Solar tracking systems provider Array Technologies (NASDAQ: ARRY) stock has fallen below its pandemic lows despite improving business. The Company manufactures and supplies single-axis solar tracking systems that enable the optimal positioning of a solar array to increase clean and renewable energy production. Its systems help lower lifetime costs by over 7% and over 31% lower lifetime O&M. The Company plays right into the ESG theme by making solar energy systems more efficient. However, a glance at the horrifying share price collapse would make you think the Company was going out of business. Shares peaked at $54.78 in January 2021 and stumbled to a low of $8.28 on Feb. 24, 2022, before staging a rally that is fizzling out again. Inflationary pressures hit hard with extensive spikes in commodities and materials pricing along with increased logistics costs. Historically, these costs tend to fall, not rise. These headwinds cut right into margins causing a miss which was accentuated by the shifting of deliveries to the next quarter. Management believes this is transitory and with a newly appointed CEO, investors may be seeing a light at the end of the tunnel. The Company continues to grow top-line beats and is guiding towards profitability next year as it surpasses the $1 billion revenue mark. Prudent and patient investors can watch for opportunistic pullbacks to scale into a position.
Q4 Fiscal 2021 Earnings Release
On April 5, 2022, Array released Q4 fiscal 2021 results for the quarter ending in December 2021. The Company earnings reported per share (EPS) of (-$0.06) excluding non-recurring items, missing analyst consensus estimates of (-$0.03), by $0.03. Revenues rose 21.8% year-over-year (YoY) to $219.88 million, beating analyst estimates for $213.19 million. Supply chain disruptions resulted in higher material costs. Executed contracts and awards hit a new record of $1.8 billion on Dec. 31, 2021.
Full-Year 2022 In-Line Guidance
Array raised its full-year fiscal 2022 earnings guidance with EPS ranging between $0.55 to $0.74 versus consensus analyst estimates for $0.71. Full-year fiscal 2022 revenues are estimated between $1.45 billion to $1.75 billion beating consensus analyst estimates of $1.46 billion. The Company appointed a new CEO Kevin Hostetler from Rotork. Array CEO Jim Fusaro commented We delivered revenue in line with expectations for the fourth quarter and the full year of 2021. That said, our full-year 2021 revenue and adjusted EBITDA were adversely impacted by approximately $7 million from the shifting of revenue into future periods Due to the restatement of the first three quarters of 2021, as discussed in our Form 8-K filed on March 29, 2022. It is, however, important to reiterate that the total overall contractual revenue and cash flow for these projects remains unchanged and that this shifting is merely a timing issue.”
Conference Call Takeaways
CEO Fusaro highlighted the three key risks in the industry and how the company is mitigating them. The first was rising commodities and logistics costs. Array is providing fixed tracker pricing and confidence in material availability to fend off the pricing volatility for customers. The global tightening of supply chains and available logistics has been driving longer lead-times making it tougher to get the right parts to the right destinations in a timely manner. Array added 20 new suppliers with its STI acquisition to help mitigate the pressures stemming for supply chain disruption. Lastly, the US regulatory environment fosters uncertainty with a potential headwind from the AD/CVD inquiry. Array isn’t affected directly since they don’t procure modules, but their availability impacts their clients with their build schedules. This in turn impacts Array. They have been actively providing outreach initiatives in Washington, DC to educate Congress, while engaging clients to ascertain the certainty of module supplies. Array is working with customers on-site for redesign efforts of module swap-outs as needed. The STI acquisition has also enabled Array to diversify its business internationally which offsets some of the exposure in the US He concluded, “Over the last few years, we’ve transformed into a global renewable energy leader with an incredible platform to grow even bigger. The pieces are in place, and I look forward to seeing the great things this company will do in the future. So, I would like to not only thank my management team but the entire organization for their support over the last several years. It has been quite a ride”
ARRY Opportunistic Pullback Levels
Using the rifle charts on weekly and daily time frames provides a precise view of the landscape for ARRY stock. The weekly rifle chart downtrend made an initial bottom off the $18.02 Fibonacci (fib) level.
The weekly market structure low (MSL) buy triggered a breakout through $11.84 as shares peaked out at $13.96 before sinking again on earnings. The weekly rifle chart is in a make-or-break setup that will resolve in either an inverse pup breakdown or a stochastic mini pup breakout. The weekly 5-period moving average (MA) is stalled at $11.41 with a 15-period MA at $11.17. The weekly lower Bollinger Bands (BBs) sit at $3.35 and 50-period MA at $16.07. The weekly stochastic had a mini pup that coiled through the 20-band but is stalling just under the 40-band as shares plummet. The daily rifle chart has a downtrend with a falling 5-period MA overlapping the 50-period MA resistance at $10.65 with 15-period MA falling at $11.82. The daily lower BBs sits at $8.62. On the upside, the daily upper BB sits at $15.02 and the daily 200-period MA sits at $15.69. The daily stochastic is a full oscillation down through the 20-band on a mini inverse pup. Prudent investors can watch for opportunistic pullback levels at the $8.70, $8.02 fib, $7.46, $6.64 fib, $5.59, and the $4.44 fib levels. Upside trajectories range from the $13.09 fib level up to the $19.78 fib level.