First Quarter 2023 Highlights
- Revenue of
$376.8 million - Net income to common shareholders of
$13.6 million - Adjusted EBITDA(1) of
$67.0 million - Basic and diluted net income per share of
$0.09 - Adjusted diluted net income per share(1) of
$0.25 - Executed contracts and awarded orders at
March 31, 2023 totaling$1.6 billion
(1) A reconciliation of the most comparable GAAP measure to its Non-GAAP measure is included below.
“In the first quarter we grew revenue 25% from the prior year as we had favorable project timing to close out March in our Array Legacy Segment. Adjusted EBITDA for the quarter was
“I will note that we did have a slowdown in our order activity this quarter, which was not unexpected. Our pipeline remains strong, but many of our customers are still awaiting final IRA guidelines around domestic content before issuing final award and are delaying project start dates to provide more time to evaluate its provisions. This dynamic was largely contemplated when we evaluated our orderbook entering the year and reflected on the lower end of the revenue range we provided. As we are now further into the year and have a better understanding of how these delays are impacting the second half of the year, we are slightly reducing the top end of the revenue range to reflect this market dynamic. That said, we remain confident in our gross margin outlook and on the back of our strong first quarter performance, we are holding our adjusted EBITDA and adjusted EPS ranges,” concluded
First Quarter 2023 Financial Results
Revenue increased 25% to
Gross profit increased 281% to
Operating expenses decreased to
Net income to common stockholders was
Adjusted EBITDA increased to
Adjusted net income was
Executed Contracts and Awarded Orders
Total executed contracts and awarded orders at
Full Year 2023 Guidance
For the year ending
- Revenue to be in the range of
$1,800 million to$1,900 million - Adjusted EBITDA(2) to be in the range of
$240 million to$265 million - Adjusted net income per share(2) to be in the range of
$0.75 to$0.85
(2) A reconciliation of projected adjusted EBITDA and adjusted net income per share, which are forward-looking measures that are not prepared in accordance with GAAP, to the most directly comparable GAAP financial measures, is not provided because we are unable to provide such reconciliation without unreasonable effort. The inability to provide a quantitative reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the components of the applicable GAAP measures and non-GAAP adjustments may be recognized. The GAAP measures may include the impact of such items as non-cash share-based compensation, revaluation of the fair-value of our contingent consideration, and the tax effect of such items, in addition to other items we have historically excluded from adjusted EBITDA and adjusted net income per share. We expect to continue to exclude these items in future disclosures of these non-GAAP measures and may also exclude other similar items that may arise in the future (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments are inherently unpredictable as to if or when they may occur. As such, for our 2023 outlook, we have not included estimates for these items and are unable to address the probable significance of the unavailable information, which could be material to future results.
Conference Call Information
Array management will host a conference call today at
Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://ir.arraytechinc.com. The online replay will be available for 30 days on the same website immediately following the call.
To learn more about
About
Investor Relations Contact:
Investor Relations
505-437-0010
investors@arraytechinc.com
Forward-Looking Statements
This press release contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our projected future results of operations, business strategies, our continued integration of STI Norland and industry and regulatory environment. Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” "seek," “should,” “will,” “would” or similar expressions and the negatives of those terms.
Array’s actual results and the timing of events could materially differ from those anticipated in such forward-looking statements as a result of certain risks, uncertainties and other factors, including without limitation: changes in the demand for solar energy projects; competition from conventional and renewable energy sources that may offer products and solutions that are less expensive or otherwise perceived to be more advantageous than solar energy solutions; a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment; failure to retain key personnel or failure to attract additional qualified personnel; defects or performance problems in our products that could result in loss of customers, reputational damage, a loss of revenue, and warranty, indemnity and product liability claims; a drop in the price of electricity derived from the utility grid or from alternative energy sources; our ability to successfully integrate the business of STI Norland into our business or achieve the anticipated benefits of the acquisition of STI Norland; challenges in our ability to consolidate the financial reporting of our acquired foreign subsidiaries; the effect of the capped call transactions on the value of our 1.00% Convertible Senior Notes due 2028 (the “Convertible Notes”) and the market price of our common stock; the potential of the fundamental change repurchase feature of the Convertible Notes to delay or prevent an otherwise beneficial attempt to acquire us; delays, disruptions or quality control problems in our product development operations; the risks of severe weather events, natural disasters and other catastrophic events; our ability to manage the financial regulatory and competitive risks of our continued expansion into new markets; developments in alternative technologies that may have an effect on demand for our offerings; the effects of a further increase in interest rates, or a reduction in the availability of tax equity or project debt capital in the global financial markets, which could make it difficult for customers to finance the cost of a solar energy system and could reduce the demand for our products; changes to tax laws and regulations that are applied adversely to us or our customers; existing electric utility industry policies and regulations, and any subsequent changes, that may present technical, regulatory and economic barriers to the purchase and use of solar energy systems; the interruption of the flow of materials from international vendors, including as a result of the imposition of additional duties, tariffs and other charges or restrictions on imports and exports; changes in the global trade environment, including the imposition of import tariffs; economic, political and market conditions, including the Russian-Ukraine conflict, uncertain credit and global financial markets resulting from increasing inflation and interest rates along with recent bank failures, and the COVID-19 pandemic; the reduction, elimination or expiration of government incentives for, or regulations mandating the use of, renewable energy and solar energy specifically; our ability to, obtain, maintain, protect, defend or enforce, our intellectual property and other proprietary rights; significant changes in the costs of raw materials; the determination to restate prior period financial statements could negatively affect investor confidence and raise reputational issues; the implementation of the IRA may not deliver as much growth as we are anticipating; our ability to remediate our material weaknesses on a timely basis or at all; the effect of our substantial indebtedness on our financial condition; the occurrence of cybersecurity incidents, including unauthorized disclosure of personal or sensitive data or theft of confidential information; and the other risks and uncertainties described in more detail in the Company’s most recent Annual Report on Form 10-K and other documents on file with the
Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Non-GAAP Financial Information
This press release includes certain financial measures that are not presented in accordance with
We believe that these non-GAAP financial measures are provided to enhance the reader’s understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing the Company’s performance, as well as in planning and forecasting future periods. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.
Among other limitations, Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; do not reflect income tax expense or benefit; and other companies in our industry may calculate Adjusted EBITDA and Adjusted Net Income differently than we do, which limits their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA and Adjusted Net Income on a supplemental basis. You should review the reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income below and not rely on any single financial measure to evaluate our business.
Consolidated Balance Sheets (unaudited)
(in thousands, except per share and share amounts)
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 147,756 | $ | 133,901 | |||
Accounts receivable, net | 414,712 | 421,183 | |||||
Inventories | 254,624 | 233,159 | |||||
Income tax receivables | 3,163 | 3,532 | |||||
Prepaid expenses and other | 46,381 | 39,434 | |||||
Total current assets | 866,636 | 831,209 | |||||
Property, plant and equipment, net | 25,864 | 23,174 | |||||
428,173 | 416,184 | ||||||
Other intangible assets, net | 379,374 | 386,364 | |||||
Deferred income tax assets | — | 16,466 | |||||
Derivative assets | 63,320 | — | |||||
Other assets | 30,802 | 32,655 | |||||
Total assets | $ | 1,794,169 | $ | 1,706,052 | |||
LIABILITIES, REDEEMABLE PERPETUAL PREFERRED STOCK AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 200,585 | $ | 170,430 | |||
Accrued expenses and other | 58,795 | 54,895 | |||||
Accrued warranty reserve | 1,443 | 3,690 | |||||
Income tax payable | 11,833 | 6,881 | |||||
Deferred revenue | 151,343 | 178,922 | |||||
Current portion of contingent consideration | 1,811 | 1,200 | |||||
Current portion of debt | 34,382 | 38,691 | |||||
Other current liabilities | 10,393 | 10,553 | |||||
Total current liabilities | 470,585 | 465,262 | |||||
Deferred income tax liabilities | 73,051 | 72,606 | |||||
Contingent consideration, net of current portion | 6,914 | 7,387 | |||||
Other long-term liabilities | 13,939 | 14,808 | |||||
Long-term warranty | 4,469 | 1,786 | |||||
Long-term debt, net of current portion | 705,827 | 720,352 | |||||
Total liabilities | 1,274,785 | 1,282,201 | |||||
Commitments and contingencies (Note 12) | |||||||
Series A Redeemable Perpetual Preferred Stock of | 312,054 | 299,570 | |||||
Stockholders’ equity | |||||||
Preferred stock of | — | — | |||||
Common stock of | 150 | 150 | |||||
Additional paid-in capital | 426,221 | 383,176 | |||||
Accumulated deficit | (241,338 | ) | (267,470 | ) | |||
Accumulated other comprehensive income | 22,297 | 8,425 | |||||
Total stockholders’ equity | 207,330 | 124,281 | |||||
Total liabilities, redeemable perpetual preferred stock and stockholders’ equity | $ | 1,794,169 | $ | 1,706,052 | |||
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts)
Three Months Ended | |||||||
2023 | 2022 | ||||||
Revenue | $ | 376,773 | $ | 300,586 | |||
Cost of revenue | 275,594 | 273,999 | |||||
Gross profit | 101,179 | 26,587 | |||||
Operating expenses | |||||||
General and administrative | 38,142 | 45,425 | |||||
Change in fair value of contingent consideration | 1,338 | (3,731 | ) | ||||
Depreciation and amortization | 14,241 | 23,237 | |||||
Total operating expenses | 53,721 | 64,931 | |||||
Income (loss) from operations | 47,458 | (38,344 | ) | ||||
Other income (expense) | |||||||
Other income, net | 194 | 743 | |||||
Foreign currency gain (loss) | (194 | ) | 3,863 | ||||
Change in fair value of derivative assets | (1,950 | ) | — | ||||
Interest expense | (9,500 | ) | (6,942 | ) | |||
Total other (expense) | (11,450 | ) | (2,336 | ) | |||
Income (loss) before income tax (benefit) expense | 36,008 | (40,680 | ) | ||||
Income tax (benefit) expense | 9,876 | (14,743 | ) | ||||
Net income (loss) | 26,132 | (25,937 | ) | ||||
Preferred dividends and accretion | 12,484 | 11,606 | |||||
Net income (loss) to common shareholders | $ | 13,648 | $ | (37,543 | ) | ||
Income (loss) per common share | |||||||
Basic | $ | 0.09 | $ | (0.25 | ) | ||
Diluted | $ | 0.09 | $ | (0.25 | ) | ||
Weighted average number of common shares outstanding | |||||||
Basic | 150,607 | 148,288 | |||||
Diluted | 151,795 | 148,288 | |||||
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Three Months Ended | |||||||
2023 | 2022 | ||||||
Operating activities: | |||||||
Net income (loss) | $ | 26,132 | $ | (25,937 | ) | ||
Adjustments to net income (loss): | |||||||
Provision for bad debts | 233 | 145 | |||||
Deferred tax expense | 4,555 | 4,349 | |||||
Depreciation and amortization | 14,533 | 23,608 | |||||
Amortization of debt discount and issuance costs | 2,826 | 1,710 | |||||
Equity-based compensation | 3,366 | 4,508 | |||||
Contingent consideration | 1,338 | (3,731 | ) | ||||
Warranty provision | 436 | 594 | |||||
Write-down of inventories | 1,847 | 409 | |||||
Change in fair value of derivative assets | 1,950 | — | |||||
Changes in operating assets and liabilities, net of business acquisition | |||||||
Accounts receivable | 6,238 | (44,268 | ) | ||||
Inventories | (23,312 | ) | (46,250 | ) | |||
Income tax receivables | 369 | (21,924 | ) | ||||
Prepaid expenses and other | (6,947 | ) | 11,558 | ||||
Accounts payable | 30,155 | 59,419 | |||||
Accrued expenses and other | 3,900 | 7,027 | |||||
Income tax payable | 4,952 | (8,760 | ) | ||||
Lease liabilities | 824 | 6,085 | |||||
Deferred revenue | (27,579 | ) | (18,639 | ) | |||
Net cash provided by (used in) operating activities | 45,816 | (50,097 | ) | ||||
Investing activities: | |||||||
Purchase of property, plant and equipment | (3,883 | ) | (2,357 | ) | |||
Acquisition of STI, net of cash acquired | — | (373,816 | ) | ||||
Net cash used in investing activities | (3,883 | ) | (376,173 | ) | |||
Financing activities: | |||||||
Proceeds from Series A issuance | — | 33,098 | |||||
Proceeds from common stock issuance | — | 15,885 | |||||
Series A equity issuance costs | (750 | ) | (175 | ) | |||
Common stock issuance costs | — | (450 | ) | ||||
Proceeds from revolving credit facility | — | 52,000 | |||||
Proceeds from issuance of other debt | 6,469 | 6,229 | |||||
Principal payments on term loan facility | (11,075 | ) | (4,368 | ) | |||
Principal payments on other debt | (17,206 | ) | — | ||||
Contingent consideration payments | (1,200 | ) | (1,483 | ) | |||
Net cash provided by (used in) financing activities | (23,762 | ) | 100,736 | ||||
Effect of exchange rate changes on cash and cash equivalent balances | (4,316 | ) | 7,355 | ||||
Net change in cash and cash equivalents | 13,855 | (318,179 | ) | ||||
Cash and cash equivalents, beginning of period | 133,901 | 367,670 | |||||
Cash and cash equivalents, end of period | $ | 147,756 | $ | 49,491 | |||
Supplemental Cash Flow Information | |||||||
Cash paid for interest | $ | 7,980 | $ | 3,039 | |||
Cash paid for income taxes | $ | 2,522 | $ | — | |||
Non-cash Investing and Financing Activities | |||||||
Dividends accrued on Series A Preferred | $ | 6,350 | $ | 6,189 | |||
Stock consideration paid for acquisition of STI | $ | — | $ | 200,224 | |||
Adjusted EBITDA and Adjusted Net Income Reconciliation (unaudited)
(in thousands, except per share amounts)
The following table reconciles net income (loss) to Adjusted EBITDA:
Three Months Ended | |||||||
2023 | 2022 | ||||||
Net income (loss) | $ | 26,132 | $ | (25,937 | ) | ||
Preferred dividends and accretion | 12,484 | 11,606 | |||||
Net income (loss) to common shareholders | $ | 13,648 | $ | (37,543 | ) | ||
Other expense, net | (194 | ) | (743 | ) | |||
Foreign currency (gain) loss | 194 | (3,863 | ) | ||||
Preferred dividends and accretion | 12,484 | 11,606 | |||||
Interest expense | 9,500 | 6,942 | |||||
Income tax (benefit) expense | 9,876 | (14,743 | ) | ||||
Depreciation expense | 745 | 588 | |||||
Amortization of intangibles | 13,788 | 23,138 | |||||
Equity-based compensation | 3,340 | 4,508 | |||||
Change in fair value of derivative assets | 1,950 | — | |||||
Change in fair value of contingent consideration | 1,338 | (3,731 | ) | ||||
Legal expense(a) | 303 | 1,046 | |||||
M&A(b) | — | 11,183 | |||||
Other costs (c) | — | 2,346 | |||||
Adjusted EBITDA | $ | 66,972 | $ | 734 | |||
(a) Represents certain legal fees and other related costs associated with (i) action against a competitor in connection with violation of a non-competition agreement and misappropriation of trade secrets for which a judgement has been entered in our favor, (ii) actions filed against the company and certain officers and directors alleging violations of the Securities Exchange Acts of 1934 and 1933, and (iii) other litigation/settlements. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business.
(b) Represents fees related to the acquisition of STI Norland.
(c) For the three months ended
The following table reconciles net income (loss) to Adjusted Net Income:
Three Months Ended | |||||||
2023 | 2022 | ||||||
Net income (loss) | $ | 26,132 | $ | (25,937 | ) | ||
Preferred dividends and accretion | 12,484 | 11,606 | |||||
Net income (loss) to common shareholders | $ | 13,648 | $ | (37,543 | ) | ||
Amortization of intangibles | 13,788 | 23,138 | |||||
Amortization of debt discount and issuance costs | 2,826 | 1,710 | |||||
Preferred accretion | 6,135 | 5,353 | |||||
Equity based compensation | 3,340 | 4,508 | |||||
Change in fair value of derivative assets | 1,950 | — | |||||
Change in fair value of contingent consideration | 1,338 | (3,731 | ) | ||||
Legal expense(a) | 303 | 1,046 | |||||
M&A (b) | — | 11,183 | |||||
Other costs(c) | — | 2,346 | |||||
Income tax expense of adjustments(d) | (6,044 | ) | (7,551 | ) | |||
Adjusted Net Income | $ | 37,284 | $ | 459 | |||
Income (loss) per common share | |||||||
Basic | $ | 0.09 | $ | (0.25 | ) | ||
Diluted | $ | 0.09 | $ | (0.25 | ) | ||
Weighted average number of common shares outstanding | |||||||
Basic | 150,607 | 148,288 | |||||
Diluted | 151,795 | 148,288 | |||||
Adjusted net income (loss) per common share | |||||||
Basic | $ | 0.25 | $ | — | |||
Diluted | $ | 0.25 | $ | — | |||
Weighted average number of common shares outstanding | |||||||
Basic | 150,607 | 148,288 | |||||
Diluted | 151,795 | 148,288 | |||||
(a) Represents certain legal fees and other related costs associated with (i) action against a competitor in connection with violation of a non-competition agreement and misappropriation of trade secrets for which a judgement has been entered in our favor, (ii) actions filed against the company and certain officers and directors alleging violations of the Securities Exchange Acts of 1934 and 1933, and (iii) other litigation/settlements. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business.
(b) Represents fees related to the acquisition of STI Norland.
(c) For the three months ended
(d) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.
Source:
2023 GlobeNewswire, Inc., source