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Array Technologies IPO: What Investors Should Know About This Solar Company

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Array Technologies IPO: What Investors Should Know About This Solar Company

Solar energy company Array Technologies will go public Thursday in a listing that has already increased its offering size.

About Array Technologies: Array Technologies (NASDAQ: ARRY) is one of the world’s largest manufacturers of ground-mounting systems that are used in solar energy products. The company is a key leader in the market of trackers, which move solar panels throughout the day to maximize the sun’s position.

The use of trackers can generate up to 25% more energy and provide 22% lower costs of energy compared to fixed-tilt mounting systems according to the filing.

The company sells its DuraTrack system and SmarTrack software to engineering and construction firms and large solar developers.

The Offering: Array Technologies had originally announced an offering of 33.75 million shares. The upsized listing will now see 45 million shares priced at $22.

The company is selling 7 million shares with an additional 38 million shares being sold by shareholders.

After the offering, the company will be 65% owned by Oaktree and Array Technologies founder Ron P. Corio.

IPO Outlook: Solar Power Company Array Technologies, Chinese Retailer Miniso Lead Possible 9 IPO Week

Growing Solar Market: Solar power is one of the fastest-growing forms of electricity in the U.S. with compound annual growth of 20% from 2014 to 2019.

The installation of ground-mounted solar devices is expected to grow from 10.9 GW in 2019 to 19.6 GW in 2023.

Trackers saw compound annual growth of 35% from 2017 to 2019. The growth in trackers outpaced the overall growth of ground-mounted installs. The percentage of ground-mounted installs to use trackers increased from 60% in 2017 to 70% in 2019.

Clean energy has been a hot sector to invest in for 2020 with some investors guessing the area could see massive growth with a Joe Biden presidential victory. The Invesco Solar ETF (NYSE: TAN) is up 140% year-to-date.

Ahead of Competition: Array Technologies has a patent on its tracker design, which allows one motor to drive multiple rows of solar panels.

The company’s largest competitor has to use one motor in each row due to Array’s patent. Having less motors lowers costs and potential maintenance on the solar panel setup.

Growth: One of the keys to the company’s growth is pushing for international business.

In 2019, 87% of Array’s revenue came from the U.S. The remainder was made up of 8% from Australia and 5% from other international markets.

The company says the ground mount solar panel growth is four times that of the U.S. market (excluding China), but only 30% use trackers compared to 70% in the U.S.

Financials: Array Technologies reported revenue of $647.9 million in fiscal 2019, which was more than double the $290.8 million reported the prior year. Revenue for the first six months of 2020 was $552.6 million. The company reported net income of $39.7 million in fiscal 2019 and $76.1 million for the first six months of 2020.

 

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