ARRY - Earnings call 4 2023 | Array Technologies, Inc.

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Operator

Greetings, and welcome to the Array Technologies' Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Cody Mueller, Investor Relations at Array. Please go ahead.

Cody Mueller

Thank you, and welcome to Array Technologies' Fourth Quarter 2023 Financial Conference Call.

me our Kevin CFO. with and our call Wood, Kurt the today Hostetler, are CEO; On Today's Investor ir.arraytechinc.com, slides. Relations is site call being at including webcast audio from our and

market been detailing financial the financial found we of throughout is to specified. presented financial financial quarterly These release supply, other to cause A demand results made Today's be and non-GAAP results can the that statements documents recent and the forward-looking refer expected and today press may for a from current reminder, visit the unless a We on we arraytechinc.com you regarding the are results. the website. our website addition, results matters. matters subject materially results today. affect at In XX-K to non-GAAP has conferences our may discussing for the basis Form posted attending.As on We uncertainties including the the to are you actual SEC, of reconciliation on risks a recent measures on our discussion encourage GAAP statements include future our to on risks quarter differ discussion our with otherwise company, may that statements our file most information information website. including we most of be forward-looking that

reflected forward-looking of are statements expectations the reasonable, guarantee in the or performance activity, levels that achievements. future cannot believe results, we Although we

the to statements results.I'll call actual over Kevin. We the are duty any conform to now under no statements these update forward-looking to turn of to

Kevin Hostetler

everyone. afternoon, Good Thank you, Cody.

guidance optimization which in severe will moments.Revenue pipeline software of We every I speak mitigation growth The enable weather approximately a cost for energy our in was billion what that our product and at to end recognized the in highlights gross is track. million attractive of year the basis On for testament with quarter. on new about X.X, and XXX represents quarter in further increase in year a of in momentum of range. QX the a the order $X.X and from a benefit exited metric broadly margin inclusive to and we was coming high full improved [Audio an fourth million. in record book-to-bill our give year basis, resulting as strong $XXX bookings levelized for market a First, turning billion, year above fourth portfolio, record our few came public bookings some excess our a and customers. are almost book latest the solutions book to quarter order is sequential $X.XX Slide discussed we with seeing winning our of book more Gap]the services we Array the $X.X global at We energy fourth of including company. bookings across quarter. adjusted and I'll points This of the and in our last Full our year-over-year increase an order P&L ratio delivered was a approximately results. X,XXX X. highlights full year XX.X%,

and in we structural we existing design have procure executed is how the changes here price, new we and our largely product optimization value successfully performance for alike. around Our demonstrating products we how how materials introductions

intense proactive XX supplier than both lower with million metric cash $XXX and our and the generated our our discuss basis, record time. one-off million consecutive XXXX. the expanded scale the of provided full and will capacity will high focus critical now strengthened marks and volume, low gigawatts added percentage content and which and operational and more in supply same the our and of U.S. coupled sheet hand, now in relevant and manufacturing EBITDA free the at upon simultaneously proof project point XXX several chain in achieve ended with and confident deliverable on we levels outlook domestic higher $XXX deliver more liquidity throughout upside XXXX.Adjusted annual This us international adjusted we the sources base in the have level gross to million understood capacity, well-positioned on was the XXXX year in from we more balance the total of depending than not fund margin capabilities to are revolving in ability build-out We to please critical $XXX million and the better the At than beginning XXs leaves levels to by than in of to cash higher, $XXX supply mid-XX% credit throughout be gigawatts With XXX. execution in year year flow, year performance.Our doubled nearing domestic Slide We XX we undrawn when million, historically record factoring and highest strong while standpoint, the million continuing this sheet.Now a capacity. second customers globe. the as where a of deleverage we only resiliency, domestic requirements across configuration doubled. our did $XXX year. This delivery level at on-time we become which achieving supply level with on we From chain was more an of our content components maintain for X, turn manufacturing this where growth hand, time, additional of $XXX the capacity basis. has the On the high on to balance domestic over of inventory us to a over content allows our credits, while our domestic

around quarter, in us of which agreements late our resulted the financial you This our included benefit considered As benefits manufacturing eligibility million aware, be and volumes in tube.In million statements will the throughout recognized that on of further a in confirmed torque XXXX. early understanding $XX to on guidance XXXX. fastener. benefit we torque our published IRS the with remainder our as in the balance successfully earning previous additional and earlier domestic clarify Approximately suppliers XXX in the catch-up for many structural December P&L, our sheet $X was delivered not our certain are XXXX, P&L incentives XXX of in XXXX tube. be did recorded Unfortunately, with associated to largely and was key December, XXX published a what negotiated recorded of the would content guidance fourth a the

will negotiate obtain manufacture we to structural monetize components the we not internally. can structural number inclusion fasteners, parallel, economic framework a the we benefits regarding of eligibility. that the In expect working to are our components there legislation. the be the the split we for multiple intent continue are under continuing was specific to initial fastener is do clarity our and additional of actively initiatives and We definition our of the belief spirit with base for It supply parts these behind of

now software as future and updates available.I'd service will more to like We becomes additional to product, transition information calls our on offerings. provide

services X This the is numerous rollout expansion response service Slide that of platforms, installed our our and product, to new we automated our to on offerings. SmarTrack software portfolio hail other and driven our cost the of new launch of and and experience.Turning software all tracker XXXX, provide strengthened During with down top our improvements the of snow improved have customer X.

chose our would return dynamics would XXXX, business elevated As to color and provide us we market financial require around half XXXX share or additional the meaningful market that and current would level I not I risk. generate threshold pursue to order in to mentioned not like After in gaining a first earlier, book. of of XXXX assume

indicators implementation structural margin in entered seeing and fruits and XXXX, achieving and the price cost of still processes we enhancements goals.With environment, saw second firmly us points million our the orders place the which our quarter. in logistics a XXXX market rate second new received momentum. high-risk achieve of fourth This around our As expansion we of half the commodity enhancements from the triple our away allowed $XXX leading was half book pipeline pricing of by bookings order and costing more which increase, online, sustainably short-term real-time important cumulatively our in of evidenced the moving while win lower are the both X.Xx cost we of come ratio and to and structural the were book-to-bill

seeing consistent enter Tier X X we we a As years. our are customers executed contracts the our order customers as percentage new for That XX% of with has have continue book, quality see pipeline. remained also we look over of last said, customers we our to being into historically.A

delays are impacting are first and would year.As at towards are point a in as included, away 'XX billion project are half supply in impacting our financing. industry-wide customers, being delays defined project to customers excluding historically in are half projects XXXX. into of It case of $X.X projects long BCAs that named more The important around book we increase and/or point also of that issues interconnection, date. across weighted second in start this call, seeing have more moving are pushouts don't book Our year, most impact pushouts [ fairly equipment order timing time an from not half there all it at last relates than the is that first represented chain on start over while and order of these who our the factors are and as last stands it XXXX dates, disproportionately we to our on a forward we delays we that and year-end, handful the any hearing the a of several in project well first revenues be and highlighted seeing permitting of The walked resulted coupled out types the still are of manner. we lead with willingly common half XXXX particularly of are project the of normalized that ] utilities seeing the

billion, guiding relatively Looking revenue midpoint and ahead, billion XXXX on $X.X versus full at representing a XXXX XX% year the between we $X.XX volume. decline are flat

will costs. to declining primarily input ASPs commodity down expect We be year-over-year due

results and we about revenues adjusted a revenues the reflecting half of to adjusted I the to of XX% margin dollars expected expand as will loaded, with year-over-year both the percentage will XXXX be growth our see year-over-year overall outlook. and revenue.Our for growth range in our under growth some Kurt? to spoke back-end absolute XX% of now color just $XXX million, book will be earlier. for EBITDA give and in with trough again materialize and second order year, gross expect continued see to dynamics QX the by concluding of in low first However, more the range questions. the the returning a followed provide in remarks before half.Kurt additional year million of on $XXX will then revenue XXXX sequential I'll the line opening remainder the

Kurt Wood

Kevin. roughly turn ask mentioned, that deliver fourth many was year the and the X.X lower a to we delivered XXXX the full down shipped Slide some above that the Thanks, via providing provided the the which a year in highly from was profitable additional In a year-over-year we Kevin costs. QX heart like came I fourth gigawatts global versus off approximately start by pushouts. attention end XX% to year. driven record in year reduction on able on revenue, range the quarter, our quarter details and around period. and in were earnings fourth of and results prior-year of the call project by revenue ASP XXXX headwinds top We $XXX decline X.As was commodity million quarter, fronts, our the in would the way flat you despite At guidance prior your to

we million the move movement of costs down, generally our pass legacy XX.X%, of inclusive by the $XXX commodity when on million to in $XXX was fourth $XX revenue XXX cost points saw sales a margin reminder, gross the year-over-year expand a $X.X XXX million million basis STI realized Array We customers.Putting quarter. benefit As or to of the geography, of from comprised the quarter respectively. to on by and and the up units, adjusted basis

structural STI million the on earlier.Our the Our compared the Kevin was common $X.XX during million goods QX fourth for tube, the of structural segment impacted that on flat an items decrease contract the included $X.XX offset prior the $XX the certain relating to onetime our XXXX approximately by same loss see benefit we margin ability based by to was for compared 'XX the loss year. XXXX.As and compared This points on the margins STI expense margin diluted have $X to is million to fasteners the income our treated the improvement entitled in the and reduction will the other and basic income the due and to $XX.X in ruling the XXX determined. was adjustments a expense to the during and attributable but highlighted in up of And refundability a per certain gross share gross same partially $X In are expenses to of was the executed, as $XX.X until fourth period by benefit for related million occurred anomalies, share basic negatively periods prior adjustments. to of to with shareholders additional lower our to the gross XXXX.Net $XX.X those future million diluted the basis expand adjusted assets income to period during per and now of onetime authority during each entries net million would previous adjusted income same the The per volumes expect current of Operating expand to expected.I'd both $X.XX amortization The basic a on mid-XXs to sold acquisition. directly balance approximately structure to $X.X to outstanding sheet to XX% quarter prior in in when form volumes quarter, vendor a million adjusted STI's inventory materialize share in year we of like a XXXX.Adjusted in and driven benefits of down to period of income reserve is on cost or from entire million relating recorded adjusted been contract combined year. volume earlier, relatively period. Absent delivered to and to couple other were compared changes of an was receivables. quarter amount relating XXXX, assets from $XX attributable eligibility items our including of overdue items nearly $XX.X net during based to that due as VAT fourth share and value-added certain these and intangible $XX torque was decline relates from benefits. we the increase QX adjusted revenue period, million tax the Kevin VAT of the related P&L tax Both noted basic per further on XXX certain to during of reserve the a the a diluted as in to with of million on was the European a timing XXXX, received to increased $XX financials income to of million $X.XX net liabilities. diluted in were how not

relatively was period many free the was ICMS million flat prior on cover attributable change a from period on year the for a benefit our $XX.X pricing I'll This million XXXX. flow the the Slide so revenue primarily in Full full-year in cash year.Kevin volume decline to versus Finally, of same reduction X% lower the these X. representing commodity briefly $X.XXX metrics, spoke decline revenue versus just $XX.X the ASP, in and Brazilian resulting the again billion, to for was treatment.

XXXX, the was adder treated on And reduction ICMS, prior sales. a to an as tax, Brazil the as to of in was value-added years cost revenue. it reminder, As the transacted a starting discussed or call last of in how we impact

attributable the amounted a made million $X.X to business prior to income million compared to $XX.X million to $XXX.X the flow $XXX.X from $X.XX XXXX, $XXX.X gross XXX million the less driven the basic year increased adjusted and For common a prior to share increased shareholders million prior year. to comparison.Adjusted this in the to during revenue effect period. $XXX.X $XX.X our our in approximately year. in expansion was to benefit EBITDA year, expenses Xx of of $XXX.X amortization acquisition, the and to the in diluted lower year.Finally, operational the $X.XX enhancements we higher costs income was per from by loss and structural $X.XX relative share to XXXX of compared $XX.X million prior diluted margin to again per was $XXX.X and prior and the profit baseline the STI lesser basic our more product And primarily diluted gross and was net in the in from in Net $XX.X compared to fourth in loss million improvement, income million million million decrease than And by basic The by related per million headcount-related prior expense compared to $XX.X were year. expenses decreased doubled $X.XX the partially that year. to in the related compared Adjusted the million drive of cash million year.Adjusted income execution recorded the to $XXX $X.XX intangible million share $XXX.X quarter.Operating net was to to prior process compared offset free innovation. prior $XXX.X million to for

continue ended we on principal ended our million hand our like our X.Xx, in our the nearly million a the ratio of to term the net million we (sic) for and go our want change I settlement STI. color STI Slide doubled we will Array is be business down reflective million of loan, breaking of collective in discuss We're throughout regional Excluding performance revolver. to free factoring our business and on and year for of with begin This Slide rather Array Throughout our outlook than forward how successful quarter cash with going year, $XX are capacity XX commentary flow than processes. give the to paid excluding by liquidity will of XXXX. X providing where I of we year of consolidated additional integration out as of shares.Now our I'd that million, will the our and helpful, and approximately streamlining $XX.X cash one on XXXX, $XXX we the segment preferred $XXX of we guidance legal third total on [ leverage proceeds $XX managing ], more product including year-over-year undrawn debt, following year. the received noting to and

XXXX, out Additionally, its in basis, of uncertainties reporting we the of call will all-in differences periods, those we around will an was the year inclusive on future In be a XXX warranted benefits.XXXX transitional given fasteners benefit call of specific our XXX inclusion including extent they're number already. of structural a within around all out metrics treatment. the any and resulting material the benefit to the assumptions, in starting

XXXX of billion. year to to full expect $X.XX the $X.X within We billion revenue be range

begin the earlier, dynamics From and $XXX year-over-year, the in perspective, lower portion strive more discussed be revenues our are will solar of second year.As the of product on would weighted are adjusted the growth our structure benefits second to the driving a our pass-through earnest million will XXs the $XXX benefit half trough and expect industry. quarterly then input be a of XXX a the when fixed you the are fluctuate revenue half. cost from Inclusive in we XXX second in QX the a year number driven XXXX. to as we of to there low approximately second price in lower cost basis, Kevin for year percent lower double-digit on year-over-year absorption. lower our of for tube, generation linearity to a overall to As which half. towards our based end, expect mix growth our million in torque the slightly low at with expecting customers reduction outlook. second of that margins mix, we in the quarter, half be due cost the before see To ability by to may to forecasting this sequential Primarily, the compared of costs, we of project to continues ASP we the gross

approximately compared slightly XXXX. which we is adjusted expect dollar down million million For standpoint from quarter, SG&A, $XX $XX a to to per

of percent federal per largely to adjusted we tax $X in rate increase profitability share, EBITDA We to be within cost as midpoint. expect Brazil. adjusted beginning at structural related which by both a guidance million range treatment drive from $XXX million. This the to in our change driven enhancements year-over-year scale will an as that in is efficiency in to decline to a in and $XXX subject to X% improvement well benefit decrease marking EBITDA for percentage of EBITDA At of this represents exempt, and improvement this range point Previously, increase ICMS a the year a due benefits the margin now and anticipate the the earnings torque taxation tax tube. dollar benefit adjusted of XXX midpoint, our basis the consecutive X was is in XXXX. revenue point represents a become but third This year-over-year, adjusted the $X.XX, expansion.For Brazil the diluted in effective XXX tax

expect we such, XX%. XX% to year our effective be for As between and tax rate the

be of out here occur of point of dividends million $XX million will the amortization $XXX cash portion a P&L the will million. flow will Embedded cash the our received the I the $XX tube $XXX CapEx We during that million portion be payments expect the is inclusive to benefit the the million which year than from of later free free and will of $XX torque forecast of of benefit. PIK due on timing the IRS. to assumption which from expected approximately the XXX large approximately a and would quarterly in be benefit the discount.We XXXX, flow our is the remaining estimate cash a to $X expect million preferred basis, cash or be in cash between

for Now closing over Kevin I'll to back call remarks. turn the

Kevin Hostetler

you, and enhancements of Thank XXXX. we to we and to progress made We I the top the financial Kurt. the over record this strong confident to profitable our half performance, line that accomplished to growth made of a XXXX sustainable we again highlight XXXX, of our hard-working and structural in what second employees a very structure cost are want will are our quarters and as into few a all XXXX moment take and seeing lead efforts. thank for want as journey. for to continue team our momentum lot I'm our last business the I proud of their dedicated

call open now Operator? will We the questions. up for

Operator

[Operator Instructions] with comes of Our first question JPMorgan. Strouse the line from Mark

Mark W. Strouse

decline. start I revenue the a 'XX, with needed a kind the created I projects appreciate the outlook that of on selective the to half of higher-margin wanted of XXXX bit more hole fully first that being you to and fill.

that far Just me project were to as XQ we're incremental do there trying are what though, here. those delays, as can you to to compare hearing seeing kind heard of continued back on the Are Just call help delays the what's projects there delays? anything what compartmentalize you we today happening to in then?

Kevin Hostetler

about we've projects issues earlier of talked we question, to project for the of is same seen is delays, Thanks This relative Yes, and delays on continuing the for a that call. Kevin. your Mark. pushouts what many the

around better issues, confusion as previously What really equity hearing coming we really the up So breakers. to hearing the transformers ITC. are acute than being rules. still, lack of clarity adder at items as one keeps long -- very around are risk, the of interconnection I'm and on that's but engaging IRA, of again, I'll hearing we waiting these switches, supply to clarity the There's certainly queues some shortages some throughout. chain them now And the interest transfer more time around related orders and and placing tax that financing our related sidelines, overall for of high-voltage of is we're on sitting we about content the have we're about that lead domestic rates still still customers, and highlight and to and

particular, electrical that ubiquitous. harbor There solar that not unabated. are And finding by plus the components, the those and of of customers are able queues projects now lots battery. moving and those increase delays, permitting we're that safe have long supply to in Those forward fit seemingly in utilities is last, that with dramatic were that that certain design huge Now And electrical are a equipment. criteria. their ones solar accentuated

So in permitting delays. doing the municipalities, and the creating, of many to percentage confusion again, we're solar seeing to storage getting a battery we're used as and addition increasing sites, that is projects

quarters on. beginning for bake as we're So the it that work really where themselves the book a translates order couple And to what same we extra they're that order proportion talked about book. coming now set, that's their to begin is some what these into in those continuing book our prepared in remarks, a of of they higher And seeing of issues. order that's and orders solve are the how are that delays customers to getting

Mark W. Strouse

the sense gross able planning is a in are Kurt, couple you of are to -- kind then, planning And today you provide what margin XXX, the Are on Okay. XXX questions of you to or catch-up get quick million XXXX 'XX, second, excluding of here. we the of include then your that about XXXX? does $XX kind XXs that you've a improvements so outlook low from what been just the structural can are? margin talking And for

Kurt Wood

questions. great Yes,

well, takes items of couple were things, our got remember credits you talking sticking our take in lower out the you deals that that the We price It think as want. a it that quarter the still yes, a customers margin that XX%. there forward. that that saw new that then, here. about signed XXX along And that settled still range. we we the account if the our pass we to going profile the account maintain are into percent to fourth where enhancements And margin we're account into And our it takes allow the structural we'll to that takes to with. [indiscernible] we've takes low the cost margin on us mid-XXs of XXs into done onetime certain take the We into XXX pass-through does into in and we

that we what So our in. And additional prepared What we it there. doesn't all have it's is sign. fasteners contracts might be included talked structural in got and in that may there any remarks about in

would negotiating any us upside we materialize if vendors those that puts that want as deals things. some to negotiate we're at because of these specifics with going be well So obviously a don't we give forward. that our as when And disadvantage other

Operator

next the Christine Cho line Our question from with of comes Barclays.

Unknown Analyst

is ] Yovan Christine. This [ for on

on quick What one of since your sideline? bookings probability are 'XX. me. waiting You for pipeline high where tripled chart showed this the one sort Just XQ

wondering I'm be to for converted. So actually to needs happen this what

Kevin Hostetler

it's a question. great Yes,

So measure XX% to begins at one our trend verbal -- that our it of There may to high still in see it pipeline you competing cases, it to that's once get still our pipeline we're is becomes of other be from But In what even XX%. on, pipeline, that's go so is the be from that pipeline peer competitive business down with with EPC some named. that momentum companies orders. XX%, probability when meaning that of it's it range convert becomes a over what that probability we goes overall -- we waiting an business. cases, portion XX%, then in typically XX% high to in of when to we're that to one

So that's trend. really the

the and probability. stage funnel, look what's trend in of the that into is terms quality the overall work. win coming what's that That's to the into it gets getting at what in the our of funnel through high position order where that gates So we

really of the very is business us. high momentum that probability tripling significant an of that's So of seeing we're in pipeline a to indication the

Operator

Our next with Julien from question Bank line the comes of Dumoulin-Smith of America.

Cameron Lochridge

Cameron A on Lochridge quick BofA for from one for Julian. me.

so tie tandem. together, of both just And they in kind asking

delays those what coming at backlog you customer of out in that where you perhaps the those international the seeing same churn like these how -- then play and out projects any of level. at commentary the on some speak you of the bit XQ being Any time, project have things projects little kind of and XXXX. the around that. the to as I delays appreciate Are interconnection in to are nature, a First, dynamics backlog, customer the a in result of can backlog? sold things U.S. And others of some permitting, or

Kevin Hostetler

I'll let certainly specific one. the the bookings. I'll take about first Kurt talk QX

actually into look, backlog, be in So that -- project It modeled is rather, and we're had We've that's day little get only go ever pull smaller to canceled. the we've forgiveness product, projects is broadly they Certainly, the sure that's going last forward. only this the that, and may few delayed, we a our our out project, bit we put when X projects as to only out X months. speak -- to we but have projects backlog I'll But do a of backlog, only American domestically. Brazilian you North ever. of some that. Internationally, different pretty and

sold. get projects some seeing fact in are We

of converting doing as the from having the terms friends of some of benefiting issues, in advantage are in do they're business. we're that and additional we're better of are, up they some that coming a and for refinancing and developers of suppliers cases, in work to other some Array those. orders, picking lack moving Array. it And supply from that word, in taking coming fact others Some that and developers And they're and are

any So, sold prior emerging meaningful not at all. so the far, these we're projects market to bought and And of in from we've fact, seen completion. benefiting secondary getting from cancellations some

Kurt Wood

part second XX%-ish was U.S., next -- of when international, domestic and our that the in revenue the day of XX% QX, your me. about, see or our U.S. on so post dynamics, was or out in it we've excuse got the for K international we And question you'll

first the hard of about into look talked we first in the softness As half that's first the we obviously overcome. year, the to half, the,

So overall in decline volumes we do U.S. a expect year-over-year.

locations, second we down, including more will growth our international Brazil. and bit be we'll will half then meaningful half And up be about. as Spain First a in talked little see

Operator

Our question from Sachs. comes Lee Goldman next Brian with line of the

Brian Lee

so cover in I had these, if I on you jumped I apologize I a couple. late, apologize, advance. did

breakdown expansion you same margin you targeting year gross margin Are in IRA. to talking gross the actually level Are ex XXXX what the the into On margin XXs were ex kind us guidance Maybe versus guidance, high-XXs last ex-IRA? the expecting about IRA? mid- you the what's of year? overall the in of of there IRA give and is this core for some just margin adding embedded

Kevin Hostetler

you break XX%. the what on we which I'd specifically, than to consolidated definitely expect one to was U.S., that call, got at say On we it up. The in said higher be the

obviously for of units. the to U.S. mid- international for mid-XXs XXs then the high And So kind

for margin And a where IRA low pre incentive there. or benefit. So combined, any that's on basis, out from all-in benefits number of any consolidated the range XX% program gross an the get is you XXX inclusive new that's then

Brian Lee

number been And ended year it's questions what helpful. sounds on kind know like you're would some backlog already it That's enough. decent paper providing then Fair why softer around of the Okay. like a with of process looks revenue thought entail. I guidance you and the the than there's

step It taking just view back, for further seems even digits, of forecasts U.S. scale this all are the double year. faster utility you peers for flat are the maybe and XX%, like year. XX% So a a talked up the some growing volume about

to expectation kind through trying pushouts last kind Is just this share? walk view Is it the you of mix? reconcile -- Just had some after year understand in customer already XXXX. you for it for for where flat maybe and different? of to build year what's year the volume specifically for So you this

So year. trying to reconcile the just

Kevin Hostetler

start And either have a question. seen a can by is question. great on impact fundamentally where I lot of a and recently this Yes, outsized changes a answer let I've that's me an I'd market large few to reminding everyone that love think projects business, notes the shifts. project that share about shorter-term windows ago focus and don't really Array both to you share dramatic XXXX. is prepared were practice, XXXX secured in not in on that share we overly we general I'll market remind I a you remind too remarks, of the statistics. which share, gains market long discussing tried in my why quarter-over-quarter

me So relative market I about talk a change. that to being think few items the said, about let share

so 'XX. on emphasizing we our have still primary in were about these nearly doing initiatives we've completing cost that's a and to pipeline our yielded in that dramatically calculations we this, less for that of in required about that. our our a margin our high cost talked increase projects probability bit pipeline to what We focus margins this. to customers, And the pull these larger on of in put the we the to customers, recovery reduction, in focused the realign help to were they But our of is in in the retrospect, making clear, really than half methodically and and business. that's we into see future the discussed the objective build years optimization engaging gross this therefore some that of Earlier out of we invested would our simply period margin, ceded a in earlier. at really and and business, we visibility was of the terms what systems on reality We that structural pursue the not go lower with a our systems engineering our and have. to our the really was the orders increasing on We're business. to reducing completed provide the a our every one with improve into month be before they there logistics back last projects dive on of we business XXXX. very our improving were we've we focus that do expanding and sacrificing the end that attacking million more we're the 'XX portion they third We our $XX purchase pricing were cost risky for today, improved operations sourcing. early for without all a backlog XXXX our was structure. reduction Xx project role margins. projects. be QX engineering half cost demonstrate for committed could actively a our really of for strong difference becoming on too here from cost competitors that and our our based and and marked the you marketplace we apparent structural projects perhaps noted pipeline cost reductions this to prepared in customers the just about planned bookings some in important would and my into And First, follow confident trying I'm internal that talked our structure, that was substantially through pricing initiative. that where that seen structural and first was being our you'll in reductions foundations on now remarks felt did Array. materials, actually to X able on are deep cybersecurity we in our first it if so there all could it's was time in we Since in optimizing of and count ground. to IT nature, customers we them about presentation design our review And In to quality buy rates strategic the they're This We've standards. X seeing saw cost do of evidenced rates nearly out and previously high and these that We are do. in build These temporarily mid-XXs to automation global win committed QX, to a first we're our our drove our find brought improvement as delivered win by business customers' of inherently

but we our can costs. ways our that beyond identifying into their So cost, we're again, that one reduce focusing our costs and reduces that's not cost customers'

the fourth ago, we than awarded historically. the But that strong things factors seeing thing financing note the minute just of bookings above. issues, time negatively about second I just of to seeing, timing have we're talked project asked. got questions impacted we we IRA The saw is be get we interconnect all see is would in of the as The projects one we first I continue last, are for and periods then indicated timing And we that supply quarter. the longer a chain permitting, delays, clarity, one of by

building Our of quarters in locking customers they're now couple is a doing what And are buffer. of capacity us. with in

revenue of real I'm given projects work high dislocation to we've competitive feedback we when And current our out most more business recently, is tell timing near-term others project think our able projects. this the last our years. keep And ability challenges. the very operational been of in would more for on we -- I or this of historically, further. customers' customers, months, services the on product is been on There been software, in making new improvements I've as as killer look, to receiving kind offerings backlog. increasingly marks over a from to feedback of well our major strength front our and previously discussed. able to our software option one we've portfolio. think stated the right our that with service trend. position. last see we to customers based we some just continue push a product, clear to fill that of the portfolio largest app industry, and what you, been in But and dislocation time and desire I our a lots is in buy historically. any we're than our or stated XX can cycle our you over push tell product have of But obviously longer receive Like of There's really I pricing to short-term would can we X I diminishes I less a seeing X pull customers any of not great in the positive many and this, be in indication would topping of any now, Simply on that don't that limits

pipeline QX the momentum, very our year calling early we and lean it results, backlog and we're to and We're here. So we're into of trough. that's that as confident back why really half the what's the that that's driving seeing build certainly going

Brian Lee

the the year, in to the just just you words it. sounds mouth, all appreciate last mean, back but I maybe your it account. to I could that in color. of your don't half like into if being that's squeeze taking put like Kevin, under-growing to circumstances that of if and I read back in And the all want way of trends, because half first outlined, then year all one, with you're the maybe growth but market, line market I

Kevin Hostetler

would even it simply feel I you've in be percentages, left point. win Yes, think really we at this I business better direction how it. If the about we just maybe our think back at rate half look than the of good the

Operator

Maheep the Our Mandloi question comes from of next with Mizuho. line

David Benjamin

the on see David same versus half of for if delta just is in gross I the was expect margin sort despite the second first revenues. to in guys the half Benjamin you This wondering breakdown Maheep.

Kurt Wood

on It in the slightly material half roughly given say lower to basis. will but be the probably lower a scale, not first obviously

We expect fairly it to be constant.

quarter-to-quarter. I moved project mix everything note and that However, else, out would it gets as

past should second we than the consistent, relatively in years. XXXX in better in be that saw slightly You half. But half first the

David Benjamin

little due ASPs and a bit there is any -- U.S. you like talk that can And also of about or to international business between

internationally? customers to those cost mentioned applying you and You downs. Are both domestically

Kurt Wood

to you this things differences apply One of and/or some is has for to product ASP or portfolio base approach the But it generally Obviously that product basis. there. a about the help customers do margin cost to each in have dynamic. We different slightly savings geographic we on will will have the do margin our we a on compliance. And great there's be universally. pass the

not customer-related to to and for on out, speak. that's give and region-by-region more [indiscernible] in it covered go established imagine, to generally competitive basis, you're aggressive specific as portfolio But that want you're markets, As with at new give you on it. much you're seeing a do will pricing we can products. long bit so just as looking a don't you too Try color how info. you might add We as than a more little a

Kevin Hostetler

there's The benefits one international, thing of pass-through not clearly. I on obviously that XXX the will a note the

Operator

question comes Donovan next of with Capital Our Markets. Northland from the line Schafer

Donovan Schafer

to the you -- when moment. tracker. HXXX know So initially on focusing the the ask really at I about actually want think U.S. I I

of I think kind switched, I So I of a rotary you the initially linked because other launched, you when do. for that a companies the tracker U.S. more like you know had we push-pull of saw was kind required of think, dual-row X-row have the kind RE+ you've design, elevated lot

-- about like in to some And you like like go give mix there just whether it's the needle? of we that of the materiality or in that help what nexus like that increase? large kind such? cause -- Or of and could of moving the us up backlog a us the of or kind that backlog, give level ASPs just quantitative Anything prices, versus the conversations if was So if price and of has can DuraTrack that increase more HXXX with -- -- OmniTrack. out and the is it get drove us if I has was you this like quarter, mean that and there had risen understand a you what part could

Kevin Hostetler

building handful what lower products using that to to price as Donovan, on we've right, DuraTrack, with core point we launching sensitive. lot a price whole win those that against our tracker up. that at on us So there's And a And And point the pressure of those out DuraTrack a rate really CapEx-sensitive reduced those the customers. is gone what's way competitors really there. price the of found that's is able be putting really have was those of super them, compete HXXX to has are our been happening, have a to

the in as have So DuraTrack still we that's better seeing. backlog on of what customers the And what pursuing have lower sale important some publicly their at. competitive that. than me they're are go chase So And noted pressure what pricing getting competitors and point, on OmniTrack quotes think those But well. come you're play. we even saying, into it, far large HXXX really at a right? the HXXX. that competitors and versus to let's the other because those far we've price targeted the this preferring uptick against is is We're seen HXXX big we're address that as platform, DuraTrack that's let of the seeing we're HXXX the "Hey, will thus price, We reduce still a where that's up while

expect We have all domestically the we've I out for XX% play if began really that to overall getting of share in XX% along, we that as be of volume think And at you DuraTrack. orders, that's of will. real that to to range, beginning orders said versus And kind OmniTrack. kind

I already volume just think So this over our in we're the for hand, already. of orders nearly anticipated half year

that's that or related small it's a more the but that of may customers amount premium to utilize a customers. at more important to offset very good And So that's translating to posts really for that, is beginning the in to grading couple what's more foundation translate and that's point. us need fact far our pretty to it's by price savings the you to our this customers,

is OmniTrack So DuraTrack. of project net-net, a percentage that customers providing even in relative improvement to several the points

to going we product go as that traction So that we're that of work learn EPCs civil design engineering how companies I seeing forward. and with the accelerate more as is to traction. in think And

Operator

question line Joseph comes Partners. the Osha Our next of from with Guggenheim

Joseph Osha

discussed your factor. the on cost terms one strategy that I Or still in that as capital Is intention seen drive of vis-a-vis developers wondering a with. And something of fundamental if is you your course market? has into come don't of hearing of quickly are your of come shift question. timing and struggling I'm segment lower mind to also, that things the in follow is if and up the ASP more is pushouts a HXXX the you am didn't -- When that conversations, and it some the DuraTrack? to I Yes. up your take issues want previous do the of it in issues the that you've up

Kevin Hostetler

between our those is of closer. lower again, and order their the in, price first, trade-off That to becomes don't much able I'll -- negligible the others lower-priced But take truly No, market as when intend have that's that competitors more in product we're you to share me advantages to HXXX let mind. in maintain what with their one value a we segment. now So latter compete that we're may we as to still with installation if and be and seeing move value you seeing. us add line costs our what somewhat those drop

really for HXXX off So look, much about And have this say, of we're The lots people this that. price. with start project a is we at a I'm project that. the We seeing point. ahead really, quotes competitive is better, internationally, Obviously, and in feel ready to charts to go. the there DuraTrack. that much and go great going more it's quoting start

further the that that to to that focused having don't on a really DuraTrack that do we're can response is be price, what so HXXX. have ready we decline with So we the

there when could that. community, was that degree for out seeing today I to don't nearly still that's be solid. -- of What wait months. The finance that relative take know were of to part first that phrase to developers over me I DuraTrack I we developers, playing we're question? I on me original a back forward conveyed the look, last impacting So I several talked -- why put and not there's was lot couple if think project don't in sorry, ways of degree XX claim a and thought. phrase project the and would I but It's so more is a I the repeat expert in the pushout, our finance around used to honestly cheaper a And in what things. I'm your half. talking much only -- know X by that it over customers the you can in financing, go is the thesis the is to a it's points an basis to

Operator

comes with question line the next of Our Oppenheimer. Colin Rusch from

Colin Rusch

newer the smaller guidance and You're just systems. You've a in for some I'm products in alluding just it, I and terms that. embedded but products that's lot product the of appreciate that older versus the versus talk Can assumptions to you year. of about trending? offered larger the underlying of details, But this so how curious, mix I'm curious are just what

Kevin Hostetler

Yes. give the don't think the we on OmniTrack And as competitors of the be vis-a-vis the track. make honest. that about in is certain more would DuraTrack that near winning I against level HXXX the term. say detail, mix I'll anticipated to only the I versus comment product

Colin Rusch

looking Okay. see in expected change much we like little of going moderate to new at now spend how you're OpEx terms And R&D an just on out that a products bit? you've spending, there that pretty here. then it a in side, is feels got the Should full portfolio

Kevin Hostetler

our this great the is feel new continue new last with it's engineering But doing of we've services. really software. This things organization to solutions that substantial very and my The forward that includes made years, work at we're products engineering on, say, efforts see to like that changes the this includes and And margin amount viable the enhancements. additional accessories we to to they value-added clamping really engineering going and point. over good actually organization about and you're accelerate. No, X commitment bring

we call to a we're that. I And again, And return year of relative So to a of earlier phenomenal we're to patents. accelerate amount spend. getting think last continue going talked on the out and

than the again granted nearly been up last years, in have more think to patents XXX XX we're that X is now I years which combined. previous the

see and just that around continue forward. and with to build you're our us that technology patents out we moat going build continue to as So business to go

Operator

Our next the Sandler. Harrison question Kasope comes with from line of Piper

Kashy Harrison

U.S. So are pipeline set and on first growth the my conversion.

you recently. to You the saying or want cost is clarify, a and it growth that pipeline just to due Xx in in is XQ U.S. between OmniTrack? time And mainly talked I growth line? into win is has gone to XQ should your the about it how XXXX? XXXX, And And then up Is think rate pipeline XXXX, you orders, HXXX? that then are said the DuraTrack Or compared about XXXX reductions XXXX. finally, conversion early we

Kevin Hostetler

Kasope. Yes. Great questions,

win So I way. it I'm it think win when to rate think is what about domestic historical comparing is rate, our So of think about our baseline -- it as right? market that share,

So not that largely our would the say. underlying simply just the seeing win that if I in is out projects most accurate, market, are equal share, our assumption rate market obviously historic there to is entirely which true, but was we're

to look we we're share is what that. there's We've what happening, So that win market at now. above And several rate that try historical share consistently us that that to rate. accelerating above for seen market that's we takeaway right, months. beginning that do see And tells

of So we and fact focused come our the entire and Chandler, said, have in I've feel and large this pricing it from can nature, And to structural to good I that right? the lot And at met that point forward, in gone that meeting a these please lock great prices you're I in really I our a EPC me going -- was really and business was trying buy of not they're many in because of is here reduced about work we're as me detail work reduce out to see both really X market the walked activities holding. sides. was satisfying customers, for amount customer on meeting on that costs tell very and the with again, the is We that structural our those conversation. in doing through the of them,

that. So I can you tell

that. That's can to a that It's pipeline above up in of DuraTrack that of again, all I at pipeline, this all mix of is the pipeline on say is and point. strong relative HXXX. made the So OmniTrack, sitting

Operator

Our Percoco next question comes Morgan from the line of with Stanley. Andrew

Andrew Percoco

of earlier. Maybe the a some questions just follow-up to margin as

You're year. this kind of alluding to some ASPs declining

XX-month pricing from to to additional potentially. per that otherwise, you where down being But was left are take to of want here? to that's much can cost a much manufacturing further whether commodity offset much use that's product that XX- how versus watt, have just you continues lower lower measure, or down, Some cost cost lower left of if metric come prices, how the by we curious, do view how much I how competition-driven you you drive today? If and your or were to room

Kurt Wood

reduce things a them bit we make the of volume with product, work the cost for our on couple as how just have product is a where where reduce constantly spoke about value overall other EPC obviously driving could isn't cost getting out taken program and we a optimizing because make bit that residual the balance instances This well. that to only higher designing there's to earlier in how Kevin things. does say but introductions. would each LCOE little R&D as side is new with into One, for system around we're and things There smarter sure Kurt. I can us like then so And sure of developer some our obviously, our logistics spend they they on also, of there. not we or redesign price optimize. chain little is differently that clamps effect price be we're back And well. end supply to the costs We're if

continue think I we So room. have to

design cost a product another lower-cost out. to HXXX continue the It will is We DuraTrack. example. of is

get maintain the that the ability our product and to have to We if level down margin. still price points use that

So operations we cost on XXX will phenomenal at will continue without the to in our in in time. benefits a why had other focus in or has that we of any job the XXXX margin goals reduction there is big reason done sitting executing we're I mid-XXs the that. a included say and team

do have that across you're company you energy cost globally. I And the solar and industry. So will headway I that, think of to seeing lowering there's committed we're every still the match to And that. think

Operator

Cantor comes with the of Derek Fitzgerald. Our from next Soderberg line question

Derek Soderberg

degree? curious the should think in bit could Any more about play was Just call-outs side there, revenue guidance? non-tracker I revenue this we non-tracker any me. opportunities. margin development plans trends product what to into for the about on or gross year? if non-tracker one 'XX? talk so, you a Did introductions If Just just how

Kurt Wood

Kevin, maybe you can on have I'll add it. if you start.

on there. made look, QX. structural we've I the some I'll with starting enhancement good think, talk Again, progress about

If onetime you about, from About that that that of year-over-year. and then XX% was sources and take the they $X.X other the revenue from gives Kevin cost basis coming each X/X these was net out, $X.X charge, non-tracker coming enhancements XXX that so million, had talked XXX, points which was million remaining us we said we we structural of have.

here, to that to we it, continue potential our we're you're year, out, there promoting going factored -- that very guidance. but probably expect We seeing in what lies into material above a but tailwind amount a it grow the is not have

Kevin Hostetler

to some we've on. industry. using have what just one focusing a you're major to there's be and is qualify kind lack of content And for entail. there order the really training domestic them There's programs. able And adding color accredited demonstrate provisions, out X the to The accredited those In programs. been of in ITC you buckets to training

So EPCs to need hiring labor have accredited to to as our be handle sent training. future labor for customers, that acceleration, able as those are they

that for for accredited, [indiscernible] our to time some And as civil we things X services, That maybe use optimization and for those a even of in-house of that some and they're they're that to and the can our highly looking time. our the again, them services, at to create the actually And time customers. there's for process up inspection as area where Omni, them then comes those we inspection, will, and point. down people if them. taking provide engineering second site to And from time some of this modules can running to golden do and value commissioning, in-source already able that this of revenue health I'm project revenue that engineering and assessment taken again, good, that example, word many and from that that's where of in being services, customers lack required at we for better they that bringing us. was fully is get really customers, management productizing of send that's training. terms row as resource training And so of front services you high-value be all we've are -- time analysis for last the do things terrain services accredited So doing to in weeks added another would really in repeatable thrilled ago, generate we recent and

So excited offerings, about really around do about we've built and excited we're we grow. really team continue expect We're that. to our that the to services

Operator

of line comes Our Wolfe question ] from next Research. Messano the Dylan [ with

Unknown Analyst

about I $XXX covered, just delayed of generally, wanted included guess those go that what churn, Sorry what as understand million if just that I'm but kind being the talked quarter's was projects? you already to trying in And back of churn was in what is on is bookings? to the quarter Gap]I guys last is the[Audio to the any this this

Kevin Hostetler

are longer our -- at came we order need working about to half they us just saw the to for orders delay. that this point. begin that the projects get with What into chain. could is These to us They book no supply of

see in. on IRA $XXX that So did of were to that specifically about we million half sidelines the related come clarity

half already out business. it we of as specificity in call rest with course project-by-project go forward. normal of We the just now. I is that But won't roll will really think any converted

Operator

next comes with from Our question Capital line ROTH of the Philip Shen Partners.

Philip Shen

$X.XXX of you the might roughly a tube XXX or can pass torque along the X/X as customers torque get to or you maybe some did to recent you if customers? keep to did of of the watt. the a you guys QX? start you maybe and pass came of credit think the some or with sorry, expect quantified the the you $XXX to much out, XXX guy bookings pass X/X might -- how guys million Or XXX you you along along credit as -- X/X you the some a of to credit it? quarter, being quantify in X/X IRA along pass half And first tube do much in -- do And The when any pass when of customers? not,

Kevin Hostetler

portion. So our will be margin Phil, there a that assumes guidance

XXX XXs that of portion we've messaging the what clear retained growth. low is in our been So that, of our is net margin

that do be would as our not that to with working forward. and yet. of our customers there into any But level us of credit certainly as have them we've committed to partners, we've We we our view contracts sharing requiring specific when entered a that been of go large

going of into there'll open an not that be share customers we're expectation that is call, So our portion going to over and forward. an but baked about that, conference our that negotiate guidance expectation what's to with we're our a

Operator

And our next question comes from the Vikram with of line Bagri Citi.

Vikram Bagri

of structural shifting a you year's you're you're to the XXX clarity I'm credit believe Is trying million boost in evaluating And realized Or you had IRA 'XX any on use avenues to 'XX mentioned be clarity? to that expired anticipated boost $XX not process. in see should to excluding what 'XX right -- topic, is IRA through see EBITDA multiple evaluating end $XX XXXX shift think onetime see from and onetime in prepared period clarity same a or I understand 'XX? in the credit for The is 'XX. mid-Feb. that onetime the from 'XX, similar may the clarification this I also amount that a on or But about million comment from did I realized we'll 'XX, what avenues to EBITDA? of to you to comments, it fasteners. gain this for Can talk timing we earned onetime similar amount at 'XX the 'XX 'XX. that 'XX of items -- is just of

Kurt Wood

and Kevin, second the take go on I'll to part you first, can then the part. first

of be XXX including On the going waiting in. parts that second structural part clarity for have the are the regarding negotiated we will little the included onetime at all There's think fasteners it's, -- that that bit nature, didn't one, vague on. a you we're more know we

on what what from now, know the you mid-XX% more what provide think range the what we an that's a I I year. little structural in provide pushed think we equal point. on to XXXX I the you're the know then throughout That we'll tell following at focusing year we margin amount that go the that safe is So clarity And probably you core. now, guidance. bit least as have we and we're But amount at for

Kevin Hostetler

fasteners. And I'll comments on your structural address

increased really external able some the being Jessica we're of challenges affairs SVP hired of having great our end specifically, first year that of us working with affairs really some So and around and of policy so I'm navigate government team a to and things we of doing, the is all Washington, impact thrilled the at and government D.C. new a these

is in with definitions that So setting to us, are of working focused categories I of providing active in aside, around we clarity elements further for are structural there's a variations think that additional we're X one. IRS terms fasteners We're push for to active on. broader of certainly the supported. kind the fastener political additional structural ensure as And in

terms that based confident parts the suppliers the in of same very focus with the we negotiations of the this in The did suppliers of year parts And We're definition, tube we current with about are isn't much as changing the early of benefit first amount to torque like are guidelines at our with the our as in it's today negotiating retaining of written. on suppliers. hopes amount there split, those well. year for a really end credits into disproportionate about qualify already our our that

come what have size guys clarity, to idea of bread is. we do the we once to back you the that really box we've So market an committed give once of that, and

And to or is and But a again, C bunch whether of give nebulous. efforts some qualify. or we'll second definition. analytics hired enough structural and bit once It's evaluate or a that of little parts A team, management opinions done. the may we're not we'll and Part And The we third-party qualify there go decide as some elements would a to we've take rest feel rendered take we or those definitions under on parts additional the the engineering not companies actually B of more that faster. us doing body of that then on whether board confident get that is

that. upside maintain So will going Again, that. we there's commitment we'll to what say when provided. on But our back full work a disclose lot have around to is of currently and that's I come you we've the to guidance again clarity

Operator

you. Thank

today's have question-and-answer reached concludes We our this the end that, of with session. teleconference. And

disconnect at may Thank time. your lines participation. your this You you for

Array (ARRY) 27 Feb 242023 Q4 Earnings call transcript