Array Technologies IPO: Stock Successfully Trades on Nasdaq Market
The Array Technologies IPO brought another eco-investing opportunity to investors. The company has been around for nearly three decades. Now Array Technologies stock is trading on the Nasdaq for the first time.
But is Array Technologies a good investment? Here’s what we know…
Array Technologies IPO: The Business
Array Technologies manufactures ground-mounting systems for solar energy projects. Its main product is a single-axis tracker. Trackers are used in solar panels to track the sun, moving the panels throughout the day so they get the most sunlight. According to BloombergNEF, energy projects using trackers can generate up to 25% more energy while also delivering a 22% lower levelized cost of energy. By providing its product, Array is creating technology to help further sustainable energy initiatives.
Array sells its products to engineering, procurement and construction firms that build solar energy products. It also sells to solar developers and independent power producers. Products are often sold as a part of a master supply agreement or a multiyear contract.
But investors interested in Array Technologies stock might be asking: What makes Array’s product different from its competitors’?
Array’s DuraTrack System
Array talks about its tracker in its IPO filings. As its main product, the company is named after one of the tracker’s biggest features. Large-scale solar projects are often in rows. Those rows form an “array.” And Array’s tracker isn’t used to move a single solar panel but rather the entire array of panels. This design is called the “DuraTrack system.”
According to Array Technologies…
Our trackers use a patented design that allows one motor to drive multiple rows of solar panels through articulated driveline joints. To avoid infringing on our U.S. patent, our competitors must use designs that we believe are inherently less efficient and reliable. For example, our largest competitor’s design requires one motor for each row of solar panels. As a result, we believe our products have greater reliability, lower installation costs, reduced maintenance requirements and competitive manufacturing costs. Our core U.S. patent on a linked-row, rotating gear drive system does not expire until February 5, 2030.
The company also notes other advantages it believes its system has over those of its competitors.
- Requires fewer motors per megawatt
- Creates site design flexibility
- Enables higher power density
- Is easier to install
- Automatically stows in high wind conditions
- Is highly reliable and requires no scheduled maintenance
- Incorporates software and machine learning capabilities
- Meets prospective national security requirement for U.S. critical energy infrastructure
Not only does Array’s product seem to be one of the top in its market, but that market is growing. The Array Technologies IPO is one of many green offerings that have been announced in 2020.
A Growing Green Market
Sustainability is a hot topic in today’s world. And during the coronavirus pandemic, it’s become bigger. One major reason is that the decrease in traffic has led to significantly reduced CO2 emissions during quarantine. Now multiple green companies are looking for increased capital to expand and bring products and technology to the market to help.
According to Array, solar is the fastest-growing form of electricity generation in the U.S. Annual installations of ground-mounted solar generation capacity grew at a 20% compound annual growth rate (CAGR). The company cites data from IHS Markit, which forecasts that the growth will continue, increasing from a capacity of 10.9 gigawatts (GWs) in 2019 to 19.6 GWs in 2023.
Part of this comes from states creating regulations that require a certain amount of energy sold within the state to come from renewable sources. As of June 2020, 30 U.S. states, three territories and Washington D.C. had such regulations in place. A number of states have also passed legislation aiming for 100% renewable or clean energy by 2030. Array believes this will lead to an increased number of power producers building solar energy projects to meet the goal.
Another factor is electrification, and the best example is the automotive industry. Fossil fuels are used for many forms of energy, but they create greenhouse gas emissions. That’s why electric vehicle companies like Fisker, Hyliion and Lordstown Motors are all looking to go public and raise funds for their projects. Array believes that an increase in electricity consumption will lead to an increase in solar energy projects.
Array says trackers are the fastest growing ground-mounting system for solar projects in the U.S. Installation of trackers grew at a CAGR of 35% from 2017 to 2019. And the number of ground-mounted installations that use trackers increased from 60% in 2017 to 70% in 2019. The company claims the increase in demand for trackers rather than overall mounting systems is because trackers help create more energy for a lower overall cost. It also claims IHS Markit forecasts annual installations of trackers will grow at a CAGR of 19% between 2019 and 2023.
Investors looking at Array Technologies’ stock are excited about the company’s potential for long-term growth. And a growing market is key to that success. But the Array Technologies IPO also revealed the company is now making a profit.
Array Technologies Stock: The Finances
Finances are important to look at with any investment. And IPOs are often startups that have little to no revenue or aren’t profitable. But as of 2019, Array both has a healthy revenue stream and is profitable. In fact, the company saw great growth over the last couple of years.
In 2018, Array’s revenue was $290.8 million. That grew to $647.9 million in 2019, a growth rate of 123%. And for the first six months of 2019, the company reported $225.4 million in revenue. That more than doubled as well, with Array reporting revenue of $552.6 million on June 30, 2020. That’s a growth rate of 145%.
But the company’s gross profit grew even more than that. It went from $11.6 million in 2018 to $150.8 million in 2019, a growth rate of 1,200%. And although its growth hasn’t been as impressive in 2020, the company has still seen a large increase. Gross profit for June 2019 was $43.2 million. That grew 225%, to $140.6 million, in 2020.
Array’s net profit is also growing, despite the company becoming profitable only last year. In 2018, the company had a net loss of $60.7 million. But in 2019, Array turned a profit of $39.7 million. The company currently is making profit in 2020, reporting $76 million for the first six months.
So Array seems to be a growing, profitable company in a growing market. And that makes Array Technologies stock look like an ideal investment. But let’s look at the Array Technologies IPO to see if it was successful.
Array IPO Details
Array Technologies became a publicly traded company on October 15, 2020. The company offered 47.5 million shares, an upsized offering from its original plan of 33.75 million shares. The price range was $19 to $21, and stock ended up selling for $22 a share on opening day. This raised just over $1 billion, giving Array a market cap of $2.8 billion. Array Technologies stock trades on the Nasdaq under the ticker symbol ARRY.
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The Array Technologies IPO appears to have been successful as the share price soared 65.8% on the first day. If the company and its market maintain strong growth, Array Technologies stock could be a great investment opportunity.