Listed solar tracker companies bearing the brunt of costs that show little sign of abating Email
The cost of hot-rolled coil steel has gone through the roof since April 2020. Image: Array Technologies.
Array Technologies’ Q1 2021 results, published last week, were illustrative not just for the company, but for the solar tracker market in general.
Posting an earnings miss is not usually conducive to appeasing shareholders or analysts, but withdrawing full-year guidance on the back of spiralling costs and volatile, unpredictable market conditions is enough to trigger serious disappointment and questioning.
The problem, as Array chief executive Jim Fusaro revealed, is the cost of hot-rolled coil steel used in Array’s products, which has spiralled to “unprecedented” levels over the course of the last year and continued to rise even further in the post-reporting period.
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Howard grew up in Philadelphia watching the Philly sports teams struggle for championships. He has been investing since 1989 and been a Fool since 2001. Prior to joining The Fool as a contract writer in 2019, Howard worked in the steel business as an engineer for 28 years. When he isn’t writing, he is usually out for a run, or relaxing to the music of the Grateful Dead.
What happened
Shares of
Array Technologies (NASDAQ:ARRY), a manufacturer of ground-mounted systems for large-scale solar energy projects, are making a bit of a recovery today after a 46% crash on Wednesday. As of 12:40 p.m. EDT, its shares had rebounded 6.4% from Wednesday s closing price.
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Array Technologies withdraws 2021 guidance amidst ‘unprecedented’ rise in materials, logistics costs
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The cost of steel used in Array’s tracker products has more than doubled over the last year. Image: Array Technologies.
Array Technologies has withdrawn its guidance for 2021 after experiencing “unprecedented” increases in material and logistics costs which severely impacted earnings in the first quarter.
Reporting its Q1 2021 results yesterday, Array revealed lower than expected adjusted earnings of US$34.5 million for the reporting period, a 69% drop year-on-year, on the back of headwinds caused by spiralling costs of steel and logistics constraints.
Revenue fell by around 44% year-on-year to US$245.9 million, attributed by Array to unseasonably high revenues recorded in Q1 2020 as developers procured components for safe harboring ahead of the step-down in investment tax credit levels.