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Array reported revenue of about 330 million dollars, slightly ahead of what analysts expected. While earnings of 6 cents per share were lower than the 10 cents predicted, the real story is the company's pipeline. Its orderbook reached a record 2.6 billion dollars, a 42 percent jump from last year. This suggests that despite recent delays in the solar industry, demand for the company's tracking systems remains high.
The company also announced an all-stock merger with Shoals Technologies. By combining Array's tracking hardware with Shoals' electrical systems, the new business aims to offer a more complete package for solar farms and data centers. This move, alongside a new manufacturing plant in New Mexico, helps the company lean into American-made products that qualify for federal tax credits. For long-term owners, the growing backlog and the merger provide a clearer path to growth as projects finally move into construction.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
After Array Technologies reported its November results, we updated our fair value and cut our quality score to 2.6. We lowered our expectations for the profit the company keeps on its sales and dropped our target for revenue growth to return to 15%. We added the merger with Shoals Technologies and the entry into the data center market to the drivers we track. We also reset our projections for the share of sales coming from the company's tracking software.
Array Technologies has entered an agreement to acquire Shoals Technologies Group. Under the terms of the deal, Shoals shareholders will receive 1.6931 shares of Array stock for every Shoals share they own. The boards of both companies have approved the merger, which is intended to be a tax-free reorganization for shareholders.
This is a major consolidation in the solar industry. Array makes the tracking systems that move solar panels, while Shoals specializes in the electrical systems that connect them. By joining forces, the combined company can offer a more complete hardware package to developers of large-scale solar farms. This could help Array win more business and improve its profit margins by selling a broader range of American-made components that qualify for federal tax credits.
Source: 8-K filing
Guggenheim lowered its price target for the solar hardware maker from $13 to $6. While the firm kept its buy rating, the lower target reflects a more cautious view of how quickly the company can turn its backlog of signed orders into revenue. The average target across all analysts who follow the stock now sits at $6.
Source: Guggenheim
Array Technologies is scheduled to share its latest quarterly numbers on November 5. Analysts are looking for revenue of about 320 million dollars and a profit of 10 cents per share. The focus will likely be on how quickly the company is turning its 2 billion dollar backlog of signed orders into actual sales, as project delays have slowed growth recently.
Management has a habit of clearing the bar they set, usually by a few cents. This suggests they have a firm handle on their project timelines even when the broader solar industry is choppy.
| Expectation | |
|---|---|
| EPS | $0.31 |
| Revenue | $525M |
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