Array Technologies (NASDAQ:ARRY), one of the world’s largest manufacturers of ground-mounting systems used in solar energy projects, was down by more than 33% as of 11am today morning.
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The company released dismal financial results for the first quarter ended March 31, 2021 after market close yesterday and did not affirm its prior guidance for the full-year.
The company went public on October 15, 2020 at an IPO price of $22 a share, and the stock touched a high of $54.78 in January this year before starting to sell off. Currently, it’s trading below the IPO price.
Financial highlights for Q1 2021
The company reported revenues of $245.9 million, down 44% from the $437.7 million for the prior-year period.
The gross profit plunged 63% from $118.4 million in Q1 2020 to $43.9 million in Q1 2021, driven primarily by lower volumes in the quarter. The gross margin decreased from 27% to 18% amid higher input costs due to a rapid increase in commodity prices and greater freight costs.
Net income came in at $2.9 million compared to $73.7 million in the same period of last year. Basic and diluted earnings per share were $0.02 compared to $0.61 during the same period in the prior year.
Adjusted EBITDA decreased 69% to $34.5 million, compared to $110.7 million for the prior-year period.
Reason for poor performance
Revenues were lower compared to last year because of the high volume of shipments in the first quarter of 2020 with customers ‘safe harboring’ tracker systems in connection with the Investment tax credit (ITC) step-down.
“Steel represents almost half of our cost of goods sold and we do not hold large amounts of steel inventory, so a significant increase in the price of steel over a short period of time can negatively impact our results,” said Jim Fusaro, Chief Executive Officer of Array Technologies.
From Q1 2020 to Q1 2021, steel prices have more than doubled and have continued to increase into the second quarter of this year.
What to Expect going forward
The company did not reaffirm its prior guidance for the full year which further added to the disappointing results of the last quarter.
“Given the continuing increases we are seeing in steel and freight costs as well as our ongoing review of open contracts to assess what costs we will pass on to customers, we are not able to affirm our previously provided guidance for the full year,” said Nipul Patel, Chief Financial Officer of Array Technologies.
Mr. Fusaro added that the outlook for solar remains favorable and the company is seeing strong demand for its products. He further said, “the near-term pressure that is being created by the current environment may enable us to accelerate our market share gains because some of our competitors may not be able to deliver on customer commitments given their inability to procure raw materials at a competitive price or at all.”
Total executed contracts and awarded orders for the company stood at $777.1 million as of March 31, 2021.