What happened
Shares of Array Technologies (ARRY 1.18%), 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.
So what
Yesterday's drop came after the company reported first-quarter 2021 earnings. Though results weren't far from expectations, the company highlighted growing freight and steel costs when saying it needed to review open contracts amid rising input costs and CFO Nipul Patel said in a statement that the company was "not able to affirm our previously provided guidance for the full year."
Image source: Getty Images.
Now what
Another announcement the company made yesterday could help address its steel cost issue. Array and Nucor (NUE +0.27%), North America's largest steelmaker, announced a supply agreement that will provide Array a supply of sustainably produced domestic steel for tubing, clamps, foundations and brackets, and other components used in its solar projects.
Array CEO Jim Fusaro said in a statement, "As Array invests in innovation and develops technologies that will decrease installation time and bring down levelized cost of energy for our customers, we are proud to say that our products will be made with sustainably sourced materials."
The agreement didn't provide details on cost or volume, but it would be beneficial for both parties if volume and pricing levels were part of the deal. Array said in its quarterly update it believes the outlook for increasing solar capacity remains strong. Fusaro added that the company would "look for opportunities to use the current environment to play offense by leveraging our size and scale." The deal with Nucor seems to be some of what he's referring to, and investors may be seeing yesterday's sell-off as overblown considering the strength in the overall sector.
