Array Technologies, Inc. (ARRY): BCG Matrix [11-2024 Updated]

As we delve into the dynamics of Array Technologies, Inc. (ARRY) in 2024, we uncover the fascinating landscape shaped by the Boston Consulting Group Matrix. This analysis categorizes Array's business segments into four distinct quadrants: Stars, Cash Cows, Dogs, and Question Marks. Each category reveals critical insights into Array's market position and growth potential, driven by factors such as the Inflation Reduction Act and recent acquisitions. Join us as we explore how Array navigates challenges and opportunities in the renewable energy sector.

Background of Array Technologies, Inc. (ARRY)

Array Technologies, Inc. is a leading global manufacturer and supplier of utility-scale solar tracking systems. The company was established in December 2018 as a wholly owned subsidiary of ATI Investment Parent, LLC, and later converted to a Delaware corporation on October 14, 2020, when it adopted its current name. The corporate headquarters are located in Albuquerque, New Mexico.

Array Technologies specializes in integrated solar tracking systems that consist of steel supports, electric motors, gearboxes, and electronic controllers, commonly referred to as single-axis 'trackers.' These trackers are designed to adjust the orientation of solar panels throughout the day, optimizing energy production. Projects utilizing these systems typically generate more energy and have a lower Levelized Cost of Energy (LCOE) compared to fixed tilt systems.

The company's flagship tracker features a patented design allowing one motor to drive multiple rows of solar panels. This innovation provides enhanced reliability, reduced installation costs, and lower maintenance needs, positioning Array Technologies competitively against other manufacturers. As of September 30, 2024, Array had shipped approximately 79.9 gigawatts of trackers globally.

In January 2022, Array Technologies expanded its product portfolio through the acquisition of STI Norland, which introduced a dual-row tracker design. This addition caters to sites with irregular boundaries, enhancing Array's ability to serve a diverse range of solar projects. The company primarily generates revenue from engineering, procurement, and construction firms, as well as large solar developers and utilities, with 70% of its revenue coming from the U.S. market.

Research and development are integral to Array Technologies' strategy, focusing on innovating new products and enhancing existing technologies. As of September 30, 2024, the company had 961 full-time employees and reported significant investments in R&D to maintain its competitive edge. The company's financial performance has faced challenges, with a reported revenue decrease of 34% for the three months ended September 30, 2024, compared to the same period in 2023.

Array Technologies, Inc. (ARRY) - BCG Matrix: Stars

Strong growth potential in the renewable energy sector

Array Technologies, Inc. operates in the renewable energy sector, specifically focusing on solar energy solutions. The global solar market is projected to grow at a CAGR of approximately 20% from 2024 to 2030, driven by increasing demand for sustainable energy solutions and government incentives.

Significant market share in solar tracking systems

Array Technologies holds a strong market position in solar tracking systems, with an estimated market share of around 30% in the U.S. solar tracker market as of 2024. The company’s innovative products have positioned it as a leader in this rapidly expanding market.

Benefiting from the Inflation Reduction Act and 45X manufacturing credit

The company is poised to benefit significantly from the Inflation Reduction Act, which includes provisions for investment in renewable energy technologies. The 45X manufacturing credit provides Array with tax incentives aimed at enhancing domestic manufacturing capabilities, which could lead to increased production efficiencies and profitability.

Recent acquisition of STI expands international presence

In January 2022, Array Technologies acquired STI Norland, enhancing its capacity and international market reach. This acquisition is expected to contribute to revenue growth and diversification, particularly in European markets where STI has established operations.

Improvement in gross margins to 34% for Q3 2024, up from 25% year-over-year

For the third quarter of 2024, Array Technologies reported a gross margin improvement to 34%, up from 25% in the same quarter of the previous year. This increase is attributed to cost control measures and the realization of benefits from the 45X manufacturing credit.

Array Technologies, Inc. (ARRY) - BCG Matrix: Cash Cows

Array Legacy Operations still generates substantial revenue despite recent declines.

For the three months ended September 30, 2024, revenue from Array Legacy Operations was $160.3 million, a decrease of 35% compared to $244.9 million for the same period in 2023. For the nine months ended September 30, 2024, revenue was $459.8 million, down 49% from $895.3 million in 2023.

Established relationships with Tier 1 utilities across the U.S.

Array Technologies has maintained strong partnerships with key utility companies, which has supported its position in the market. These relationships are crucial for securing ongoing contracts and ensuring steady revenue flow, even amidst market fluctuations.

Consistent gross profit contributions, even amidst falling revenues.

Despite the decline in revenues, the gross profit from Array Legacy Operations increased to $65.7 million for the three months ended September 30, 2024, up 13% from $58.2 million in the same quarter of 2023. Gross margin improved from 24% to 41% during this period.

Strong cash flow generation capabilities from existing contracts.

For the nine months ended September 30, 2024, Array Technologies reported net cash provided by operating activities of $96.4 million, despite a net loss of $113.5 million. This indicates strong cash generation capabilities from ongoing contracts.

Array Technologies, Inc. (ARRY) - BCG Matrix: Dogs

Significant decline in revenue, down 48% for nine months ending September 2024

For the nine months ending September 30, 2024, Array Technologies reported a consolidated revenue decline of $594.4 million, or 48%, compared to the same period in 2023. This decrease was primarily driven by:

• Array Legacy Operations revenue decreasing by $435.5 million, or 49%, primarily due to a 46% decrease in volume and a 5% decrease in average selling prices.
• Revenue from STI Operations decreasing by $158.8 million, or 47%, attributed to a 31% decrease in volume and a 19% decrease in average selling prices.

High operating expenses leading to net losses of $141 million in Q3 2024

In the third quarter of 2024, Array Technologies reported a net loss of $141.4 million, compared to a net income of $23.1 million in Q3 2023. This represents a decline of 712%. The operating expenses for the quarter totaled $210.99 million, a significant increase from $47.17 million in Q3 2023, largely due to:

• Goodwill impairment of $162 million related to STI Operations.
• Increased general and administrative expenses of $40.15 million, up 7% year-over-year.

Impairment of goodwill amounting to $162 million related to STI Operations

As of September 30, 2024, Array Technologies recorded a goodwill impairment charge of $162 million for its STI Operations. This impairment was a result of a quantitative assessment that indicated the fair value of the reporting unit was significantly lower than its carrying amount, with an estimated fair value of $455.9 million for STI Operations.

Low average selling prices, impacting overall profitability

The average selling prices for both Array Legacy Operations and STI Operations have seen significant declines. For the nine months ending September 30, 2024:

• STI Operations experienced a 19% decrease in average selling prices.
• Overall gross profit decreased by $112 million, or 34%, across the company.

Array Technologies, Inc. (ARRY) - BCG Matrix: Question Marks

STI Operations struggling with revenue decline of 47% in 2024.

Revenue from STI Operations decreased by $158.8 million, or 47%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Volume decrease of approximately 31% in solar tracking system sales.

The decrease in revenue was primarily driven by a decrease of approximately 31% in volume.

Uncertain global market dynamics affecting future growth.

Global market dynamics remain uncertain, impacting the growth potential of Array Technologies' products, particularly in the solar tracking systems segment.

Need for strategic initiatives to stabilize performance and capitalize on growth opportunities.

Array Technologies requires strategic initiatives to stabilize performance amid declining revenues and to capitalize on emerging growth opportunities in the solar market.

In summary, Array Technologies, Inc. (ARRY) presents a mixed portfolio as defined by the BCG Matrix, with its Stars showcasing strong growth in the renewable energy sector, bolstered by strategic acquisitions and improved margins. Conversely, the Cash Cows from legacy operations continue to generate revenue despite challenges. However, the company faces significant hurdles with its Dogs, marked by steep revenue declines and substantial net losses, while Question Marks like the STI Operations require urgent strategic focus to navigate uncertain market dynamics. Addressing these challenges will be crucial for Array's future sustainability and growth.

Updated on 16 Nov 2024

Resources:

1. Array Technologies, Inc. (ARRY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Array Technologies, Inc. (ARRY)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Array Technologies, Inc. (ARRY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.