okay, thanks, Keith, and then as it relates to bookings and backlog, Kevin gave a lot of great color there. You're doing, well with a lot of Tier 1 customers. I was wondering if you, can talk through the bookings, in Q1 and Q2, what strength are you seeing, now, and do you expect the strong kind of Q2 to one of a book to bill to continue. You can't keep that forever, but, how much longer can we see that continue as we get through these quarters?

Yeah, I don't think we want to get into forecasting bookings. We've not done that historically, Phil, so, but I appreciate the question. I can say that we feel good about our underlying momentum in terms of the size of our pipeline increasing the number of opportunities we're getting, the timing of those opportunities. So we're getting brought into bigger deals earlier than we have been historically, so that we're kind of getting in and getting specified and doing some of the engineering work earlier that helps us with the win rate.

So all those things I think are positive trends, but I'm not yet going to go out on a limb and predict, bookings in Q1 and Q2. Let's just say that the momentum that we've seen, in the last couple of quarters so far has been continuing for us. We're hopeful that continues over the next couple of quarters and through the rest of the year, frankly. And I should say that momentum come is valid for not only the legacy array, but the momentum we're getting on APA is quite significant.

Maheep Mandloi, Mizuho.

Hey, thanks for taking the questions here. I think most have been addressed. Maybe just in terms of like the large customers you have, can you talk about like the average sizes and how to think about this move from small to large developers and how does that benefit your order going forward? Thanks.

Yeah, I mean, one of the things we did, as you recall, almost, well jeez, it's almost two years ago now, that, back in 2024 was that we looked and kind of did the survey of what we call quality of customer, and I personally went out and interviewed some of our customers that we weren't doing as much business with that actually didn't tend to push out, didn't delay, and what we found was that there was this group of developers and certainly even a group of EPCs that were stronger than others because of their they were well capitalized, they had plenty of equipment meaning that they weren't delayed for for lack of transformers, those kind of things that we ran into a lot over the last switch gear transformers.

So what we did was we kind of identified that quality of customers and we put that quality of customer into our bid strategy, meaning we wanted to win more orders with higher quality customers that demonstrated they didn't have push outs and delays they had the equipment, they stayed on track, they had good PPAs in place, and that was kind of how we transformed. So when we call that Tier 1 customers, that's a lot of what makes up our definition, if you will, of tier one customers, which meant we wanted to do more direct to utilities.

That controlled their own destiny controlled their own interconnect we wanted to do more with those Tier 1 developers that were the best capitalized developers out there and that's what you're seeing in kind of when we talk about the quality of our order book continually improving, you saw a great amount of market. Takeaway and orders in 2024 of that kind of targeted group and then again in 2025, so our what we called at the time our low share of wallet Tier 1 customers that we wanted to win more of that's really coming through in our order book at this point so we're pretty pleased with it.

Colin Rusch, Oppenheimer.

The opportunity to accelerate deployment times in the field either from a footing perspective or from a module, attachment perspective just seems like there's, that's maybe the two areas where there may be some competitive opportunities for you guys.

Yeah, we haven't seen, so look, the challenge with us is the amount of labor required to accelerate and pull projects in artificially. We often are talking to customers about pulling into maybe a quarter, but in terms of pulling stuff that would be three and four quarters out earlier, we don't typically see this because again the size of our projects and the amount of labor you'd have to reschedule and get local to that new site.

It tends to be pretty difficult and frankly they're the largest EPCs and the ones we're focused on are pretty well booked out because those are the same group of EPCs that those top tier developers are utilizing so I don't see a whole lot of, what I would call artificial demand. Acceleration or pull forward into the year at this point, I think this year is fairly well baked. There may be spots and small projects and maybe more opportunity on the APA side in the DG channel and C&I channel. Sure, there's a lot of opportunity, I think there, but not so much on the utility scale.

Yeah, I'll take it offline. I think my question is more about actually shortening the time frames in the field once you're deploying, not pulling projects for --

Are you saying construction time frame?

Exactly.

Yeah we've got a lot of product that we've been, yeah, we've been focusing on a lot of products that do that very quickly and we could certainly offline and give you a bunch of sense of what we've been doing to reduce installation time for our customers we feel pretty well satisfied with the work we've been doing there.

Dylan Nassano, Wolf Research.

Yeah, hi, good afternoon. Thanks for fitting me in here. Appreciate the earlier color on gross margins, and I just wanted to focus in on the EBITDA level a little bit. I mean, it looks like historically you've kind of trended closer to the high teens, kind of EBITDA margin, and mid-teens kind of suggested here in the guide. So just any more color on kind of a possible path back to those historical levels, and hitting that as a run rate if you were to kind of stay at these gross margins that you're guiding to.

Hi, Dylan. This is Keith. Great question. First, I think as I said earlier, I think we're in a very competitive environment, so I think our gross margins are probably going to be in the level of where we are now. To your question of how does that drop through to improve our EBITDA margins, I think it's going to come from, two, places. One, Scale as we continue to grow, then we're going to get some SG&A leverage. Right now, you can see us coming down over the time horizon from 2024. I think where we were closer to 15% to last year we were closer to 13%. This year we are forecasting to be at 12%, and we have a near term target to leverage up to somewhere around 10%.

The other component that we have to remember is that APA, is a strong acquisition for us. It improves the opportunity for us to speak to our customers about a broad array of, how we work and develop and bundle things as those commercial synergies come online in 2027 going forward, we should see more, even a margin expansion as that business grows. And so, right now we're still forecasting to be at the 15%, but we think that there with leverage and scale that we we should get back to the high mid-teens.

Corinne Blanchard, Deutsche Bank.

Hey, guys. Can you hear me?

Yes.

Hey, sorry about that. I don't know what happened. I was there. I was talking, I mean, most of my questions have been taken now, but maybe two part, and sorry if I missed it, but the first one, can you talk about the OpEx margin maybe throughout '26 and maybe expectation for the medium term, '27 and '28. And then the second question would be like your view on the US versus international mix and how we should think about it for the rest of the year. Thank you.

Okay, so, hi, great question, much like the earlier question, we are not slowing our commercial investments in our SG&A, we have seen the benefits of that in terms of how it has improved the, customer mix quality. The size of orders that we're winning the engagement with customers as we integrate APA and increase our, ability to converse about the relevant development of sites and what's under the panel. And so what we have been focusing on is the leverage that that brings, right?

So if you look two years ago at our OpEx, it was running at a rate of about 15% of revenues. We have, increased our spend. But we've also grown and leveraged ourselves now where that is approaching 12% of revenues. We have a near term target to operate this business at about 10% of revenues, and we think that's insight with scale and leverage, and growth, and so we continue to expand the front end and change our application engineering team. And and also how we engage with higher quality customers.

We think there's a fair bit of EBITDA margin expansion to be had when the commercial synergies from APA starts to kick in in 2027. Right now what we're seeing with APA is the gross margin synergies between 45X and procurement synergies. And so, we are fairly confident that we are on the right path to back to high mid-teens EBITDA margins.

I think to answer a little bit more on the international side as well, look, we've proven the formula works when we invest in the front of the end of our business when we add new sales resources that bring in. Industry knowledge, relationships, we -- and in particular when we add that technical capability in with that sales organization, we're seeing really a lot more traction and success than we had historically. So we've taken that same approach and what Neil and the team have been doing internationally was taking that same pattern that has worked and over the last 12 months, we've added a handful of resources in other countries in Latin America.

We've added and also new sales leadership of the entire region. We've added new sales leadership in Europe again, industry experts in both cases, with relationships and then building out the team. We've added technical selling resources in each region, as well as additional country direct country managers in those regions that we think we have an opportunity to win, and where customers are willing to value our differentiation and frankly pay for it.

So we're not just bidding on price, so I would say the international is probably the international rate of recovery is about a year behind the domestic. You're seeing the results of that domestic recovery already in 2025. I think we'll begin seeing much more of that acceleration in 2026 for our international businesses.

Ameet Thakkar, BMO Capital.

Hi, thanks for squeezing me in. Just one quick one for me. If you look back at your historical kind of free cash flow, you stock conversion ratios, in 2023 and 2024, they were, I think, kind of between 70% and 80%, and, obviously a lot lower in 2025, same kind of level expected in 2026. And can you just kind of walk us through kind of like, is it, kind of shifting more of your manufacturing to the US, selling more in the US. And change some of your kind of payment terms or working capital needs relative to what it was before or any other kind of drivers for that.

Thank you, Ameet. Great question. If you go back to 2025 and 2024, some of the things that we were experiencing were the quick collections of 45X, as in prior year 45X was impacting the conversion ratio. And also as you get into 2025, what we were going through is growth. When you grow your revenues by 40%, you're also going to grow your accounts receivables by that much as well. We also saw an expansion of our CapEx, as we built a state of the art facility in Albuquerque to bring the factor of the future into our, set up and capture more of the 45X in-house, so those are the two things I think that if you think about our business and you know we converted roughly 43% of our EBITDA to free cash flow in 2025 we are forecasting to hold the same ratio.

So if we are forecasting roughly 15% EBITDA expansion, then we should be growing free cash flow by just about the same percentage. So we're fairly confident that we will be generating, continue to generating free cash flow to add to our flexibility and our choices of deleveraging or continuing to invest diligently.

Chris Dendrinos, RBC Capital.

Yeah, thank you. I wanted to dive back into the international strategy here, and I mean, maybe can you expand a little bit more on the supply chain strategy there and are you positioned to go after, I guess, a broader set of markets here? Does there ultimately need to be some incremental investment to, I guess call it optimize the supply chain to be cost competitive? Thanks.

Yeah, Chris, it's Neil. I'll take that one. So on the international side, there's a couple of things in play that we've done and some things that you'll see in the coming quarters and into the next year. So over the last, I would say eight quarters we've built out a center of excellence in Asia to consolidate supply chain and purchasing for both our US and for international footprints so that we can consolidate spend between Spain and Brazil and for areas that are domestic content required partially for the US, so that's in place that's up and running and performing quite nicely.

The other thing that you saw with our release today is that we're also moving to consolidate our international and introduce the DuraTrack platform into both the EMEA and Latin America regions. So that's going to give us scale and additional ability to drive efficiencies on a global basis on a global platform as we move forward. So at that point then you're also going to see a new product introduced, later this year which brings the best capabilities of both the H250 and DureTrack platform together which will then again bring supply chain and build material efficiencies on a global basis. So we're really looking forward to that.

I mean, I'll know Neil's being a bit modest on the amount of work that the team has done, and I'll say when I think about a couple of countries, Australia is a great example. Our ability to domesticate a supply chain and win orders in Australia, specifically because of our quick ability to fully domesticate a supply chain in Australia has led to an outsized win rate in that region, so we feel really good about that.

We've been able to replicate that in multiple other countries, but as we began getting into the countries came and said we want a higher proportion of domestic content. And we've kind of have the formula down of how we engage the what the project team looks like to do that and in every case I could think of in my head, we've been able to hit our timelines to increase domestic content in these other regions, which is then allowed us to have a higher win rate, as they put these new controls or limits on awards of orders in some of these emerging markets.

So I think we've got a really good formula for that at this point, and the team has been executing really well. I can think of three particular regions in the last 18 months that we've been able to form teams and win specifically as a result of our ability to domesticate componentry. So really good work.

Ben Kallo, Baird.

I want to go back to the market share gains. Could you talk more about, where you're seeing those gains come from? You don't have to name companies specifically, but, and why you think that you guys are gaining share, and then I know there was a reference to customers that haven't used you before is this something where it's a customer that's also growing volume and so they're adding another partner or you know same volume and you're taking the actual share from them not just increasing your share overall if that makes sense. Thank you.

Yeah, sure. So let me just start, if you just peel up the domestic business and start there, and you look at our volume growth last year of 35%, there's nobody that says this industry grew 35% last year, and anyone who does is confused. So when you just look at the domestic ATI volume growth, we've taken back market share. We see that in our internal win rate and our internal forward-looking win rate, that means the wins and losses that we see internally on bids continues to be better than what we're seeing when you're looking at the rearview mirror of revenues, right?

So we continue to see strong traction and momentum in a positive forward basis. Relative to that 4 gigawatts we talked about, in some cases that was market share takeaway where they were currently doing business with others, and we've been able to go in and win a fair share of that business, from a technical selling basis and in other cases it was companies that were migrating up into utility scale. Who already had familiarity with Array, at DG level, for example, but had not done utility scale and are going with Array on their larger program. So there's a blend of both, but suffice to say if you just look at our volume of growth, just look at our orders growth and trajectory, you'll see that we are once again significantly rebounding in market share.

Vikram Bagri, Citibank.

Hi, it's Ted on Vikram. Thanks for taking the question. I wanted to ask about wallet share. You mentioned for the share of the wallet. Where does the integrated, tracker and foundation solution get you to in terms of wallet share, either on a percentage or dollar per wallet basis, and then do you have a goal in mind for where you want that wallet share to ultimately be once you factor in the organic and inorganic growth?

We can't give you the latter answer without you figuring out what pieces of inorganic that we have most interest in to be clear, so we're going to shy away from that. I would say, look, we talked about the APA throughout the acquisition and what you're doing is solving for a foundation. So if you think about the $1 a watt or $1.08 a watt, whatever number you want to use, and the tracker being roughly $0.10 of that, the foundations range somewhere on the low end of 2.5, but typically up to almost $0.04 a watt. So that's what we pick up with APA. And as we do that integrated offering with APA we pick that up at really nice margins. So that's our first focus was to be able to integrate a foundation with the tracker to increase that share of wallet.

We are keenly focused at other areas of that that we think provide the best opportunity for interoperability. Again, that's our laser focus on our platform expansion, the balance of system strategy we're deploying is ensuring that those items we buy, there is true technical integration capability that will not only save our customers money as we technically integrate, but allow outsized margin opportunity for Array. That's our focus.

Ladies and gentlemen, this now concludes our question-and-answer session and does conclude today's conference as well. Please disconnect your lines and have a wonderful day.