Shares of Array Technologies (NASDAQ:ARRY) are getting crushed in pre-market trading on Wednesday after the solar energy equipment maker disappointed investors with yesterday’s quarterly report. ARRY stock is off more than 28%.
Revenues decreased 44% to $245.9 million compared to $437.7 million for the prior-year period, primarily driven by a reduction in the amount of ITC safe harbor related shipments, the company reported.
Gross profit decreased 63% to $43.9 million, compared to $118.4 million in the prior year period. The company says lower volume in the corner drove this dip.
Gross margin decreased from 27% to 18%, driven by less revenue to absorb fixed costs, higher margins on the 2020 safe harbor shipments, higher input costs due to a rapid increase in commodity prices and greater freight costs resulting in part from disruptions caused by the winter storm in Texas as well as port closures and congestion.
However, the bigger disappointment was Array management’s failure to confirm or update full-year guidance for investors.
“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,” CFO Nipul Patel said in a company release.
ARRY Stock Faces Clean Energy Challenges
To be sure, ARRY stock is subject to the challenges facing a roster of clean energy stocks. Along with hydrogen fuel cells, biodiesels and natural gas, solar stocks have soared as governments look to roll out clean energy policies worldwide.
The U.S. political climate clearly has been a catalyst for clean energy stocks. Investors are betting that government support can finally get the entire industry to the promised land of consistent profits and sustainable shareholder returns.
For those and other reasons, ARRY stock was one of October’s hottest initial public offerings. Investors grabbed up shares of the second-largest manufacturer of ground-mounting systems for solar energy that help panels move as they track the sun.
Raising $675 million at a then-$2.5 billion market capitalization, investors saw Array as a winner with a long growth runway ahead of it. It was also already profitable.
After touching a high price of $51.05 a share in mid-January, ARRY stock lost most of its momentum, declining 49.8% through yesterday’s market close.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News, McKinsey & Co. and McDonald & Company Investments.