Albuquerque-based Array Technologies has taken a beating since going public in October 2021 on the Nasdaq Global Market, with inflation and supply-chain challenges eroding its bottom line.
The company — which makes solar trackers that increase electric generation from utility-scale arrays by tilting and turning panels to follow the sun — reported a $22 million net income loss for first-quarter 2022 in its latest earnings report, released Tuesday.
Array had already reported a full-year, $50.4 million net loss in 2021, marking a sharp reversal from 2020, when the company generated a $59.1 million profit.
The losses reflect adverse market conditions that are buffeting industry across the board as companies struggle to manage pandemic-induced supply-chain constraints and record-level inflation.
But despite the challenges, Array continues to build a solid foundation for future growth, with $2 billion in backlogged orders for its solar trackers, or nearly triple the $705 million in cumulative contract awards it had reported in December 2020.
And while the company continues to rack up losses, efforts to improve supply-chain management, control costs and deliver product to customers on time are significantly stabilizing operations and finances, Chief Financial Officer Nipul Patel said in an earnings conference call.
“We have near-term headwinds, but 2022 will still be a good operational year for us,” Patel told investors Tuesday.
Since spring 2021, the company has significantly broadened its supply chain, adding 20 new suppliers and signing multi-year contracts to ensure long-term flow of materials and components. It’s also restructured its contract administration to account for inflation, locking in more accurate pricing with developers and negotiating more favorable terms for shipping and logistics.
That’s improving gross margins, which had decreased from 23.2% in 2020 to 9.7% last year, while also stabilizing revenue flow, Patel said.
Revenue had declined slightly last year, falling 2% to $853.3 million. But the company reported $300.6 million in revenue in first-quarter 2022, up from $248.2 million in the same period last year.
In part, additional first-quarter revenue reflects Array’s acquisition last fall of Spanish company Soluciones Técnicas Integrales Norland, S.L., which also makes solar trackers for international markets. That transaction cost Array about $661 million in cash and stock. But it helps diversify markets, significantly increasing income from foreign contracts.
STI contributed about $50 million to this year’s first-quarter revenue.
The company projects up to $1.5 billion in revenue this year. But that depends on market conditions, including a federal trade investigation that could lead to new tariffs on solar panel imports from some Asian countries, potentially costing Array up to $250 million in postponed contracts, the company said Tuesday.
Continued supply-chain issues from the pandemic, and from the conflict in Ukraine, may also impact operations, said Kevin Hostetler, who became Array’s new CEO in April..
“(Those things) will create a difficult overhang for the remainder of the year,” Hostetler said in a statement.
Meanwhile, the company’s stock has tanked, trading at $6 per share as of early Friday afternoon. That’s down from more than $40 in January 2021.