Shares of Array Technologies (ARRY 3.85%) were down 18.5% as of 3 p.m. ET Wednesday after the solar project technology company announced mixed quarterly results and lowered its full-year outlook.
For its third quarter of 2023, Array Technologies' revenue fell 32% year over year to $350.4 million, translating to non-GAAP (adjusted) net income of $31.4 million, or $0.21 per share. Analysts, on average, were looking for lower adjusted earnings of $0.13 per share, but on higher revenue of $377 million.
A tough environment for Array Technologies
Array's top-line decline stemmed from a 22% reduction in the total number of megawatts (MWs) shipped and a 12% drop in average selling price (ASP). Total executed contracts and awarded orders arrived at $1.6 billion during the quarter, including $1.4 billion from the company's Array Legacy Operations segment and $200 million from its STI Norland business.
"Despite the near-term secular challenges which impacted our volume when compared to the prior year, Array again delivered another strong quarter across all of our key metrics," CEO Kevin Hostetler said in a press release. Hostetler added that revenue was roughly in line with the company's internal projections, while adjusted gross margin of 26% was stronger than expected.
Array also generated better-than-expected free cash flow of $69.4 million during the quarter, prompting the company to make a $50 million prepayment on its term loan -- all in keeping with previously discussed deleveraging initiatives.
What's next for Array Technologies stock?
Despite Q3 revenue arriving in line with management's expectations, Array Technologies lowered its full-year 2023 outlook to call for revenue of $1.525 billion to $1.575 billion (down from $1.65 billion to $1.725 billion before), adjusted EBITDA of $280 million to $290 million (narrowed from $280 million to $295 million previously), and adjusted net income per share of $1 to $1.05 (narrowed from prior per-share earnings guidance of $1 to $1.07).
To blame, Hostetler explained, are "short-term delays in project timing driven by customer pushouts." This is a near-term issue that should resolve itself as those projects come to fruition in 2024.
In a market that hates being effectively told to hurry up and wait, however, it's obvious investors are displeased today. Until there are more tangible signs of balance sheet improvement and an eventual return to sustained profitable growth, I suspect this leading renewable energy stock will remain under pressure.
