What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-12 compared with 2021-05-11 · 194 added, 85 removed, 379 unchanged (42% of the section changed)

4 unchanged sentences

(in thousands, except per share and share amounts)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current assets

30 unchanged sentences

Commitments and contingencies (Note 12)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Preferred stock of 0.001 par value - 5,000,000 shares authorized;

none issued as of March 31, 2021 and December 31, 2020

none issued as of June 30, 2021 and December 31, 2020

Common stock of $ 0.001 par value - 1,000,000,000 shares authorized;

126,994,467 shares issued as of March 31, 2021 and December 31, 2020

126,994,467 shares issued as of June 30, 2021 and December 31, 2020

Additional paid-in capital 149,893 140,473

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Revenue $ 202,796 $ 114,916 $ 448,728 $ 552,634

8 unchanged sentences

Other expense

Other (expense) income, net ( 78 ) 108

Other expense, net ( 122 ) ( 2,242 ) ( 200 ) ( 2,134 )

Interest expense ( 6,651 ) ( 2,411 ) ( 15,660 ) ( 7,640 )

Total other expense ( 6,773 ) ( 4,653 ) ( 15,860 ) ( 9,774 )

Income before income tax expense 3,966 96,227

Income tax expense 1,079 22,542

Net income $ 2,887 $ 73,685

Earnings per share

Income (loss) before income tax expense ( 1,067 ) ( 3,442 ) 2,899 92,785

Income tax expense (benefit) ( 1,050 ) ( 5,834 ) 29 16,708

Net income (loss) $ ( 17 ) $ 2,392 $ 2,870 $ 76,077

Earnings (loss) per share

Basic $ — $ 0.02 $ 0.02 $ 0.63

8 unchanged sentences

(in thousands)

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

Preferred Stock Common Stock Additional

Shares Amount Shares Amount paid-in capital Retained earnings Total Stockholders’ Deficit

Balance, December 31, 2020 — $ — 126,994 $ 127 $ 140,473 $ ( 221,499 ) $ ( 80,899 )

Balance, March 31, 2021 — $ — 127 148,370 ( 218,612 ) $ ( 70,115 )

Equity-based compensation — — — — 1,523 — 1,523

Net Income — — — — — ( 17 ) ( 17 )

Balance, June 30, 2021 — $ — — $ 127 $ 149,893 $ ( 218,629 ) $ ( 68,609 )

For the Three Months Ended June 30, 2020

Units (*) Total Members’ Equity

Balance, March 31, 2020 1 $ 380,594

For the Three Months Ended March 31, 2020

Equity-based compensation 653

Net Income — 2,392

Balance, June 30, 2020 1 $ 383,639

(*) See note 2 - Summary of Significant Accounting Policies - corporate conversion and stock split

Array Technologies, Inc.

and Subsidiaries

Condensed Consolidated Statements of Changes in Member’s Equity/Stockholders’ Deficit (continued)

(in thousands)

For the Six Months Ended June 30, 2021

Preferred Stock Common Stock Additional

Shares Amount Shares Amount paid-in capital Retained deficit Total Stockholders’ Deficit

Balance, December 31, 2020 — $ — 126,994 $ 127 $ 140,473 $ ( 221,499 ) $ ( 80,899 )

Equity-based compensation — — — — 9,420 — 9,420

Net Income — — — — — 2,870 2,870

Balance, June 30, 2021 — $ — 126,994 $ 127 $ 149,893 $ ( 218,629 ) $ ( 68,609 )

For the Six Months Ended June 30, 2020

Units (*) Total Members’ Equity

2 unchanged sentences

Net Income — 76,077

Balance, March 31, 2020 1 $ 380,594

Balance, June 30, 2020 1 $ 383,639

(*) See note 2 - Summary of Significant Accounting Policies - corporate conversion and stock split.

4 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows used in operating activities

9 unchanged sentences

Warranty provision 425 597

Provision for inventory obsolescence 1,236 221

Changes in operating assets and liabilities

17 unchanged sentences

Principal payments on term loan facility ( 31,075 ) ( 57,702 )

Payments on related party loans — ( 21,736 )

Contingent consideration ( 7,810 ) —

Debt issuance costs ( 6,590 ) —

Net cash used in financing activities ( 36,590 ) ( 57,692 )

Net cash provided by (used in) financing activities 56,525 ( 75,108 )

Net decrease in cash, cash equivalents and restricted cash ( 90,759 ) ( 323,273 )

10 unchanged sentences

The Company is headquartered in Albuquerque, New Mexico, and manufactures and supplies solar tracking systems and related products for customers across the United States and internationally.

The Company, through its wholly-owned subsidiaries, High Desert Finance, LLC (“HDF”) and ATI Investment Holdings, Inc.

The Company, through its wholly-owned subsidiary, ATI Investment Holdings, Inc.

(“ATI Investment”) owns two other subsidiaries through which it conducts substantially all operations;

4 unchanged sentences

The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021 or any other interim periods, or any future year or period.

The balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date.

11 unchanged sentences

For EGCs, the ASU is effective for fiscal years beginning after December 15, 2021.

The Company early adopted the new standard using the modified retrospective method by recording and right-of-use asset of $ 13.2 million, short-term portion of lease liabilities of $ 6.3 million and long-term portion of lease liabilities of $ 7.2 million as of the effective date.

The Company early adopted the new standard using the modified retrospective method by recording a right-of-use asset of $ 13.2 million, short-term portion of lease liabilities of $ 6.3 million and long-term portion of lease liabilities of $ 7.2 million as of the effective date.

Prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods.

19 unchanged sentences

Principles of Consolidation

The consolidated financial statements include the accounts of Array Technologies, Inc.

The condensed consolidated financial statements include the accounts of Array Technologies, Inc.

and its Subsidiaries.

1 unchanged sentence

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Actual results could differ materially from those estimates.

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Significant estimates include impairment of goodwill, impairment of long-lived assets, fair value of contingent consideration, allowance for doubtful accounts, reserve for excess or obsolete inventories, valuation of deferred tax assets and warranty reserve.

Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements.

Due to the COVID-19 pandemic, there has been and will continue to be uncertainty and disruption in the global economy and financial markets.

Management has made estimates and assumptions taking into consideration certain possible impacts due to COVID-19.

These estimates may change, as new events occur, and additional information is obtained.

Actual results may differ from previously estimated amounts, and such differences may be material to the condensed consolidated financial statements;

however, management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements.

Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur.

Impact of COVID-19 Pandemic

2 unchanged sentences

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic.

To date, the Company has maintained uninterrupted business operations with normal turnaround times for its delivery of solar tracking systems.

Due to economic conditions our industry has seen rapid commodity price increases and strained logistics, causing us to experience temporary decreased margins and thus decreased cash from operations.

We have taken, and continue to take, mitigating steps to overcome the economic challenges and, therefore, believe the impact to be temporary, but cannot be certain the timing of when we will achieve better margins.

We have sufficient

liquidity and financing options available, and we expect to have sufficient liquidity to operate for the next 12 months.

The Company has implemented adjustments to its operations designed to keep employees safe and comply with federal, state and local guidelines, including those regarding social distancing.

3 unchanged sentences

On October 14, 2020, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective.

Under the 2020 Plan, the Company grants (i) restricted stock units (RSU’s) to its employees and non-employee directors in connection with their service on the board of directors, and (ii) performance stock units (“PSUs”) to certain of its executive officers and members of management.

Under the 2020 Plan, the Company may grant (i) restricted stock units (RSU’s) to its employees and non-employee directors in connection with their service on the board of directors, and (ii) performance stock units (“PSUs”) to certain of its executive officers and members of management.

The PSUs contain performance and market conditions.

17 unchanged sentences

Inventories consist of the following (in thousands):

March 31, 2021 December 31, 2020

June 30, December 31,

Raw materials $ 46,993 $ 39,051

4 unchanged sentences

Property, plant and equipment consisted of the following (in thousands):

Estimated Useful Lives (Years) March 31, 2021 December 31, 2020

Estimated Useful Lives (Years) June 30, December 31,

Land N/A $ 1,340 $ 1,340

8 unchanged sentences

Property, plant and equipment, net $ 9,763 $ 9,774

Depreciation expense was $ 0.6 million and $ 0.5 million for the three months ended March 31, 2021 and 2020, respectively, of which $ 0.5 million and $ 0.4 million, respectively, has been allocated to cost of revenue and $ 0.1 million and $ 0.1 million, respectively, is included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020.

Depreciation expense was $ 0.6 million and $ 0.6 million for the three months ended June 30, 2021 and 2020, respectively, of which $ 0.5 million and $ 0.5 million, respectively, has been allocated to cost of revenue and $ 0.1 million and $ 0.1 million, respectively, is included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended June 30, 2021 and 2020.

Depreciation expense was $ 1.2 million and $ 1.2 million for the six months ended June 30, 2021 and 2020, respectively, of which $ 1.0 million and $ 1.0 million, respectively, has been allocated to cost of revenue and $ 0.2 million and $ 0.2 million, respectively, is included in depreciation and amortization in the accompanying consolidated statements of operations for the six months ended June 30, 2021 and 2020.

Goodwill and Other Intangible Assets

1 unchanged sentence

As of July 8, 2016 (the “Acquisition Date”), goodwill was $ 121.6 million.

As of March 31, 2021 and December 31, 2020 goodwill totaled $ 69.7 million, net of accumulated impairment of $ 51.9 million and is not deductible for tax purposes.

As of June 30, 2021 and December 31, 2020 goodwill totaled $ 69.7 million, net of accumulated impairment of $ 51.9 million and is not deductible for tax purposes.

Other Intangible Assets

Other intangible assets consisted of the following (in thousands):

Estimated Useful Lives (Years) March 31, 2021 December 31, 2020

Estimated Useful Lives (Years) June 30, December 31,

Developed technology 14 $ 203,800 $ 203,800

11 unchanged sentences

Total other intangible assets, net $ 186,507 $ 198,260

Amortization expense related to intangible assets amounted to $ 5.9 million for the three months ended March 31, 2021 and 2020, respectively.

Amortization expense related to intangible assets amounted to $ 5.9 million for the three months ended June 30, 2021 and 2020, and $ 11.8 million for the six months ended June 30, 2021 and 2020, respectively.

Investment in Equity Security

The Company made a $ 10.0 million investment in preferred stock of a private company in the three months ended March 31, 2021.

The Company made a $ 10.0 million and $ 2.0 million investment in preferred stock of a private company in February 2021 and April 2021, respectively.

The investment is accounted for in accordance with ASC 321 at its cost less any impairment.

The investment balance as of March 31, 2021 is $ 10.0 million and is recorded in other assets on the condensed consolidated balance sheet.

There is no impairment recorded for the three months ended March 31, 2021.

The investment balance as of June 30, 2021 is $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheet.

There is no impairment recorded for the three and six months ended June 30, 2021.

The Company follows guidance under ASC Topic 740-270, Interim Reporting, which requires that an estimated annual effective tax rate is applied to year-to-date ordinary income.

1 unchanged sentence

The tax effect of discrete items is recorded in the quarter in which the discrete events occur.

For the three months ended March 31, 2021 and 2020 the Company recorded total income tax expense of $ 1.1 million and $ 22.5 million, respectively.

The effective tax rate was higher than the statutory tax rate of 21% primarily due to state income taxes, non-deductible equity-based compensation, Follow-on Offering costs and other non-deductible expenses for tax reporting purposes.

As of the three months ended March 31, 2021 and March 31, 2020, no reserves for uncertain tax positions have been recorded.

The Company recorded income tax expense (benefit) of $( 1.1 ) million and $( 5.8 ) million for the three months ended June 30, 2021 and 2020, respectively, and income tax expense of $ 29 thousand and $ 16.7 million for the six months ended June 30, 2021 and 2020.

The tax benefit in the three months ended June 30, 2021 is unfavorably impacted by non-deductible amounts for equity-based compensation and Follow-on Offering costs.

The tax benefit in the three months ended June 30, 2020 was favorably impacted by a tax benefit related to an

NOL carryback as a result of the CARES Act.

The tax expense in the six months ended June 30, 2021 was unfavorably impacted by non-deductible amounts for equity-based compensation and Follow-on Offering costs.

The tax expense in the six months ended June 30, 2020 was favorably impacted by a tax benefit related to an NOL carryback as a result of the CARES Act.

For the three and six months ended June 30, 2021 and 2020, no reserves for uncertain tax positions have been recorded.

The Company will continue to monitor this position each interim period.

Term and Revolving Loan

March 31, December 31,

Long-Term Debt

June 30, December 31,

Term loan facility $ 428,925 $ 460,000

8 unchanged sentences

On October 14, 2020, the Company entered into a senior secured credit facility consisting of (i) a $ 575 million senior secured seven-year term loan facility (the “Term Loan Facility”) and (ii) a $ 150 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

As of March 31, 2021, the Term Loan Facility had a balance of $ 430 million.

On February 23, 2021 the Company entered into the First Amendment (“First Amendment”) to it’s Senior Secured Credit Facility.

As of June 30, 2021, the Term Loan Facility had a balance of $ 428.9 million.

On February 23, 2021 the Company entered into the First Amendment (“First Amendment”) to its Senior Secured Credit Facility.

The First Amendment, in the case of the Eurocurrency borrowings, lowers the London interbank offered rate floor to 50 basis points from 100 basis points and lowers the applicable margin to 325 basis points from 400 basis points per annum.

This results in the current rate on the Term Loan Facility of 3.75 %.

This resulted in the current rate on the Term Loan Facility of 3.75 %.

On February 26, 2021, we entered into the incremental facility amendment No.

1 unchanged sentence

The Second Amendment increases the $ 150.0 million Revolving Credit Facility from $ 150.0 million to $ 200.0 million.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs of $ 34.0 million at March 31, 2021.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of March 31, 2021 is 5.01 %.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs of $ 32.7 million at June 30, 2021.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of June 30, 2021 is 5.01 %.

The Term Loan Facility has an annual excess cash flow calculation beginning with the year ended December 31, 2021 which could require the Company to make advance principal payments.

Letters of Credit

Under the Revolving Credit Facility, the Company had no outstanding balance, $ 39.7 million in standby letters of credit and availability of $ 160.3 million under the Revolving Credit Facility as of March 31, 2021.

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had $ 102.0 million outstanding balance, $ 11.0 million in standby letters of credit and availability of $ 87.0 million as of June 30, 2021.

Related Party Loan

The Company had a senior secured promissory note, as amended, with a unit holder of Former Parent that had a balance, net of debt discount and issuance costs as of March 31, 2020 of $ 41.8 million for which the Company paid interest expense for the three months ended March 31, 2020 of $ 1.7 million, which consisted of cash interest, PIK interest and amortization of the debt discount.

The note was no longer outstanding as of March 31, 2021 and had no balance or interest expense for the three months ended March 31, 2021.

The Company had a senior secured promissory note, as amended, with a unit holder of Former Parent that had a balance, net of debt discount and issuance costs as of June 30, 2020 of $ 41.8 million for which the Company paid interest expense for the three and six months ended June 30, 2020 of $ 1.7 million and $ 3.5 million, which consisted of cash interest, PIK interest and amortization of the debt discount.

The note was no longer outstanding as of June 30, 2021 and had no balance or interest expense for the three months ended June 30, 2021.

Based on Topic 606 provisions, the Company disaggregates its revenue from contracts with customers by those sales recorded over-time and sales recorded at a point in time.

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Over-time revenue $ 189,622 $ 98,637 $ 421,475 $ 516,598

8 unchanged sentences

Contract assets consisting of unbilled receivables are recorded within accounts receivable on the consolidated balance sheets on a contract-by-contract basis at the end of the reporting period and consisted of the following (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Unbilled receivables $ 37,567 $ 18,073

3 unchanged sentences

Contract liabilities consisting of deferred revenue recorded on a contract-by-contract basis at the end of each reporting period were as follows (in thousands):

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Deferred revenue $ 51,458 $ 149,821

During the three months ended March 31, 2021, the Company converted $ 101.8 million deferred revenue to revenue which represented 68.0 % of the prior years deferred revenue balance.

During the six months ended June 30, 2021, the Company converted $ 149.8 million deferred revenue to revenue which represented 100.0 % of the prior years deferred revenue balance.

Remaining Performance Obligations

As of March 31, 2021, the Company had $ 394.4 million of remaining performance obligations.

As of June 30, 2021, the Company had $ 197.5 million of remaining performance obligations.

The Company expects to recognize revenue on 100 % of these performance obligations in the next twelve months .

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):

Earnings (loss) per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except per share amounts):

Three Months Ended

Net income $ 2,887 $ 73,685

June 30, Six Months Ended

2021 2020 2021 2020

Net (loss) income $ ( 17 ) $ 2,392 $ 2,870 $ 76,077

Weighted-average shares 126,994 119,994 126,994 119,994

Earnings per share $ 0.02 $ 0.61

Earnings (loss) per share $ — $ 0.02 $ 0.02 $ 0.63

Weighted-average shares 126,994 119,994 126,994 119,994

1 unchanged sentence

Weighted average dilutive shares 126,994 119,994 127,203 119,994

Earnings per share $ 0.02 $ 0.61

There were 26,671,594 Class B units and 1,000 Class C Units of Former Parent issued to certain employees or directors of the Company which were not included in the calculation of basic or diluted EPS for the three months ended March 31, 2021 and 2020, as the Units do not represent potential units of the Company.

Earnings (loss) per share $ — $ 0.02 $ 0.02 $ 0.63

Potentially dilutive common shares issuable pursuant to equity-based awards were not included for the three months ended June 30, 2021 as their potential effect was anti-dilutive as the Company generated a net loss.

Commitments and Contingencies

The Company, in the normal course of business, is subject to claims and litigation.

Management believes that there are no outstanding claims or assessments against the Company that would result in a material unfavorable outcome.

The Company reviews the status of each matter and assesses its potential financial exposure.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company would accrue a liability for the estimated loss.

On May 14, 2021, a putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public

offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

Lead plaintiff motions were filed on July 13, 2021, and the Court is expected to appoint a lead plaintiff by August 12, 2021.

The Court has not yet set a schedule for the filing of an amended complaint or defendants’ anticipated motion to dismiss.

On June 30, 2021, a second putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11 and 15 of the Securities Exchange Act of 1933 alleging misstatements and/or omissions in certain of the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

On July 6, 2021, the Court entered an order, based on the record before the Court, that this action was in all material respects substantially similar to the Plymouth Action and both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

The Court consolidated this action with the Plymouth Action for all pretrial purposes, ordered all filings in connection with this Action to be made in the Plymouth Action, and removed this action from the docket.

On July 16, 2021, a verified derivative complaint was filed against certain officers and directors of the Company.

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for misleading proxy statements, (2) breach of fiduciary duty, (3) unjust enrichment, (4) abuse of control, (5) gross mismanagement, (6) corporate waste, (7) aiding and abetting breach of fiduciary duty, and (8) contribution under sections 10(b) and 21D of the Securities Exchange Act of 1934.

On July 21, 2021, the Court entered an order, based on the record before the Court, that this action was in all material respects substantially similar to the Plymouth Action and both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

On July 30, 2021, a second and related verified derivative complaint was filed against certain officers and directors of the Company.

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for causing the issuance of a false/misleading proxy statement, (2) breach of fiduciary duty, and (3) aiding and abetting breaches of fiduciary duty.

The Court has not yet entered an order consolidating this case with the Plymouth case.

At this time the Company believes that the likelihood of any material loss related to these matters is remote given the preliminary stage of the claims and strength of the Company’s defenses.

The Company has not recorded any material loss contingency in the Condensed Consolidated Balance Sheets as of June 30, 2021.

Contingent Consideration

Taxes Receivable Agreement

Concurrent with the Acquisition, Array Tech, Inc.

(f/k/a Array Technologies, Inc.) entered into a TRA with the former majority shareholder of Array.

(f/k/a Array Technologies, Inc.) entered into a Taxes Receivable Agreement (“TRA”) with the former majority shareholder of Array.

The TRA is valued based on the future expected payments under the agreement.

2 unchanged sentences

tax benefits deemed realized in post-closing taxable periods by Array, from the use of certain deductions generated by the increase in the tax value of the developed technology.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in general and administrative in the accompanying consolidated statements of operations.

As of March 31, 2021 and December 31, 2020, the fair value of the TRA was $ 19.8 million and $ 19.7 million, respectively.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in contingent consideration in the accompanying consolidated

statements of operations.

As of June 30, 2021 and December 31, 2020, the fair value of the TRA was $ 12.0 million and $ 19.7 million, respectively.

Estimating the amount of payments that may be made under the TRA is by nature imprecise.

The significant fair value inputs used to estimate the future expected TRA payments to the former owners include the timing of

tax payments, a discount rate, book income projections, timing of expected adjustments to calculate taxable income and the projected rate of use for attributes defined in the TRA.

The significant fair value inputs used to estimate the future expected TRA payments to the former owners include the timing of tax payments, a discount rate, book income projections, timing of expected adjustments to calculate taxable income and the projected rate of use for attributes defined in the TRA.

Payments made under the TRA consider tax positions taken by the Company and are due within 125 days following the filing of the Company’s U.S.

3 unchanged sentences

Earn-Out Liability

The Company had a liability during the three months ended March 31, 2020 to the selling stockholders of Array for contingent consideration consisting of earn-out payments in the form of cash upon the occurrence of certain events, including the sale, transfer, assignment, pledge, encumbrance, distribution or disposition of shares held by the acquirer to a third party;

The Company had a liability to the selling stockholders of Array for contingent consideration consisting of earn-out payments in the form of cash upon the occurrence of certain events, including the sale, transfer, assignment, pledge, encumbrance, distribution or disposition of shares held by the acquirer to a third party;

initial public offering of the equity securities of Former Parent, acquirer or the Company;

5 unchanged sentences

These inputs include the estimated amount and timing of future cash flows, the probability of a qualifying event occurring, and a risk-free rate used to adjust the probability-weighted cash flows to their present value.

Subsequent to the Acquisition Date, at each reporting period, the earn-out liability is re-measured to fair value with changes in fair value recorded in general and administrative in the accompanying condensed consolidated statements of operations.

Subsequent to the Acquisition Date, at each reporting period, the earn-out liability was re-measured to fair value with changes in fair value recorded in contingent consideration in the accompanying condensed consolidated statements of operations.

The following table summarizes the liability related to the estimated contingent consideration (in thousands):

TRA Earn-Out Liability Contingent Consideration

Balance, December 31, 2020 $ 19,691 $ — $ 19,691

Balance, March 31, 2021 $ 19,839 $ — $ 19,839

Payments ( 7,810 ) ( 7,810 )

Fair value adjustment ( 13 ) — ( 13 )

Balance, June 30, 2021 $ 12,016 $ — $ 12,016

Balance, March 31, 2020 $ 17,113 $ 124 $ 17,237

Fair value adjustment 1,732 1,698 3,430

Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667

TRA Earn-Out Liability Contingent Consideration

Balance, December 31, 2020 $ 19,691 $ — $ 19,691

Payments ( 7,810 ) — ( 7,810 )

Fair value adjustments 135 — 135

Balance, June 30, 2021 $ 12,016 $ — $ 12,016

Balance, December 31, 2019 $ 17,808 $ 442 $ 18,250

Fair value adjustment 1,037 1,380 2,417

Balance, March 31, 2020 $ 17,113 $ 124 $ 17,237

Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667

The TRA and earn-out liabilities require significant judgment and are classified as Level 3 in the fair value hierarchy.

3 unchanged sentences

The 2020 Plan authorized 6,683,919 new shares, subject to adjustments pursuant to the 2020 Plan.

In March 2021, the Company granted an aggregate of 226,819 RSU’s to employees and 150,462 Performance Stock Units (PSUs) to certain executives.

In the six months ended June 30, 2021, the Company granted an aggregate of 513,463 RSU’s to employees and board of director members and 177,472 Performance Stock Units (PSUs) to certain executives.

The PSUs cliff vest after three years and upon meeting certain revenue and adjusted EPS targets.

The PSUs also contain a modifier based on the total stock return (TSR) compared a certain Index which modifies the number of PSUs that vest.

The PSUs also contain a modifier based on the total stock return (TSR) compared to a certain Index which modifies the number of PSUs that vest.

Activity under the 2020 Plan was as follows:

3 unchanged sentences

Forfeited ( 43,045 ) 28.36

Unvested, March 31, 2021 726,825 $ 26.95

Unvested, June 30, 2021 970,424 $ 23.49

PSU Number of Shares Weighted Average Grant Date Fair Value

2 unchanged sentences

Forfeited ( 14,379 ) 30.74

Unvested, March 31, 2021 150,462 $ 30.74

Unvested, June 30, 2021 163,093 $ 28.03

Class B Units

9 unchanged sentences

Actual results may vary depending on the assumptions applied within the model.

Company accelerating the recognition of the remaining unamortized compensation expense of $ 6.3 million in the three months ended March 31, 2021.

For the three months ended March 31, 2021 and 2020, the Company recognized $ 7.9 million and $ 1.8 million in equity-based compensation.

As of March 31, 2021, the Company had $ 22.3 million of unrecognized compensation costs which is expected to be recognized over a period of 2.8 years.

There were no forfeitures during the three months ending March 31, 2021 and 2020.

On March 23, 2021, in connection with the closing of the 2021 Follow-on Offering, all of the outstanding Class B Units of Former Parent were immediately vested per the terms of the equity awards, resulting in the Company accelerating the recognition of the remaining unamortized compensation expense of $ 6.3 million in the three months ended March 31, 2021.

For the three and six months ended June 30, 2021, the Company recognized $ 4.1 million and $ 12.0 million in equity-based compensation, respectively.

For the three and six months ended June 30, 2020, the Company recognized $ 0.7 million and $ 2.4 million in equity-based compensation, respectively.

As of June 30, 2021, the Company had $ 19.1 million of unrecognized compensation costs which is expected to be recognized over a period of 2.5 years.

There were 57,424 forfeitures during both of the three and six months ended June 30, 2021 and no forfeitures during the three and six month ended June 30, 2020.

Effective January 1, 2021, the Company adopted ASC 842 Leases using the modified retrospective approach.

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The following table summarizes the balances as it relates to leases at the end of the period (in thousands):

(*) As of March 31, 2021

(*) June 30, 2021

ROU Asset Other assets $ 10,537

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Three Months Ended

March 31, 2021

June 30, 2021

Operating lease expense $ 1,651

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Total lease expense $ 1,742

The following table presents the maturities of lease liabilities as of March 31, 2021 (in thousands):

Fiscal year ending March 31, Operating Leases

The following table presents the maturities of lease liabilities as of June 30, 2021 (in thousands):

Fiscal year ending June 30, Operating Leases

Total lease payments 11,113

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Three Months Ended

March 31, 2021

June 30, 2021

Weighted average remaining lease-term 2.0 years

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Three Months Ended

March 31, 2021

June 30, 2021

Operating cash flows from operating leases $ 1,465

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Accounts Payable-Related Party

The Company had $ 2.6 million and $ 2.2 million as of March 31, 2021 and December 31, 2020, respectively, of accounts payable - related party with the former shareholders of Array and current unit holder of Former Parent.

The Company had $ 0.6 million and $ 2.2 million as of June 30, 2021 and December 31, 2020, respectively, of accounts payable - related party with the former shareholders of Array.

The payables relate to a federal tax refund related to the pre-Acquisition periods, restricted cash at Acquisition Date which were due to the sellers of Array upon release of the restriction offset by a receivable related to a sales/use tax audit from the pre-Acquisition period for which the seller provided the Company with indemnification.

Related Party Loans - see Note 9

Related Party Loan - see Note 9

Contingent Consideration - see Note 12

Subsequent Events

S ecurities Purchase Agreement

On August 10, 2021, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with BCP Helios Aggregator L.P., a Delaware limited partnership (the “Purchaser”), an investment vehicle of funds affiliated with Blackstone Inc.

Pursuant to the Securities Purchase Agreement, on August 11, 2021, the Company issued and sold to the Purchaser 350,000 shares of a newly designated Series A Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Perpetual Preferred Stock”), having the powers, designations, preferences, and other rights set forth in the Certificate of Designations (as defined below), and 7,098,765 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”), for an aggregate purchase price of $ 346.0 million (the “Initial Closing”).

Further, pursuant to the Securities Purchase Agreement, and subject to the terms and conditions set forth therein, including the expiry or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the Company has agreed to issue and sell to the Purchaser 776,235 shares of Common Stock for an aggregate purchase price of $ 776 .

The Company intends to use the net proceeds from the Initial Closing to repay all of the outstanding amounts under the Company’s existing revolving credit facility and to prepay at least $ 100 million under the Company’s term loan and for general corporate purposes.

Pursuant to the Securities Purchase Agreement, the Purchaser is entitled to designate one representative (the “Series A Director”) to be appointed to the Company’s board of directors (the “Board”), and to appoint three non-voting observers to the Board, in each case until such time as the Purchaser and its Permitted Transferees (as defined in the Securities Purchase Agreement) no longer beneficially own shares of the Series A Perpetual Preferred Stock with at least $ 100 million aggregate Liquidation Preference (as defined below).

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Perpetual Preferred Stock either in cash at the then-applicable Cash Regular Dividend Rate, through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate (the “Permitted Accrued Dividends”), or a combination thereof.

Folloing the fifth anniversary of the Initial Closing, dividends shall be payable only in

To the extent the Comany does not declare such dividends and pay in cash following the fifth anniversary of the Initial Closing, such dividends shall accrue to the Liquidation Preference (“Default Accrued Dividends”, and together with Permitted Accrued Dividends, “Accrued Dividends”) at the then-applicable Cash Regular Dividend Rate plus 200 basis points.

In the event there are Default Accrued Dividends outstanding for six consecutive quarters, the Company, at the option of the holder of the Series A Perpetual Preferred Stock (each a “holder”), will pay 100 % of the amount of Default Accrued Dividends by delivering to the Holder a number of shares of Common Stock equal to the quotient of (i) the amount of Default Accrued Dividends) divided by (ii) 95 % of the 30-day VWAP of the Common Stock (“Non-Cash Dividend”).

As used herein, “Cash Regular Dividend Rate” with respect to the Series A Perpetual Preferred Stock means (i)

initially, 5.75 % per annum on the Liquidation Preference and (ii) increased by (a) 50 basis points on each of the fifth, sixth and seventh anniversaries of the Initial Closing and (b) 100 basis points on each of the eighth, ninth and tenth anniversaries of the Initial Closing.

The “Accrued Regular Dividend Rate” with respect to the Series A Perpetual Preferred Stock means 6.25 % per annum on the Liquidation Preference.

Additional Closings

Pursuant to the Securities Purchase Agreement, until June 30, 2023, the Company, subject to the terms and conditions set forth therein, shall have the option to require the Purchaser to purchase, in the aggregate, in one or more additional closings (the “Additional Closings”), up to 150,000 shares (the “Delayed Draw Commitment”) of the Series A Perpetual Preferred Stock and up to 3,375,000 shares of Common Stock (or up to 6,100,000 shares of Common Stock in the event of certain price-related adjustments) (subject to certain equitable adjustments pursuant to any stock dividend, stock split, stock combination, reclassification or similar transaction) for an aggregate purchase price up to $ 148 million.

Until June 30, 2023, the Company will pay the Purchaser a cash commitment premium on the unpurchased portion of Delayed Draw Commitment as follows:

0 % through the six-month anniversary of the Initial Closing;

1.5 % from the six-month anniversary of the Initial Closing through the 12-month anniversary of the initial closing;

3.0 % from the 12-month anniversary of the Initial Closing through June 30, 2023.

The Company may terminate some or all of the Delayed Draw Commitment, from time to time, at its sole discretion.

Customary Covenants

The Securities Purchase Agreement, Certificate of Designations and Registration Rights Agreement (as defined below) contain other customary covenants and agreements, including certain standstill provisions and customary preemptive rights.

The Delayed Draw Commitment is subject to certain customary anti-dilution adjustments provided under the Securities Purchase Agreement and Certificate of Designations, including for stock splits, reclassifications, combination’s and dividends or distributions made by the Company on the Common Stock.

Transfer Restrictions

After the Initial Closing, subject to certain customary exceptions including transfers to Permitted Transferees (as defined in the Securities Purchase Agreement), the Purchaser will be restricted from transferring the Series A Perpetual Preferred Stock and Common Stock until the one-year anniversary of the Initial Closing.

Ranking and Liquidation Preference

The Series A Perpetual Preferred Stock ranks senior to the Common Stock with respect to dividend rights and rights upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (a “Liquidation”).

Upon a Liquidation, each share of Series A Perpetual Preferred Stock would be entitled to

receive an amount per share (the “Liquidation, Redemption or Repurchase Amount”) equal to the greater of (i) the Liquidation Preference of such share, plus all accrued and unpaid dividends (including any Accrued Dividends) thereon and (ii) an amount in cash equal to the sum of (a) 130.0 % of the Initial Liquidation Preference of such share, minus (b) the cumulative amount of cash dividends paid in respect of such share prior to such payment.

As used herein, “Liquidation Preference” means, with respect to any share of the Series A Perpetual Preferred Stock, the initial liquidation preference of $ 1,000 per share (the “Initial Liquidation Preference”) plus any Accrued Dividends of such share as of the time of determination.

Redemption Rights

The Company may redeem all or any portion of the Series A Perpetual Preferred Stock (in increments of not less than $ 200 million based on the Liquidation Preference of such shares of Series A Perpetual Preferred Stock to be redeemed at such time (or such lesser amount to the extent the Company chooses to redeem all of the outstanding shares of Series A Perpetual Preferred Stock)) for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Upon a “Fundamental Change” (involving a change of control, bankruptcy, insolvency or liquidation of the Company as further described in the Certificate of Designations), each Holder shall have the right to require the Company to redeem all or any part of the Holder’s Series A Perpetual Preferred Stock for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Voting and Consent Rights

Each Holder of Series A Perpetual Preferred Stock will have one vote per share on any matter on which Holders of Series A Perpetual Preferred Stock are entitled to vote separately as a class (as described below), whether at a meeting or by written consent.

The Holders of shares of Series A Perpetual Preferred Stock do not otherwise have any voting rights.

The consent of the Holders of a majority of the outstanding shares of Series A Perpetual Preferred Stock will be required for so long as the Threshold Amount remains outstanding for (i) amendments to the Company’s organizational documents that have an adverse effect on the holders of Series A Perpetual Preferred Stock, (ii) issuances by the Company of securities that are senior to, or equal in priority with, the Series A Perpetual Preferred Stock, (iii) entrance into, or amendments to, transactions with affiliates of the Company, (iv) incurrence by the Company of indebtedness, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such incurrence (other than drawdowns by the Company under the Company’s current revolving credit facility) or (v) any payment of dividends or making of distributions on equity securities of the Company ranking junior to the Series A Perpetual Preferred Stock or redemptions, purchases or direct or indirect acquisitions of such equity securities ranking junior to or parity with the Series A Perpetual Preferred Stock by the Company, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such dividends, distributions, redemptions, purchases or acquisitions.

Registration Rights Agreement

In connection with the Securities Purchase Agreement, on August 10, 2021, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Purchaser certain registration rights with respect to Common Stock purchased pursuant to the Securities Purchase Agreement and Non-Cash Dividend pursuant to the Certificate of Designations, including customary shelf registration rights and “piggyback” registration rights.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements