What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-12 compared with 2021-05-11 · 149 added, 62 removed, 183 unchanged (54% of the section changed)

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Important factors that could cause actual results to differ materially from our expectations include:

• the impacts on our business due to component shortages, disruptions in transportation or other supply chain related constraints including as a result of the COVID-19 pandemic;

• if demand for solar energy projects does not continue to grow or grows at a slower rate than we anticipate, our business will suffer;

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We sell our products to engineering, procurement and construction firms (“EPCs”) that build solar energy projects and to large solar developers, independent power producers and utilities, often under master supply agreements or multi-year procurement contracts.

In the three months ended March 31, 2021, we derived 99% and 1% of our revenues from customers in the U.S.

In the six months ended June 30, 2021, we derived 99% and 1% of our revenues from customers in the U.S.

and rest of the world, respectively.

1 unchanged sentence

company and our headquarters and principal manufacturing facility are in Albuquerque, New Mexico.

As of March 31, 2021, we had 387 full-time employees.

Impact of COVID-19

In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China.

Since then, COVID-19 has spread to multiple countries, including the United States.

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

To date, we have maintained uninterrupted business operations with normal turnaround times for the delivery of solar tracking systems.

We have implemented adjustments to our operations designed to keep employees safe and comply with federal, state and local guidelines, including those regarding social distancing.

The extent to which COVID19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

In response to COVID-19, the United States government has passed legislation and taken other actions to provide financial relief to companies and other organizations affected by the pandemic.

As of June 30, 2021, we had 387 full-time employees.

Securities 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 cash.

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.

Registration Rights Agreement

In connection with the Securities Purchase Agreement, on August [9], 2021, the Company and the Purchaser entered into a 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, including customary shelf registration rights and “piggyback” registration rights.

Update on the Impact of COVID-19

With the second wave of the pandemic including follow-on variants of COVID-19, we continue to closely monitor the situation in all the locations where we operate.

Our priority remains the welfare of our employees.

We expect persistent waves of COVID-19 to remain a headwind into the near future.

Refer to “Risk Factors - The ongoing COVID-19 pandemic has materially and adversely affected our business and results of operations.

The duration and extent to which it will continue to adversely impact our business and results of operations remains uncertain and could be material,” as disclosed in Part II, “Item 1A.

Risk Factors.”

We are continuously evaluating our capital structure in response to the current environment and expect that our current financial condition, including our liquidity sources are adequate to fund future commitments.

See additional discussion in the Liquidity and Capital Resources section below.

Performance Measures

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Personnel-related costs are the most significant component of our operating expenses and include salaries, benefits, payroll taxes and commissions.

Our full-time employee headcount in our general and administrative departments has grown from approximately 150 as of December 31, 2019 to approximately 177 as of December 31, 2020 and 175 at March 31, 2021, and we expect to continue to hire new employees to support our growth.

Our full-time employee headcount in our general and administrative departments has grown from approximately 150 as of December 31, 2019 to approximately 177 as of December 31, 2020 and 175 at June 30, 2021, and we expect to continue to hire new employees to support our growth.

The timing of these additional hires could materially affect our operating expenses in any particular period, both in absolute dollars and as a percentage of revenue.

We expect to continue to invest substantial resources to support our growth and continued technological advancement and anticipate that general and administrative and depreciation expenses will increase in absolute dollar amounts for the foreseeable future.

We expect to continue to invest substantial resources to support our growth and continued technological

advancement and anticipate that general and administrative and depreciation expenses will increase in absolute dollar amounts for the foreseeable future.

General and administrative expenses

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We intend to continue to expand our sales presence and marketing efforts to additional countries.

We also expect

that as a public company we will incur additional audit, tax, accounting, legal and other costs related to compliance with applicable securities and other regulations, as well as additional insurance, investor relations and other costs associated with being a public company.

We also expect that as a public company we will incur additional audit, tax, accounting, legal and other costs related to compliance with applicable securities and other regulations, as well as additional insurance, investor relations and other costs associated with being a public company.

We also anticipate an increase in our spend related to product innovation as we hire additional engineering resources and increase our external research & development spend.

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Contingent consideration consists of the changes in fair value of the earn-out and the Tax Receivable Agreement (“TRA”) entered into with Ron P.

Corio, our indirect stockholder, concurrent with the Acquisition of Array Technologies Patent Holdings Co., LLC (“Patent LLC”) by ATI Investment Parent, LLC (“Former Parent”) Former Parent’s acquisition of Patent LLC.

Corio, a former indirect stockholder, concurrent with the Acquisition of Array Technologies Patent Holdings Co., LLC (“Patent LLC”) by ATI Investment Parent, LLC (“Former Parent”) Former Parent’s acquisition of Patent LLC.

The earn-out liability was recorded at fair value as of July 8, 2016 (the “Acquisition Date”) and subsequent changes in the fair value are recognized in earnings.

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We are subject to federal and state income taxes in the United States.

As we expand into foreign markets, we may be subject to foreign tax.

Results of Operations

The following tables set forth our consolidated statement of operations (in thousands):

Three Months Ended

March 31, Increase/(Decrease)

The following tables set forth our consolidated statement of operations (dollars in thousands):

Three Months Ended June 30, Increase/Decrease Six Months Ended June 30, Increase/Decrease

2021 2020 $ % 2021 2020 $ %

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Total other expense (6,773) (4,653) (2,120) 46 % (15,860) (9,774) (6,086) 62 %

Income Before Income Tax Expense 3,966 96,227 (92,261) (96) %

Income Tax Expense 1,079 22,542 (21,463) (95) %

Net Income $ 2,887 $ 73,685 $ (70,798) (96) %

Comparison of three months ended March 31, 2021 and 2020

Revenue decreased by $191.8 million, or 44%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

Total MW delivered decreased by approximately 28% for the three months ended March 31, 2021 driven by a higher proportion of our volume occurring in the first quarter of the year in 2020 versus 2021, primarily due to certain customers electing to take deliveries ahead of build schedules to take advantage of the ITC rate before the rate step down in 2020.

Income (loss) before income tax expense (1,067) (3,442) 2,375 (69) % 2,899 92,785 (89,886) (97) %

Income tax (benefit) expense (1,050) (5,834) 4,784 (82) % 29 16,708 (16,679) (100) %

Net (loss) income $ (17) $ 2,392 $ (2,409) (101) % $ 2,870 $ 76,077 $ (73,207) (96) %

Comparison of three months ended June 30, 2021 and 2020

Revenue increased by $87.9 million, or 76%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Total MW delivered increased by approximately 74% for the three months ended June 30, 2021 mostly attributable to a higher proportion of our volume occurring in the first quarter of 2020 vs the second quarter of 2020 due to certain customers electing to take deliveries ahead of build schedules to take advantage of the ITC rate before it stepped down in 2020.

Cost of Revenue and Gross Profit

Cost of revenue decreased by $117.2 million, or 37%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to the decrease in the number of MW delivered.

Gross profit as a percentage of revenue decreased from 27.1% for the three months ended March 31, 2020 to 17.8% for the three months ended March 31, 2021.

The decrease in Gross Profit as a percentage of revenue reflects higher commodity prices, higher logistics and lower absorption of fixed costs.

Cost of revenue increased by $83.3 million, or 90%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020 primarily due to the increase in the number of MW delivered.

Gross profit as a percentage of revenue decreased from 19.3% for the three months ended June 30, 2020 to 13.2% for the three months ended June 30, 2021.

The decrease in Gross Profit as a percentage of revenue reflects higher commodity prices and higher logistics costs.

Operating Expenses:

General and Administrative

General and administrative expenses increased by $13.0 million, or 111%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The increase in expense was primarily due to additional consulting and professional fees incurred in the first quarter of 2021 associated with our follow-on offering of common stock that closed in March of 2021 (the “2021 Follow-on Offering:).

T he increase in expense also represents additional headcount driven by the growth of the company over the last twelve months and a charge of $6.3 million for equity-based compensation expense for the accelerated vesting of the Class B Units in connection with the 2021 Follow-on Offering with no comparable expense in 2020.

General and administrative expenses increased by $3.9 million, or 35%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

The increase in expense was primarily due to a $2.5 million increase in equity-based compensation due to a mark-to-market of a cash-settled award.

T he increase in expense also represents additional headcount driven by the growth of the company over the last twelve months.

Contingent Consideration

Contingent consideration expense increased by $1.2 million, or 115%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020.

The increase was primarily due to an increase in the fair value of our Tax Receivable Agreement obligation.

Depreciation expense for the three months ended March 31, 2021 was similar to the three months ended March 31, 2020 as we did not add any significant capital assets.

Contingent consideration expense decreased by $3.4 million, or 100%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

The decrease was primarily due to the prior period having a $3.4 million increase in the fair value of contingent consideration for which there is no increase in the current quarter.

Depreciation expense for the three months ended June 30, 2021 was similar to the three months ended June 30, 2020 as we did not add any significant capital assets.

Amortization of Intangibles

Amortization of intangibles for the three months ended March 31, 2021 was similar to the three months ended March 31, 2020 as we did not add any significant intangible assets.

Amortization of intangibles for the three months ended June 30, 2021 was similar to the three months ended June 30, 2020 as we did not add any significant intangible assets.

Interest Expense

Interest expenses increased by $3.8 million, or 72%, for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to interest on the higher average balance of our Term Loan Facility which was not outstanding during three months ended March 31, 2020.

As of March 31, 2021, we had $430.0 million outstanding under the Senior Secured Credit Facility.

Interest expenses increased by $4.2 million, or 176%, for the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to interest on the higher average balance of our Term Loan Facility and Revolving Facility which were not outstanding during the three months ended June 30, 2020.

As of June 30, 2021, we had $429.0 million outstanding under the Term Loan and $102.0 million outstanding under the Revolving Senior Secured Credit Facility.

We expect interest expense to be higher for the remainder of 2021 compared to 2020 as a result of the debt outstanding under the Senior Secured Credit Facility along with the amortization of the related discount and issuance costs.

Income Tax Benefit

Income tax benefit decreased by $4.8 million, or 82% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

Our effective tax rate was 98.4% for the three months ended June 30, 2021 and 169.5% for the three months ended June 30, 2020.

The tax benefit decrease is primarily related to unfavorable non-deductible equity based compensation and Follow-on offering costs for the three months ended June 30, 2021 and a favorable tax benefit related to an NOL carryback as a result of the CARES Act for the three months ended June 30, 2020.

Comparison of the six months ended June 30, 2021 and 2020

Revenue decreased by $103.9 million, or 19%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Total MW delivered decreased by approximately 2% for the six months ended June 30, 2021 driven by heavier volume in the first half of 2020 due to certain customers electing to take deliveries ahead of build schedules to take advantage of the ITC, partially offset by lower ASPs in 2021.

Cost of Revenue and Gross Profit

Cost of revenue decreased by $33.9 million, or (8)%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020 primarily due to the decrease in the number of MW delivered.

Gross profit as a percentage of revenue decreased from 25.4% for the six months ended June 30, 2020 to 15.7% for the six months ended June 30, 2021.

The decrease in Gross Profit as percentage of revenue reflects higher commodity and logistics prices.

Operating Expenses:

General and Administrative

General and administrative expenses increased by $16.9 million, or 74%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The increase in expense was primarily due to a $4.1 million recovery of an account receivable that was previously reserved during the six months ended June 30, 2020 for which there was no similar credit in the 2021 period.

The increase in general and administrative expense also relates to a $8.7 million expense in the six months ended June 30, 2021 for equity-based compensation with no comparable expense in 2020.

Finally, in 2021 we increased our internal headcount leading to higher payroll and related costs, but we were able to partially offset those increases with a reduction in third-party spend related to business process outsourcing, consulting costs, and other professional fees.

Contingent Consideration

Contingent consideration expense decreased by $2.3 million, or 94%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The decrease was primarily due to an increase in the fair value of our Tax Receivable Agreement obligation in the prior year period for which there was no corresponding increase in the current year period.

Depreciation expense for the six months ended June 30, 2021 was similar to the six months ended June 30, 2020 as we did not add any significant capital assets.

Amortization of Intangibles

Amortization of intangibles for the six months ended June 30, 2021 was similar to the six months ended June 30, 2020 as we did not add any significant intangible assets.

Interest Expense

Interest expenses increased by $8.0 million, or 105%, for the six months ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to interest on the higher average balance of our Term Loan Facility and Revolving Facility which was not outstanding during six months ended June 30, 2020.

As of June 30, 2021, we had $429.0 million outstanding under the Term Loan and $102.0 million outstanding under the Revolving Senior Facility.

Income Tax Expense

Income tax expense decreased by $21.5 million, or 95% for the three months ended March 31, 2021 compared to the three months ended March 31, 2020, due to the decrease in earnings.

Our effective tax rate was 27.2% for the three months ended March 31, 2021 and 23.4% for the three months ended March 31, 2020.

Income tax expense decreased by $16.7 million, or 100% for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Our effective tax rate was 1.0% for six months ended June 30, 2021 and 18.0% for the six months ended June 30, 2020.

The reduction in the effective tax rate is primarily related to unfavorable non-deductible equity-based compensation and Follow-on offering costs for the six months ended June 30, 2021, a favorable tax benefit related to an NOL carryback as a result of the CARES Act in the six months ended June 30, 2020, and the level of earnings in each period.

Liquidity and Capital Resources

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The following table compares the historical cash flow (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities $ (134,109) $ (247,900)

Net cash used in investing activities (13,175) (265)

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)

We have historically financed our operations primarily with the proceeds from capital contributions, operating cash flows and short and long-term borrowings.

Our ability to generate positive cash flow from operations is dependent on the strength our gross margins as well as our ability to quickly turn our working capital.

Based on our past performance and current expectations, we believe that operating cash flows and our availability under our Revolving Credit Facility will be sufficient to meet our future cash needs to fund operations.

As of March 31, 2021, our cash and cash equivalents was $19.1 million.

Net working capital as of March 31, 2021 was $53.2 million.

As of March 31, 2021, we had outstanding borrowings of $430.0 million and $200.0 million commitment a under our Revolving Credit Facility, of which $160.3 million was available to borrow to fund operations.

Our ability to generate positive cash flow from operations is dependent on the strength of our gross margins as well as our ability to quickly turn our working capital.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China.

Since then, COVID-19 has spread to multiple countries, including the United States.

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

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 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.

In response to the recent challenging environment, we continuously evaluate our ability to meet our obligations over the next 12 months.

We have sufficient financing options available to do so and we expect to have sufficient liquidity to fund current and future commitments.

As of June 30, 2021, our cash and cash equivalents were $17.7 million.

Net working capital as of June 30, 2021 was $162.1 million.

As of June 30, 2021, we had outstanding borrowings of $429.0 million and a $200.0 million commitment under our Revolving Credit Facility, of which $102.0 million is outstanding and $87.0 million was available to borrow to fund operations.

Operating Activities

For the three months ended March 31, 2021, cash used in operating activities was $42.1 million primarily due a decrease in deferred revenue of $59.9 million for which we made payments to our suppliers for products that we received the cash for in 2020, but that we did not ship until 2021, a decrease in accounts payable of $10.6 million, an increase in accounts receivable of $2.6 million, an increase in inventories of $6.3 million offset by non-cash add-backs to net income of $17.8 million, a decrease in income tax receivables of $13.0 million and an increase in accrued expenses of $5.1 million and net income of $2.9 million.

For the three months ended March 31, 2020 cash used in operating activities was $200.6 million, due to an decrease in deferred revenue of $301.2 million, a decrease in accounts payable of $35.6 million, an increase in accounts receivable of $19.5 million, offset by a decrease in inventory of $27.4 million, a decrease in income tax payable of $23.2 million and net income of $73.7 million.

For the six months ended June 30, 2021, cash used in operating activities was $134.1 million primarily due a decrease in deferred revenue of $98.4 million for which we made payments to our suppliers for products that we received the cash for in 2020, but that we did not ship until 2021, an increase in accounts receivable of $33.2 million, an increase in inventories of $20.5 million offset by net income and other add-backs to reconcile to net income.

For the six months ended June 30, 2020 cash used in operating activities was $247.9 million, due to a decrease in deferred revenue of $308.0 million, a decrease in accounts payable of $99.4 million, offset by a decrease in inventory of $42.5 million, a decrease in income tax payable of $35.8 million and net income of $76.1 million.

Investing Activities

For the three months ended March 31, 2021 and 2020, net cash used in investing activities was $10.6 million and $0.2 million, respectively, primarily attributable to a $10.0 million investment in equity securities.

For the six months ended June 30, 2021, net cash used in investing activities was $13.2 million, primarily attributable to a $12.0 million investment in equity securities.

For the six months ended June 30, 2020, net cash used in investing activities was $0.3 million, due to additions to property, plant and equipment.

Financing Activities

For the three months ended March 31, 2021, net cash used by financing activities was $36.6 million, of which $30.0 million was attributable to a payment on the Term Loan Facility and $6.6 million was attributable to fees paid to reduce the annual interest rate on the Senior Secured Credit Facility and to increase the limit on the Revolving Facility by $50.0 million.

For the three months ended March 31, 2020, net cash used by financing activities was $57.7 million, which was attributable to scheduled principal payments on the Term Loan Facility.

For the six months ended June 30, 2021, net cash provided by financing activities was $56.5 million, of which $102.0 million was from proceeds under the Revolving Facility, offset by $31.1 million payment on the Term Loan Facility and $6.6 million in fees paid on the Senior Secured Credit Facility and to increase the limit on the Revolving Facility by $50.0 million.

For the six months ended June 30, 2020, net cash used by financing activities was $75.1 million, which was attributable to $57.7 million principal payments on the Term Loan Facility and $21.7 million on the related party loan.

S ecurities Purchase Agreement

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

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

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

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.

Registration Rights Agreement

Debt Obligations

Senior Secured Credit Facility

On October 14, 2020, the Company entered into a senior secured credit facility which was amended on February 23, 2021 by the first amendment and on February 26, 2021 by the second amendment.

On October 14, 2020, we entered into a senior secured credit facility which was amended on February 23, 2021 by the first amendment and on February 26, 2021 by the second amendment.

The senior secured facility consisted originally of (i) a $575.0 million senior secured seven-year term loan facility (the “Term Loan Facility”) and (ii) a $150.0 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

On February 23, 2021 we entered into the first amendment (“First Amendment”) to our 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.

The First Amendment, in the case of 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 our current rate on the Term Loan Facility decreasing to 3.75% down from 5% prior to the First Amendment.

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

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 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.

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

As of March 31, 2021, the Term Loan Facility had a balance of $430.0 million.

We are in compliance with all covenants as of March 31, 2021.

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.

The balance of the Term Loan Facility is presented in the accompanying consolidated balance sheets net of debt discount and issuance costs of $34.0

million at June 30, 2021.

As of June 30, 2021, the Term Loan Facility had a balance of $430.0 million.

We are in compliance with all covenants as of June 30, 2021.

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had $102.0 million outstanding, $11.0 million in standby letters of credit and availability of $87.0 million under the Revolving Credit Facility.

Interest Rate

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Off-Balance Sheet Arrangements

As of March 31, 2021, we posted surety bonds in the total amount of approximately $134.3 million.

We are required to provide surety bonds to various parties as required for certain transactions initiated during the

ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations.

As of June 30, 2021, we posted surety bonds in the total amount of approximately $131.0 million.

We are required to provide surety bonds to various parties for certain transactions initiated during the ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations.

These off-balance sheet arrangements do not adversely impact our liquidity or capital resources.

Critical Accounting Policies and Significant Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

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

We have 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 those estimates and assumptions.

Refer to the accounting policies under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, where we discuss our more significant judgments and estimates used in the preparation of the condensed consolidated financial statements.

Equity-Based Compensation

5 unchanged sentences

The Class B Units fully accelerated vesting upon the completion 2021 Follow-on Offering and the Company recognized the remaining unamortized compensation expense of $6.3 million.

As of March 31, 2021, there were no other significant changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the year ended December 31, 2020.

As of June 30, 2021, there were no other significant changes in the application of our critical accounting policies or estimation procedures from those presented in our Annual Report on Form 10-K for the year ended December 31, 2020.

Quantitative and Qualitative Disclosures About Market Risk.

1 unchanged sentence

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 2. Management’s Discussion and Analysis