What changed in this filing

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Item 1. Business

2022-04-06 compared with 2021-03-10 · 73 added, 211 removed, 113 unchanged (72% of the section changed)

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Our principal product is an integrated system of steel supports, electric motors, gearboxes and electronic controllers commonly referred to as a single-axis “tracker.” Trackers move solar panels throughout the day to maintain an optimal orientation to the sun, which significantly increases their energy production.

Solar energy projects that use trackers generate up to 25% more energy and deliver a 22% lower LCOE than projects that use “fixed tilt” mounting systems, which do not move, according to BloombergNEF.

Trackers represent between 10% and 15% of the cost of constructing a ground-mounted solar energy project, and approximately 70% of all ground-mounted solar energy projects constructed in the U.S.

during 2019 utilized trackers according to BloombergNEF and IHS Markit, respectively.

Solar energy projects that use trackers generate more energy and deliver a lower Levelized Cost of Energy (“LCOE”) than projects that use “fixed tilt” mounting systems, which do not move.

The vast majority of ground mounted solar systems in the U.S.

use trackers.

Our trackers use a patented design that allows one motor to drive multiple rows of solar panels through articulated driveline joints.

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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.

Our largest customers are EPCs that construct multiple projects for many different end customers who often directly influence or make the decision to use our products.

For example, our largest customer in 2019 was an EPC that represented 17% of our sales, but the trackers it purchased were used in 15 different solar projects with five different owners.

Demand for ground-mounting systems is driven by installations of new ground-mounted solar energy projects.

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Historically, we have derived the majority of our revenues from the sale of trackers used in solar energy projects located in the U.S.

For example, in 2020, we derived 92% and 8% of our revenues from customers in the U.S.

During the year ended December 31, 2021, we derived 97% and 3% of our revenues from customers in the U.S.

and rest of the world, respectively.

We are a U.S.

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

Our Human Capital Management

We believe our success depends on our ability to attract and retain outstanding employees at all levels of our business.

As of December 31, 2020, we had 389 full-time employees, of which approximately 96% are located in the U.S., with the balance located in Europe, Latin America, and Asia.

None of our employees are represented by a labor union.

We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good.

During the COVID-19 pandemic, we have implemented procedures to reduce the risk of spreading the virus and have implemented an hourly incentive for employees that work in our manufacturing facilities.

We have a team-oriented culture, which we believe helps us to succeed and drive operational excellence.

As a rapidly growing business, we rely on the success of our recruitment efforts to attract and retain technically skilled people who can support our ongoing innovation and expansion.

We aim to be inclusive in our hiring practices focusing on the best talent for the role, welcoming all genders, nationalities, ethnicities, abilities and other dimensions of diversity.

We aim to provide our employees with competitive salary and benefits that enable them to achieve a good quality of life and plan for the future.

Our benefits differ according to local norms and market preferences, but typically include all salary and social benefits required by local law (including retirement saving programs, paid vacation and sick leave) and many additional benefits that go beyond legal requirements in local markets.

We aim to hire individuals who share our passion, commitment and entrepreneurial spirit.

We are also committed to diversity and inclusion because we believe that diversity leads to better outcomes for our business and enables us to better meet the needs of our customers.

We recognize the importance of diversity in leadership roles within our company.

We believe that all accidents and injuries at work are preventable and we aim to ensure a zero-injury culture across our offices and operations.

We comply with applicable occupational health and safety regulations and are certified to Occupational Health and Safety Quality Management Standard ISO 9001.

Our injury rates are low.

Our Strengths

We believe the following strengths of our business position us to capitalize on continued growth in the solar energy market, reinforce our leadership position in the mounting systems market and distinguish us from our competitors:

• Direct beneficiary of the global energy transition.

Nations are rapidly moving to decarbonize their economies in order to reduce air pollution and fight climate change.

A key element of decarbonizing the global economy is transitioning electricity generation from fossil fuels to renewable energy.

Solar energy has become one of the lowest cost, most reliable and most flexible forms of renewable energy generation and is becoming a preferred option for electricity generation worldwide.

As a leading provider of ground-mounting systems for solar energy projects, we benefit directly from the global transition to renewable energy through growing demand for our products.

We estimate that approximately 15% of the future spending on ground-mounted solar energy projects can be addressed by our products.

• Products independently verified to deliver the lowest cost of ownership and highest reliability.

TÜV Rheinland PTL, found that projects using our tracker system would achieve a 6.7% lower LCOE, 4.5% higher net present value, and 31% lower operations and maintenance cost than projects that used competing single row control architectures.

We believe that independent verification of the superior total cost of ownership and higher reliability of our products helps us to attract and retain customers and grow our market share.

• Panel technology agnostic.

All solar panels require mounting systems, and our products are designed to work with all types of solar panels.

As a result, we do not believe we are exposed to risk from changes in solar panel technology or shifts in market share between different manufacturers of solar panels.

As long as there is demand for ground-mounted solar energy projects, we believe there will be demand for our products.

• Large installed base.

We believe the large installed base of our products reinforces the advantages of our trackers for both our customers and their financing sources who value established equipment vendors with long product operating histories.

• Demonstrated ability to reduce the cost of our products while maintaining profit margins.

In order to enhance the competitiveness of our products and increase our margins, we continually work to reduce the cost of our products through innovation and rigorous supply chain management.

These efforts have resulted in a reduction in cost of goods sold per watt by approximately 22% from 2017 through 2020.

This has allowed us to reduce average selling prices by approximately 22% over the same period, driving significant increases in revenues, while simultaneously increasing gross profits and maintaining gross margins.

• Experienced engineering team with a track record of continuous innovation.

We have successfully introduced three generations of trackers.

We believe each new version has delivered significant improvements in performance, reliability and total cost of ownership.

As of December 31, 2020, approximately 26% of our salaried employees were engineers with expertise in software, electronics, material science, structural mechanics and civil engineering.

We believe that our engineering expertise will enable us to continually improve the functionality and reliability of our products while reducing their cost.

• Intellectual property and trade secrets portfolio.

We maintain a portfolio of intellectual property and trade secrets related to our projects and business processes.

Our core U.S.

patent on a linked-row, rotating gear drive tracker (U.S.

8,459,249) has also been issued in a number of other jurisdictions, including Australia, Chile, Germany, the European Patent Office, Spain, France and the U.K.

We have also been granted six additional U.S.

patents generally covering, among other things, technologies related to panel clamps/brackets,utilizing torque limiters to reduce hinge moment forces, and clearing obstructions.

These additional patents have also been issued in a number of jurisdictions and are pending in others around the world.

We have obtained trademark protection in the standard character marks “DuraRack” and “DuraTrack,” both of which are on the U.S.

principal register and relate to our tracking products.

We also utilize many common law trademarks.

We have brought successful actions against competitors who have infringed on our intellectual property and our core U.S.

patent was recently upheld in an inter partes review by the U.S.

Patent and Trademark Office.

In addition to our patents, we maintain a portfolio of trade secrets relating to, among other things, our pricing strategies, cost structures, sales pipelines and unpatented technology.

• Highly scalable manufacturing with low capital intensity.

We are an engineering and technology centric company with an assembly-focused manufacturing model.

Approximately 80% of our cost of goods sold consists of purchased components, including motors, gearboxes, electronic controllers and steel tubing that we source from third-party suppliers.

The remainder of our cost of goods sold is primarily labor to fabricate and assemble certain specialized parts of our system.

As a result, our business requires minimal capital investment and generates significant cash flow, which has allowed us to make investments in research and development, repay debt and make distributions to our stockholders.

• Rigorous supply chain management supported by a sophisticated ERP system.

We have made substantial investments in our systems and supply chain designed to minimize material movement, working capital investment and costs of goods sold while enabling us to rapidly deliver large volumes of our products to project sites around the world.

To minimize material movement and working capital investment, we typically ship purchased components representing more than 70% of our cost of goods

sold directly from our suppliers to our customers’ sites.

To lower our cost of goods sold, we employ components that are mass produced and widely available to maintain security of supply and to benefit from existing economies of scale.

In addition, we believe the large volume of purchases that we make afford us preferential pricing and terms from our suppliers, which creates a competitive advantage.

operations that reduce the potential impact of trade tariffs.

We are a U.S.

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

We believe our status as a U.S.

company with U.S.

manufacturing reduces the potential impact of U.S.

government tariffs placed on, or other U.S.

government regulatory actions taken against, products manufactured in foreign countries.

• Adherence to ESG principles.

We believe that our impact on the environment;

how we manage our relationships with employees, suppliers, customers and the communities where we operate;

and the accountability of our leadership to our stockholders are critically important to our business.

We plan to report how we oversee and manage ESG factors material to our business under the GRI, which maintains a public database for governments and businesses to communicate their impacts on climate change, human rights and corruption.

As a part of our plan to provide ESG disclosures pursuant to GRI, we will describe how our business contributes to certain UN SDGs.

Our mission is to leverage our technology, people and processes to deliver solutions for the new energy economy that improve the performance, increase the reliability and reduce the cost of renewable energy.

Key elements of our strategy include:

• Delivering product innovations that will convert more customers to our products.

We believe we have a long track record of delivering innovative products that lower our customers’ LCOE while maintaining high reliability.

Our strategy is to grow our market share by reducing the manufacturing, installation and ownership cost of our products through improved design, performance and cost.

We are currently developing the next generation of our DuraTrack system which we believe will deliver significant improvements in all of these areas.

• Leveraging our global supply chain and economies of scale to reduce product cost.

Purchased components are the largest contributor to our cost of goods sold.

Our strategy is to continually reduce our cost of goods sold by leveraging the large volumes of materials and components we purchase against multiple, qualified suppliers to obtain the best price and terms while ensuring availability of inputs and mitigating the risk of supply chain disruptions.

• Growing our international business.

Excluding China, the international market for ground-mounting systems for solar energy projects was more than four times larger than the U.S.

market in 2019 according to IHS Markit.

From 2014 to 2019, annual installations of ground-mounted solar generation capacity outside of the U.S.

and China grew at a compound annual growth rate of 35% according to IHS Markit.

While our historical focus has primarily been the U.S.

given the size and attractiveness of that market, we have recently made investments in our international sales capability and supply chain to secure and deliver on orders globally.

We believe that the share of international solar energy projects that use trackers has the potential to increase to the same level as the U.S.

because trackers deliver the same benefits outside the U.S.

as they do in the U.S.

Components of our international growth strategy include leveraging our relationships with existing customers, many who develop and construct projects globally;

marketing region-specific products tailored to the unique needs of particular

entering into joint-venture or licensing arrangements with companies in certain markets;

expanding our relationships with value-added resellers of our products in some countries;

and utilizing locally sourced components in our products in jurisdictions where locally sourced components are a regulatory or customer requirement.

• Creating new revenue streams that leverage our large installed base.

We believe that the significant and continued growth in our installed base creates opportunities to sell products, software and services related to our tracker systems.

Our strategy is to introduce a targeted set of offerings over time, including hardware and software upgrades and retrofits, as well as preventative maintenance and extended warranty plans that we believe can generate high margin, recurring revenues.

• Expanding into related products and services in adjacent markets organically or through acquisition.

Our strategy is to leverage our engineering capabilities, supply chain, sales and marketing resources, and customer relationships to expand our business into products and services for adjacent markets.

We are currently evaluating markets for related products that are used in solar energy projects, but that we do not currently supply, including foundations and electrical balance of system components, as well as other types of mounting and support structures used in electrical infrastructure.

We may enter these markets by developing new products organically or through acquisitions.

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

As of December 31, 2021, we had 471 full-time employees.

Our Customers

We sell our products to 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.

Although sales to a single customer may occasionally be greater than 10%, they generally represent multiple projects for many different end customers who often directly influence or make the decision to use our products.

In 2021, our sales to EPC’s represented approximately 70% of our revenue.

Our Products and Services

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Different tracker manufacturers use different approaches to rotate the panels in a row.

We have patented single-axis tracker systems that use one electric motor to drive the rotation of multiple rows through articulated driveline joints, require only a single bolt clamp to attach solar panels and automatically stow in high wind conditions.

We have patented single-axis tracker systems that use one electric motor to drive the rotation of multiple

rows through articulated driveline joints, require only a single bolt clamp to attach solar panels and automatically stow in high wind conditions.

We refer to our design as the “DuraTrack” system.

We believe our DuraTrack system has significant advantages, including:

• Requiring fewer motors per megawatt than competing products.

Our tracker system uses less than one motor per megawatt which compares with more than 25 motors per megawatt for our largest competitor.

Using fewer motors per megawatt lowers the cost, reduces the number of failure points, and minimizes the maintenance requirements of our system.

Fewer motors per megawatt also reduces the number of motor controllers and the amount of wiring and other ancillary parts that are required for the system, which further reduces cost, simplifies installation and improves reliability.

• requiring fewer motors per megawatt (“MW”) than competing products;

• creating site design flexibility;

Our drive-shaft joints articulate, which allows successive rows in the array to be offset by a combined angle of up to 40 degrees horizontally or vertically and accommodates up to a 26% grade.

The ability to offset rows allows our customers to accommodate undulating terrain and irregular site boundaries without the need for extensive grading.

We estimate that eliminating grading reduces construction costs by $0.01 to $0.07 per watt of installed capacity, maximizes the use of available land and helps preserve the site environment.

• enabling higher power density than competing products;

Our system is designed to minimize “dead space,” which we define as any area in the system that could otherwise be occupied by a solar panel.

Minimizing dead space is important to our customers because maximizing power production per acre increases their return on investment.

Our system minimizes dead space by locating our gearbox

and drive shafts below the solar panels, as opposed to next to them in some of our competitors’ systems, and by using our patented low-profile clamps that require less than 1/4 inch of spacing between each panel in a row.

Together, we believe these features allow our system to generate approximately 5% more power per acre than our largest competitor’s comparative design.

• making installation easier;

The amount of labor and time required during construction are major contributors to the cost of a solar energy project.

We believe our tracker is simpler and faster to install than competing products because it has fewer parts, requires only one bolt to attach each solar panel, ships largely preassembled from our factory, is efficiently packaged based on component location in the array rather than by part type, and does not require any special tools to install.

• automatically stowing in high wind conditions;

Most damage to ground-mounted solar arrays is caused by high winds.

Avoiding wind damage requires rotating the panels into a position that minimizes lifting forces as wind speeds increase.

This feature is commonly referred to as “wind stow.” Most tracker systems rely on anemometers to determine when wind forces reach levels that could damage the array.

The anemometers communicate with motor controllers that in turn instruct the motors in the tracker system to rotate the array into a wind stow position.

Power to operate the motors is typically provided by a series of batteries.

A failure of any of these components can cause the array to fail to stow, which may result in catastrophic damage.

Our trackers operate differently.

Each row in our system has a gearbox with a patented torque limiting technology which acts as a clutch that releases when wind forces reach a certain level, relieving the pressure on the row by allowing it to rotate freely.

We refer to this capability as “passive stow.” As a purely mechanical system, passive stow eliminates the possibility of severe damage to the array from a failure to stow stemming from a loss of power or electronic component failure.

Additionally, our trackers stow each row individually based on the wind force at that particular row, which allows unaffected rows in the array to continue to generate power while many of our competitors’ products indiscriminately stow the entire array.

• having high reliability and no scheduled maintenance;

Solar energy projects are expected to operate for at least 30 years, so their reliability and maintenance costs can have a significant impact on the owner’s return on investment.

We have designed our tracker to minimize the number of components and potential failure points, provide redundancy in the event of a component failure and eliminate the need for scheduled maintenance, which reduces the total cost of ownership and improves return on investment for the users of our products.

Based on an independent analysis by TÜV Rheinland PTL, we believe our system will require 433 times fewer service hours than our largest competitor’s system.

• incorporating software and machine learning capabilities that enhance performance.

Trackers are typically programmed to rotate panels in an array on a defined schedule.

These schedules are made based on the average angle of insolation for the general area where the project is located but do not usually take into account the site’s specific terrain, weather or air quality conditions.

We have developed a software offering called SmarTrack that uses site-specific weather and energy production data, in combination with machine learning algorithms, to identify the optimal position for a solar array in real time to increase its energy production.

Our SmarTrack software does not require additional hardware and DNV-GL, an independent engineering firm, has projected that using our SmarTrack software can increase energy production in certain circumstances by up to 5%.

• Meeting prospective national security requirements for U.S.

critical energy infrastructure.

Large solar energy projects are subject to heightened and evolving reliability and cybersecurity standards reviewed and approved by the U.S.

We do not source controllers and other key electronic

components from manufacturers that may be deemed to pose threats to U.S.

national security, or rely on open, wireless communication protocols that can be easily hacked.

As cyber attacks on infrastructure become more prevalent, we believe the U.S.

government will impose increasingly stringent cyber security requirements on solar energy projects.

DuraTrack ® HZ v3

Our DuraTrack ® HZ v3 was launched in May 2015.

The DuraTrack HZ v3 is our third generation single axis tracker and incorporates unique features such as a patented single-bolt per module mounting system that reduces installation time, a passive wind load mitigation system and a low number of motors and controls per MW.

Our principal product is the DuraTrack® HZ v3 tracker system, which we launched in May 2015.

DuraTrack HZ v3 is our third-generation single axis tracker and incorporates unique features such as a patented single-bolt per module mounting system that reduces installation time, a passive wind load mitigation system and a low number of motors and controls per MW.

SmarTrack Software

SmarTrack uses site-specific historical weather and energy production data, in combination with machine learning algorithms, to identify the optimal position for a solar array in real time to increase its energy production.

SmarTrack is our software product that uses site-specific historical weather and energy production data, in combination with machine learning algorithms, to identify the optimal position for a solar array in real time to increase its energy production.

Product Roadmap

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We have introduced three generations of trackers and each new version has delivered significant cost and performance improvements over the prior version.

We are currently developing the fourth version of the DuraTrack system which will focus on improvements to performance, reliability and cost of ownership.

We are currently developing the fourth generation of the DuraTrack technology which will focus on improvements to performance, reliability and cost of ownership.

We are also planning to introduce improvements and additional functionality to our SmarTrack software, including unique positioning algorithms designed to maximize energy production from arrays that use bi-facial panels, pre-positioning instructions based on weather forecasts and enhanced site-specific machine learning capabilities as well as cybersecurity enhancements.

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and sponsoring industry conferences and events.

We take a “360-degree” approach to selling, working with developers, independent power producers, EPCs, utilities, independent engineering firms, insurers and mechanical subcontractors in each of the countries where we operate.

In the U.S., Europe, the Middle East and Africa (“EMEA”), Latin America and Australia our products are actively sold by employees in seven different countries.

Our Customers

In 2020, our two largest customers, Lightsource Renewable Energy US, LLC and Blattner Energy

Inc., an independent power producer and an EPC, represented approximately 21.5% of our revenue and were the only customers constituting greater than 10% of total revenue.

In 2020, we derived 92% and 8% of our revenues from customers in the U.S.

and rest of the world, respectively.

In the United States, Europe, the Middle East and Africa (“EMEA”), Latin America and Australia our products are actively sold by employees in seven different countries.

Training and Customer Support

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We have field service engineers located in the geographies where we are active, and support our customers with commissioning of large projects, introduction of new technologies and features and on-the-job training of new installers.

Our customer support and training organization consists of approximately 25 full time employees worldwide.

Trackers are highly specialized products that are specific to the solar industry.

The unique expertise required to design trackers and customers’ reluctance to try unproven products has confined the number of firms that produce trackers to a relatively small number.

Our principal tracker competitors include NEXTracker Inc., a subsidiary of Flex Ltd., PV Hardware and Artech Solar.

We also compete indirectly with manufacturers of fixed tilt mounting systems, including UNIRAC, Inc., and RBI Solar Inc., a subsidiary of Gibraltar Industries, Inc.

We compete on the basis of product performance and features, total cost of ownership (usually measured by LCOE), reliability and duration of product warranty, sales and distribution capabilities, and training and customer support.

Manufacturing

We operate a fifty-seven thousand square feet manufacturing facility in Albuquerque, New Mexico.

We operate a fifty-seven thousand square foot manufacturing facility in Albuquerque, New Mexico.

Our manufacturing process is designed to meet four objectives:

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As needed, we collaborate with academia, national laboratories and consultants, to further enhance our capabilities and confirm results independently.

As of December 31, 2020, we had 46 people in our engineering department.

Intellectual Property

The success of our business depends, in part, on our ability to maintain and protect our proprietary technologies, information, processes and know-how.

We rely primarily on patent, trademark, copyright and trade secret laws in the U.S.

and similar laws in other countries, confidentiality agreements and procedures and other contractual arrangements to protect our technology.

We rely primarily on patent, trademark, copyright and trade secret laws in the United States and similar laws in other countries, confidentiality agreements and procedures and other contractual arrangements to protect our technology.

As of December 31, 2021, we had two U.S.

trademark registrations, nine issued U.S.

trademark registrations, eleven issued U.S.

patents, 152 issued non-U.S.

patents, twelve patent applications pending for examination in the U.S., thirteen U.S.

provisional patent applications pending, at least 100 patent applications pending for examination in other countries and eight domain name registrations, all of which are related to U.S.

applications.

patents, eighteen patent applications pending for examination in the United States, fourteen U.S.

provisional patent applications pending, 94 patent applications pending for examination in other countries and eight domain name registrations.

Many of our patents relate to mounting assemblies, solar trackers and related methods.

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We believe that many elements of our manufacturing processes involve proprietary know-how, technology or data that are not covered by patents or patent applications, including technical processes, test equipment designs, algorithms, and procedures.

Our policy is for our research and development employees to enter into confidentiality and proprietary information agreements with us to address intellectual property protection issues and require our employees to assign to us all of the inventions, designs and technologies they develop during the course of employment with us.

Our policy is for our research and development employees to enter into confidentiality and proprietary information agreements with us to address intellectual property protection issues and require our employees to assign to us all the inventions, designs and technologies they develop during the course of employment with us.

However, we might not have entered into such agreements with all applicable personnel, and such agreements might not be self-executing.

Moreover, such individuals could breach the terms of such agreements.

We also require our customers and business partners to enter into confidentiality agreements

before we disclose any sensitive aspects of our technology or business plans.

ITC for Solar Projects

The most significant incentive program to our business is the federal investment tax credit (“ITC”) for solar energy projects.

The ITC was originally enacted in 2005, and was most recently extended in December 2020 under the Consolidated Appropriations Act, 2021.

The ITC is worth a percentage of a solar project owner’s cost basis in the asset.

The ITC percentage varies depending on the year in which the solar project is deemed to

begin construction under U.S.

Internal Revenue Service (the “IRS”) rules.

In general, the IRS rules provide that construction begins in the year in which a taxpayer performs physical work of a significant nature or pays or incurs at least 5% of the total cost of the solar energy project (the “Safe Harbor”).

A common strategy that our customers use to satisfy the Safe Harbor is to make a single large payment for equipment with the expectation of delivery within three and half months after the payment date.

The ITC is worth 26% of cost for projects that begin construction before 2023.

Projects that begin construction in 2023 or later are subject to the phase down schedule described below.

Our revenue is impacted by seasonality related to ITC step-downs and construction activity.

We also require our customers and business partners to enter into confidentiality agreements before we disclose any sensitive aspects of our technology or business plans.

Government Contracts

Our revenue is impacted by seasonality related to federal investment tax credit (“ITC”) step-downs for solar energy projects and construction activity.

ITC step-downs.

While solar power is cost-competitive with conventional forms of generation in many states without the ITC, we believe step-downs in the ITC have influenced, and will continue to influence, the timing and quantity of some customer’s orders.

For example, during the fourth quarter of 2019, we received approximately $400 million of orders that were structured to maintain our customers’ eligibility for the 30% ITC that is available for projects for which construction began before 2020.

While solar power is cost-competitive with conventional forms of generation in many U.S.

states even without the ITC, we believe step-downs in the ITC have influenced, and will continue to influence, the timing and quantity of some customers’ orders.

During the fourth quarter of 2019, we received approximately $400 million of orders that were structured to maintain our customers’ eligibility for the 30% ITC available for projects for which construction began before 2020.

We shipped and recorded the associated revenues on approximately $100 million and $300 million of those orders in the fourth quarter of 2019 and first half of 2020, respectively.

While we cannot predict our customers’ behavior, we expect the pattern of some customers placing large orders in the fourth quarter with the majority of shipments occurring during the first half of the next calendar year will continue to occur in years preceding an ITC step-down.

During the fourth quarter of 2020, we received approximately $80 million of orders that were structured to maintain our customers’ eligibility for the 26% ITC that is available for projects for which construction began before 2021, respectively.

We shipped and recorded the associated revenues on approximately $40 million and $40 million of those orders in the fourth quarter of 2020 and the first half of 2021, respectively.

The current 26% ITC phases down to 22% for projects that begin construction in 2023, and then phases down to a permanent 10% level for projects that begin construction in 2024 or later.

We cannot predict our customers’ behavior;

however, should the step-downs remain intact we expect to see a similar order pattern to what was experienced in prior years.

Construction activity.

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While we expect this seasonality will continue to impact us in the near term as a large portion of our business is in North America, we expect to see less pronounced seasonal variations as we expand into new global markets in the southern hemisphere.

Trackers are highly specialized products that are specific to the solar industry.

The unique expertise required to design trackers and customers’ reluctance to try unproven products has confined the number of firms that produce trackers to a relatively small number.

Our principal tracker competitors include NEXTracker Inc., a subsidiary of Flex Ltd., PV Hardware and Artech Solar.

We also compete indirectly with manufacturers of fixed tilt mounting systems, including UNIRAC, Inc., and RBI Solar Inc., a subsidiary of Gibraltar Industries, Inc.

As of December 31, 2020, we had 389 full-time employees.

None of our employees are represented by a labor union.

We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good.

Government Regulation

Environmental Laws and Regulations

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The range and duration of these incentives varies widely by geographic market.

The market for grid-connected applications, where solar power is sold into organized electric markets or pursuant to power purchase agreements, often depends in large part on the availability and size of these government subsidies and economic incentives.

economic incentives.

The following is a summary of the major current government subsidies and economic incentives in the key jurisdictions where our customers operate.

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Under the current legislative framework, solar projects that were under construction by the end of 2019 qualify for a tax credit equal to 30% of the project’s cost.

The value drops to 26% for projects starting construction in 2020 through 2022, and 22% for projects starting construction in 2023.

The value dropped to 26% for projects starting construction in 2020 through 2022, and 22% for projects starting construction in 2023.

The credit drops to a permanent 10% level for projects that begin construction in 2024 or later.

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states and local jurisdictions have established various property tax abatement incentives for renewable energy systems.

Human Capital

We believe our success depends on our ability to attract and retain outstanding employees at all levels of our business.

As of December 31, 2021, we had 471 full-time employees, of which approximately 93% are located in the United States, with the balance located in Europe, Latin America, Australia, and Asia.

None of our employees are represented by a labor union.

We have not experienced any employment-related work stoppages, and we consider relations with our employees to be good.

We have a team-oriented culture, which we believe helps us to succeed and drive operational excellence.

As a rapidly growing business, we rely on the success of our recruitment efforts to attract and retain technically skilled people who can support our ongoing innovation and expansion.

We aim to be inclusive in our hiring practices focusing on the best talent for the role, welcoming all genders, nationalities, ethnicities, abilities and other dimensions of diversity.

We drive high levels of performance and improvement by prioritizing training and development to ensure our team members are equipped with the knowledge, skills, and tools to succeed.

We motivate and develop our employees by providing them with opportunities for advancement, and we invest in both on-the-job training and on-line training and development tools because we believe our people are the ultimate drivers of our success.

These initiatives include multiple compliance trainings as well as various leadership development courses.

In addition, we support external development and verification programs as well as offer education reimbursement.

We aim to provide our employees with competitive salary and benefits that enable them to achieve a good quality of life and plan for the future.

Our benefits differ according to local norms and market preferences but typically include all salary and social benefits required by local law (including retirement saving programs, paid vacation and sick leave) and many additional benefits that go beyond legal requirements in local markets.

We aim to hire individuals who share our passion, commitment and entrepreneurial spirit.

We are also committed to diversity and inclusion because we believe that diversity leads to better outcomes for our business and enables us to better meet the needs of our customers.

We recognize the importance of diversity in leadership roles within our company.

Our employees’ health and safety is important to us.

During the COVID-19 pandemic, we took measures to ensure the safety of our employees by complying with federal, state and local health guidelines, and we have implemented procedures to reduce the risk of spreading the virus, such as work from home measures,

restricting the number of attendees at events or in-person meetings, limiting the number of people in our buildings and factories at a given time, further restricting access to our facilities and suspending employee travel, and we have also implemented an hourly incentive for employees that work in our manufacturing facilities.

In addition, we believe that all accidents and injuries at work are preventable and we aim to ensure a zero-injury culture across our offices and operations.

We comply with applicable occupational health and safety regulations and are certified to Occupational Health and Safety Quality Management Standard ISO 9001.

Our injury rates are low.

Available Information

Our website address is https://arraytechinc.com, and our investor relations website is located at https://ir.arraytechinc.com.

Information on our website is not incorporated by reference herein.

We will make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

The SEC maintains an Internet site (http://www.sec.gov) containing reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

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-K

Item 1. Business