Array Technologies to Merge With Shoals, Cuts 2026 Outlook

Array Technologies (NASDAQ: ARRY) announced an all-stock merger with Shoals Technologies Group that would give Shoals shareholders about 65% of the combined company, as Array separately reported lower third-quarter revenue and margins and reduced its 2026 guidance. The transaction is intended to create an integrated energy-infrastructure provider spanning solar trackers, foundations, electrical balance-of-system products and wire management.

Array will be the surviving legal entity, and its common stock will serve as the combined company’s equity. Shoals shareholders will receive 1.6931 Array shares for each Shoals share, while existing Array shareholders will own approximately 35% of basic shares outstanding. The companies expect the transaction to close in the first quarter of 2027, subject to shareholder and regulatory approvals and other customary conditions.

Shoals Chief Executive Brandon Moss will lead the combined company, while Array CEO Kevin Hostetler will move into a special-adviser role. Brad Forth will remain chairman. A new corporate name and ticker symbol are expected to be announced in the coming months.

Array lowers 2026 outlook after weaker third quarter

Array reported third-quarter revenue of $330.2 million, down 16.1% from $393.5 million a year earlier and 3% below the second quarter. Gross profit declined to $69.2 million from $105.7 million a year earlier, while gross margin narrowed to 21.0% from 26.9%.

Adjusted gross margin was 22.8%, compared with 28.1% in the prior-year period and 30.8% in the second quarter. The company said the result included an $11 million noncash reserve related to a 2023 Section 45X receivable, representing a 330-basis-point impact. Domestic input costs and international sales mix also weighed on profitability.

Array recorded GAAP net income of $8.2 million, but preferred dividends and accretion resulted in a $7.9 million net loss attributable to common shareholders, or $0.05 per diluted share. Adjusted net income was $9.4 million, or $0.06 per share. Adjusted EBITDA fell to $32.1 million from $72.2 million a year earlier, and adjusted EBITDA margin contracted to 9.7% from 18.3%.

Operating cash flow was $4.6 million, and free cash flow was negative $1.1 million after $5.7 million of capital expenditures. Array ended September with $143.3 million of cash and cash equivalents, $530 million of net debt and $465.9 million of available liquidity.

The company revised its full-year 2026 revenue guidance to $1.34 billion to $1.4 billion from $1.4 billion to $1.5 billion. It now expects adjusted EBITDA of $190 million to $210 million, compared with its previous range of $210 million to $230 million, and adjusted earnings of $0.57 to $0.69 per common share, down from $0.68 to $0.75. Fourth-quarter revenue is expected to range from $445 million to $505 million, including contributions from Affordable Wire Management, which Array acquired on August 31.

Management attributed project-timing extensions to policy uncertainty, financing conditions and delays in notices to proceed. Some deliveries have shifted into 2027, although the company described the fourth quarter as its peak delivery period. About 80% of Array’s total orderbook and 70% of its domestic tracker orderbook are scheduled for delivery over the next six quarters.

Despite the near-term pressure, Array’s orderbook reached a fourth consecutive record of $2.6 billion, up 42% year over year. The company booked more than $400 million of new orders for a fifth consecutive quarter, while trailing-12-month net new orders exceeded $1.8 billion at a book-to-bill ratio of 1.6 times. Products introduced more recently, including offerings from the APA and AWM acquisitions, represented nearly 60% of the orderbook.

Shoals posts record quarterly revenue

Shoals reported third-quarter revenue of $195.3 million, up 43.8% year over year, reflecting what the company described as a meaningful sequential production improvement. Gross profit was $62.4 million, with a gross margin of 31.9%, while adjusted EBITDA reached $39.8 million for a margin of 20.4%. GAAP net income was $17.9 million.

Shoals generated $28.9 million of operating cash flow and reduced revolving-credit borrowings by $33 million during the quarter. Its backlog and awarded orders totaled $792 million. The company said quarterly bookings kept its book-to-bill ratio at 1.0 despite record revenue, while quoted opportunities approached $1 billion.

Combined company targets cross-selling and cost savings

Management expects the merger to expand the companies’ access to solar infrastructure spending by offering foundations, trackers, electrical balance-of-system products and wire management through a single platform. Based on projects sold from January 2025 through September 2026, only about 20% of combined project volume used products from both companies. The presentation estimated roughly $2.5 billion of incremental annualized sales potential if the full product suite had been sold into every project served by either business, though that figure is illustrative rather than a forecast.

The companies are targeting more than $100 million of annual incremental adjusted EBITDA from cost and commercial synergies by the third year after closing, including about $35 million in the first year. Planned savings include eliminating duplicate public-company and corporate costs, consolidating parts of the organization, and reducing freight, legal, technology and professional-service expenses. Revenue opportunities are expected to come from cross-selling and integrated products.

The combined company’s indicative 2027 pro forma outlook calls for revenue of $2.2 billion to $2.4 billion and adjusted EBITDA of $410 million to $480 million, supported by $3.4 billion of combined backlog and awarded orders as of September 30. The companies stressed that these unaudited ranges are intended to illustrate potential scale and do not constitute standalone projections for either business.

Beyond solar, management identified battery energy storage systems and data centers as expansion areas. The companies estimated that their addressable U.S. opportunity in those markets could increase from about $3 billion in 2026 to approximately $5 billion in 2030.

Preferred-stock reduction and transaction risks

Array committed to redeem $161.3 million of Series A preferred stock within 90 days after closing and another $156.3 million over the following three years. Management expects the total $317.5 million reduction to lower preferred-stock cash distributions by nearly $100 million over five years. The combined company would have pro forma net leverage of 2.6 times estimated 2026 adjusted EBITDA, with management estimating leverage below two times by the end of 2027.

Completion remains contingent on approvals from both companies’ shareholders and regulators. The presentation also identified integration costs and delays, failure to achieve planned synergies, disruption to customer or supplier relationships, management distraction and difficulties retaining key employees as transaction risks. Broader uncertainties include solar-project delays, interest rates, access to capital, tariffs, regulatory changes and the companies’ ability to convert backlog into revenue.