Energy Business

Array Technologies Sizzles in Solar Tracker IPO

Array Technologies, Inc. (NASDAQ: ARRY) has traded sharply higher on its debut in trading. The New Mexico-based maker of solar ground mounting systems and “trackers” priced its initial public offering at $22.00 per share. This is definitely considered to be a hot IPO, but the ownership structure may act as an overhang after the dust settles.

A total of 47.5 million shares sold, but the company itself only sold 7 million shares to add $154 million in capital. The remaining 40.5 million shares were sold by affiliates of Oaktree Capital.

Thursday’s IPO had already priced above the last range of $19 to $21 per share, but its stock traded up at $29.50 upon opening and its high print on last look was up over 50% from its formal IPO pricing at $33.25.

With about 127 million shares outstanding, the IPO price of $22 already gave Array Technologies a market capitalization of about $2.8 billion. The higher $33 handle would give Array a market cap of about $4.2 billion.

The company changed its name from ATI Intermediate Holdings, LLC upon the launch of the offering. As of June 30, 2020, Array had 343 full-time employees and the company noted that it has not experienced any employment-related work stoppages.

One interesting aspect about this offering is that the Oaktree affiliates selling the shares had been increasing the number of shares that it wanted to sell ahead of the IPO. The selling shares from the investment group started out as 26.75 million earlier in October, but that bumped up to 38 million shares and then ultimately to the 40.5 million shares.

Array Technologies posted net income of $76.1 million off of $552.6 million in revenues for the first half of 2020. That is up from a net loss of $5.2 million and $255.4 million in revenues for the first six months of 2019. For 2019, revenue rose 123% to $647.9 million and its net income was $39.7 million.

The company’s IPO filing also disclosed the undiscounted future expected payments under the Tax Receivable Agreement as more than $62 million in 2020 and over $1.7 million in the years 2021 to 2024.

The IPO had a rather large underwriting syndicate with Goldman Sachs, JPMorgan, Guggenheim and Morgan Stanley listed as the joint book-running managers. Credit Suisse, Barclays, UBS, Cowen, Oppenheimer, MUFG and Nomura were also listed as underwriters on the IPO documents.

This was already set up to be a busy week for the IPO market.

It is not difficult to understand why there is strong interest in Array Technologies. Many investors are having a hard time finding fresh alternative energy and renewable energy investments that are already established and well-heeled in their industry. What makes this one different is that the company is still effectively controlled by affiliates of Oaktree, and if they wanted to upsize their share sales at the offering then they may be even more likely to want to sell more shares as soon as they are able to.

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