Array Technologies: Balancing Strong Demand and Margin Challenges.

Array Technologies has strong demand with a $1.8 billion backlog, driven by volume and strategic partners. However, gross margins were negatively impacted by legacy-priced agreements and tariffs. The company is expected to benefit from margin improvements in the latter half of 2025, but mixed factors justify a cautious outlook and a Hold recommendation from analyst Jeff Osborne at TD Cowen with a $7.00 price target.

Array Technologies, Inc. (NASDAQ: ARRY) reported its second-quarter financial results for the period ended June 30, 2025, highlighting robust demand and strategic partnerships while grappling with legacy pricing and tariffs. The company's revenue reached $362.2 million, up 84% year-to-date compared to the same period last year. Gross margin was 26.8%, while adjusted gross margin stood at 27.8%. Net income to common shareholders amounted to $28.5 million, and adjusted EBITDA was $63.6 million [1].

The company's strong performance was driven by a $1.8 billion backlog of executed contracts and awarded orders, indicating substantial demand for its solar tracking technology. This was bolstered by strategic partnerships and volume growth, with year-to-date volume up 84%. However, gross margins were negatively impacted by legacy-priced agreements and tariffs, leading to a cautious outlook.

Array Technologies also reported the signing of a definitive purchase agreement to acquire APA Solar, expected to close in the coming weeks. The company issued $345 million of new convertible notes, repaid a term loan in full, and repurchased $100 million of 2028 convertible notes at a ~20% gain/discount. These financial moves aim to enhance capital structure and debt maturity profile, positioning the company for long-term growth.

For the full year 2025, the company raised its guidance, expecting revenue to be in the range of $1.180 billion to $1.215 billion, adjusted EBITDA to be between $185 million and $200 million, and adjusted net income per share to be between $0.63 and $0.70 [1].

Despite the strong demand and strategic acquisitions, analysts remain cautious. Jeff Osborne at TD Cowen has issued a Hold recommendation with a $7.00 price target, citing mixed factors and the potential impact of legacy pricing and tariffs on margins. Osborne expects margin improvements in the latter half of 2025, but the outlook remains uncertain.

References:
[1] https://ir.arraytechinc.com/news-releases/news-release-details/array-technologies-inc-reports-financial-results-second-3