What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 194 added, 167 removed, 592 unchanged (38% of the section changed)

4 unchanged sentences

(in thousands, except per share and share amounts)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets

35 unchanged sentences

(in thousands, except per share and share amounts)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Commitments and contingencies (Note 16)

Series A Redeemable Perpetual Preferred Stock of $ 0.001 par value - 500,000 authorized;

412,606 and 350,000 shares issued as of June 30, 2022 and December 31, 2021, respectively;

liquidation preference of $ 413.0 million and $ 350.0 million as of June 30, 2022 and December 31, 2021, respectively

400,000 and 350,000 shares issued as of September 30, 2022 and December 31, 2021, respectively;

liquidation preference of $ 400.0 million and $ 350.0 million as of September 30, 2022 and December 31, 2021, respectively

287,561 237,462

1 unchanged sentence

Preferred stock of $ 0.001 par value - 4,500,000 shares authorized;

none issued as of June 30, 2022 and December 31, 2021

none issued as of September 30, 2022 and December 31, 2021

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

150,279,160 and 135,026,940 shares issued as of June 30, 2022 and December 31, 2021, respectively

150,334,261 and 135,026,940 shares issued as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 392,862 202,562

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

Income (loss) from operations 18,520 ( 19,516 ) ( 25,549 ) ( 4,729 )

Other expense

Other income (expense), net ( 371 ) ( 122 ) 372 ( 200 )

Other income (expense)

Other expense, net ( 399 ) ( 297 ) ( 27 ) ( 497 )

Legal settlement 42,750 — 42,750 —

Foreign currency gain (loss) ( 159 ) — 1,968 —

Interest expense ( 8,746 ) ( 13,109 ) ( 23,709 ) ( 28,769 )

Total other expense ( 10,128 ) ( 6,773 ) ( 12,464 ) ( 15,860 )

Loss before income tax benefit ( 16,972 ) ( 7,347 ) ( 51,469 ) ( 1,073 )

Income tax benefit ( 14,195 ) ( 1,830 ) ( 26,638 ) ( 132 )

Net loss ( 2,777 ) ( 5,517 ) ( 24,831 ) ( 941 )

Total other income (expense) 33,446 ( 13,406 ) 20,982 ( 29,266 )

Income (loss) before income tax (benefit) expense 51,966 ( 32,922 ) ( 4,567 ) ( 33,995 )

Income tax (benefit) expense 11,144 ( 5,361 ) ( 18,109 ) ( 5,493 )

Net income (loss) 40,822 ( 27,561 ) 13,542 ( 28,502 )

Preferred dividends and accretion 12,257 5,479 36,045 5,479

Net loss to common shareholders $ ( 14,959 ) $ ( 5,517 ) $ ( 48,619 ) $ ( 941 )

Loss per common share

Net income (loss) to common shareholders $ 28,565 $ ( 33,040 ) $ ( 22,503 ) $ ( 33,981 )

Income (loss) per common share

Basic $ 0.19 $ ( 0.25 ) $ ( 0.15 ) $ ( 0.26 )

6 unchanged sentences

and Subsidiaries

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited)

(in thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 2,777 ) $ ( 5,517 ) $ ( 24,831 ) $ ( 941 )

Net income (loss) $ 40,822 $ ( 27,561 ) $ 13,542 $ ( 28,502 )

Change in foreign currency translation adjustments ( 34,106 ) — ( 72,835 ) —

Comprehensive loss $ ( 32,495 ) $ ( 5,517 ) $ ( 63,560 ) $ ( 941 )

Comprehensive income (loss) $ 6,716 $ ( 27,561 ) $ ( 59,293 ) $ ( 28,502 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Temporary Equity Permanent Equity

1 unchanged sentence

Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity (Deficit)

Balance at March 31, 2022 400 $ 281,792 — $ — 150,174 $ 150 $ 411,232 $ ( 293,956 ) $ ( 9,011 ) $ 108,415

Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 299,182 ) $ ( 38,729 ) $ 63,853

Equity-based compensation — — — — 55 — 4,097 — — 4,097

1 unchanged sentence

Preferred cumulative dividends plus accretion — 12,257 — — — — ( 12,257 ) — — ( 12,257 )

Net loss — — — — — — — ( 2,777 ) — ( 2,777 )

Other comprehensive income — — — — — — — — ( 29,718 ) ( 29,718 )

Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 296,733 ) $ ( 38,729 ) $ 66,302

Dividends paid ( 13 ) ( 18,670 ) — — — — — — — —

Net income — — — — — — — 40,822 — 40,822

Other comprehensive loss — — — — — — — — ( 34,106 ) ( 34,106 )

Balance at September 30, 2022 400 $ 287,561 — $ — 150,334 $ 150 $ 392,862 $ ( 258,360 ) $ ( 72,835 ) $ 61,817

Array Technologies, Inc.

2 unchanged sentences

(in thousands)

Three Months Ended June 30, 2021

Preferred Stock Common Stock

Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Balance at March 31, 2021 — $ — 126,994 $ 127 $ 148,370 $ ( 216,923 ) $ ( 68,426 )

Three Months Ended September 30, 2021

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Balance at June 30, 2021 — $ — — $ — 126,994 $ 127 $ 149,893 $ ( 222,440 ) $ ( 72,420 )

Equity-based compensation — — — — — — 2,160 — 2,160

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 350 229,799 — — — — — — —

Issuance of common stock, net — — — — 7,875 8 104,756 — 104,764

Preferred cumulative dividends plus accretion — 5,479 — — — — ( 5,479 ) — ( 5,479 )

Net loss — — — — — — — ( 27,561 ) ( 27,561 )

Balance at June 30, 2021 — $ — 126,994 $ 127 $ 149,893 $ ( 222,440 ) $ ( 72,420 )

Balance at September 30, 2021 350 $ 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 250,001 ) $ 1,464

Array Technologies, Inc.

2 unchanged sentences

(in thousands)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Temporary Equity Permanent Equity

6 unchanged sentences

Preferred cumulative dividends plus accretion 13 36,045 — — — — ( 36,045 ) — — ( 36,045 )

Net loss — — — — — — — ( 24,831 ) — ( 24,831 )

Other comprehensive income — — — — — — — — ( 38,729 ) ( 38,729 )

Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 296,733 ) $ ( 38,729 ) $ 66,302

Dividends paid ( 13 ) ( 18,670 ) — — — — — — — —

Net income — — — — — — — 13,542 — 13,542

Other comprehensive loss — — — — — — — — ( 72,835 ) ( 72,835 )

Balance at September 30, 2022 400 $ 287,561 — $ — 150,334 $ 150 $ 392,862 $ ( 258,360 ) $ ( 72,835 ) $ 61,817

Array Technologies, Inc.

2 unchanged sentences

(in thousands)

Six Months Ended June 30, 2021

Preferred Stock Common Stock

Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

Nine Months Ended September 30, 2021

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity (Deficit)

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

Equity-based compensation — — — — — — 11,580 — 11,580

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 350 229,799 — — — — — — —

Issuance of common stock, net — — — — 7,875 8 104,756 — 104,764

Preferred cumulative dividends plus accretion — 5,479 — — — — ( 5,479 ) — ( 5,479 )

Net loss — — — — — — — ( 28,502 ) ( 28,502 )

Balance at June 30, 2021 — $ — 126,994 $ 127 $ 149,893 $ ( 222,440 ) $ ( 72,420 )

Balance at September 30, 2021 350 $ 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 250,001 ) $ 1,464

The accompanying notes are an integral part of these condensed consolidated financial statements.

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

Net loss $ ( 24,831 ) $ ( 941 )

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ 13,542 $ ( 28,502 )

Adjustments to reconcile net income (loss) to net cash provided by, (used in) operating activities:

Provision for (recovery of) bad debts 660 ( 574 )

14 unchanged sentences

Accrued expenses and other 41,271 1,683

Warranty payments ( 373 ) —

Income tax payable 2,951 ( 8,185 )

1 unchanged sentence

Deferred revenue 34,772 ( 68,474 )

Net cash used in operating activities ( 60,764 ) ( 134,109 )

Net cash provided by, (used in) operating activities 44,023 ( 165,837 )

Cash flows from investing activities

8 unchanged sentences

Common stock issuance costs ( 450 ) ( 3,873 )

Dividends paid on Series A Preferred ( 18,670 ) —

Payments on revolving credit facility ( 116,000 ) ( 102,000 )

1 unchanged sentence

Proceeds from revolving credit facility 116,000 102,000

Principal payments on debt ( 22,377 ) ( 31,075 )

Contingent consideration ( 1,483 ) ( 7,810 )

Debt issuance costs — ( 6,590 )

Array Technologies, Inc.

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Principal payments on debt ( 33,286 ) ( 132,150 )

Contingent consideration ( 1,483 ) ( 7,810 )

Debt issuance costs — ( 6,590 )

Net cash provided by financing activities 33,146 188,014

15 unchanged sentences

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

(“ATI Investment”) owns subsidiaries through which it conducts substantially all operations.

owns subsidiaries through which it conducts substantially all operations.

Acquisition of STI

9 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 and six months ended June 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or any other interim periods, or any future year or period.

The results for the three and nine months ended September 30, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or any other interim periods, or any future year or period.

The balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date.

2 unchanged sentences

Principles of Consolidation

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

and its subsidiaries.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries.

All intercompany accounts and transactions have been eliminated upon consolidation.

7 unchanged sentences

Impact of COVID-19 Pandemic

In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (“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, the Company’s industry has seen rapid commodity price increases and strained logistics, causing the Company to experience decreased margins and thus decreased cash from operations which has adversely impacted the Company’s business.

In addition, due to global tightening of supply chain and strained logistics issues the Company has experienced an increase in unbilled revenues and in some instances incurred liquidated damages.

The Company has taken, and continues to take, mitigating steps to overcome the economic challenges and, therefore, believes the impact to be temporary, but cannot be certain the timing of when it will achieve better margins.

The extent to which the COVID-19 pandemic and recent supply chain constraints and price increases 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.

The Company continues to closely monitor the ongoing impact of the COVID-19 pandemic in all the locations where it operates.

The Company’s priority remains the welfare of its employees.

The Company expects persistent waves of COVID-19, including variants of the virus, to remain a headwind into the near future.

The duration and extent to which it will continue to adversely impact the Company’s business and results of operations remain uncertain and could be material.

The Company believes it has sufficient liquidity and financing options available and expects to have sufficient liquidity to operate for the next 12 months.

2 unchanged sentences

however, such a draw would increase the Company’s dividend obligations and outstanding common stock and failure to draw the delayed commitments will result in interest expense payable by the Company.

See Note 13 – Redeemable Perpetual Preferred .

See Note 13 – Redeemable Perpetual Preferred Stock .

The Revolving Credit Facility has $ 166.6 million of availability.

however, the Company may have limited ability to draw on the funds due to existing debt covenants.

Impact of the Ongoing Conflict in Ukraine

The ongoing conflict in Ukraine has reduced the availability of material that can be sourced in Europe and, as a result, increased logistics costs for the procurement of certain inputs and materials used in our products.

We do not know ultimate severity or duration of the conflict in Ukraine, but we are continuously monitoring the

situation and evaluating our procurement strategy and supply chain as to reduce any negative impact on our business, financial condition and results of operations.

The Company could see an impact from inflationary pressures.

Inflation has continued to accelerate in the wake of Russia’s invasion of Ukraine, driving up energy prices, freight premiums, and other operating costs.

Interest rates, notably mature market government bond yields, remain low by historical standards but are rising as central banks around the world tighten monetary policy in response to inflation pressures, while government deficits and debt remain at high levels in many major markets.

We do not know ultimate severity or duration of the conflict in Ukraine, but we continue to monitor the situation and evaluate our procurement strategy and supply chain as to reduce any negative impact on our business, financial condition and results of operations.

The Company could see an impact from elevated inflation and other operating costs.

Interest rates have increased quickly and substantially as central banks in developed countries raise interest rates in an effort to subdue inflation, while government deficits and debt remain at high levels in many global markets.

The eventual implications of higher government deficits and debt, tighter monetary policy, and potentially higher long-term interest rates may drive a higher cost of capital during our forecast period.

11 unchanged sentences

dollars at rates prevailing when acquired, and all other assets and liabilities are translated at period end exchange rates.

Inventories charged to cost of sales and depreciation are remeasured at historical rates, and all other income and expense items are translated at average exchange rates prevailing during the period.

Inventories charged to cost of revenue and depreciation are remeasured at historical rates, and all other income and expense items are translated at average exchange rates prevailing during the period.

Gains and losses which result from remeasurement are included in earnings.

11 unchanged sentences

The standard was applied to the acquisition accounting for STI.

A review of the deferred revenue of

the acquiree of $ 20.3 million was reviewed for consistency in application with the Company’s policies and U.S.

A review of the deferred revenue of the acquiree of $ 20.3 million was reviewed for consistency in application with the Company’s policies and U.S.

GAAP and the contract liability balance was carried over at its carrying value.

5 unchanged sentences

The STI Acquisition provided the Company with an immediate presence in Brazil, Western Europe and South Africa.

Transaction expenses incurred in connection with the acquisition are $ 5.6 million recorded in the General and administrative line item on the condensed consolidated statement of operations for the six months ended June 30, 2022.

expenses incurred in connection with the acquisition are $ 5.6 million recorded in the general and administrative line item on the condensed consolidated statement of operations for the nine months ended September 30, 2022.

In accordance with the STI Purchase Agreement, the Company paid closing consideration to the Sellers consisting of $ 410.5 million in cash and 13,894,800 shares of the Company’s common stock.

16 unchanged sentences

Preliminary Fair Value of Net Assets Acquired and Liabilities Assumed:

Acquisition Date Measurement Adjustment June 30, 2022

Acquisition Date Measurement Adjustment September 30, 2022

Cash and cash equivalents $ 36,725 $ — $ 36,725

18 unchanged sentences

The preliminary purchase price allocation was based upon a preliminary valuation, and the Company’s estimates and assumptions are subject to change within the measurement period (defined as the twelve months following the Acquisition Date).

The preliminary estimates of the fair values of the assets acquired and liabilities assumed were estimated to approximate carrying values since they are short term in nature, and they are receivable or payable on demand.

These assets and liabilities were cash and cash equivalents, accounts receivable, prepaid expenses and other, accounts payable, other liabilities, and deferred revenue.

The primary areas of the preliminary purchase price allocation that are not yet finalized relate to the valuation of identifiable intangible assets acquired, the fair value of certain tangible assets acquired and liabilities assumed as well as the tax impact.

1 unchanged sentence

The purchase price allocation is subject to further adjustment until all pertinent information regarding the assets acquired is fully evaluated by the Company, including but not limited to, the fair value accounting.

For assets and liabilities excluded from the scope of the intangible asset and property, plant and equipment valuation, the Company considered net book value to be a reasonable proxy as of the acquisition close date.

The preliminary purchase price allocation includes $ 318.4 million of acquired identifiable intangible assets.

6 unchanged sentences

The preliminary fair value of the identifiable intangible assets has been estimated using the Excess Earnings Method (customer relationships and backlog) and Relief from Royalty Method (trade name).

Significant inputs using the Excess Earnings Method include estimated revenue, expenses based on actuals and forecast, and a discount rate based on a weighted average cost of capital for customer relationships of 15 % for Spain, 16.5 % for Brazil and 14.0 % for Spain foreign sourced projects and for order backlog of 8.5 % for Spain, 9.5 % for Brazil and 7.5 % for Spain foreign sourced projects.

Significant inputs using the Excess Earnings Method and Level 3 inputs in the fair value hierarchy include estimated revenue, expenses based on actuals and forecast, and a discount rate based on a weighted average cost of capital for customer relationships of 15 % for Spain, 16.5 % for Brazil and 14.0 % for Spain foreign sourced projects and for order backlog of 8.5 % for Spain, 9.5 % for Brazil and 7.5 % for Spain foreign sourced projects.

Significant inputs to the Relief from Royalty method model include estimates of future revenue, economic life, estimated royalty rate of 1.25 %, and a discount rate based on a weighted average cost of capital 15.2 %.

The weighted average cost of capital was determined based on the Company’s capital structure, cost of capital, inherent business risk profile and long-term growth expectations.

The intangible assets are being amortized over their estimated useful lives on a straight-line basis that reflects the economic benefit of the asset.

The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future forecasted cash flows of the Company following the STI Acquisition.

The amounts of revenue and net loss of STI included in the Company’s consolidated statement of operations from the Acquisition Date through June 30, 2022 are $ 122.6 million and $ 10.9 million, respectively.

The amounts of revenue and net loss of STI included in the Company’s consolidated statement of operations from the Acquisition Date through September 30, 2022 are $ 237.2 million and $ 14.1 million, respectively.

Pro Forma Financial Information (Unaudited)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2022 2021 2022 2021

4 unchanged sentences

Accounts receivable consists of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Accounts receivable $ 485,869 $ 236,149

2 unchanged sentences

Inventories consist of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 166,260 $ 85,470

4 unchanged sentences

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

Estimated Useful Lives (Years) June 30, 2022 December 31, 2021

Estimated Useful Lives (Years) September 30, 2022 December 31, 2021

Land N/A $ 1,563 $ 1,340

8 unchanged sentences

Property, plant and equipment, net $ 20,024 $ 10,692

Depreciation expense was $ 0.6 million and $ 0.6 million for the three months ended June 30, 2022 and 2021, respectively, of which $ 0.4 million and $ 0.5 million, respectively, was allocated to cost of revenue and $ 0.2 million and $ 0.1 million, respectively, was included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended June 30, 2022 and 2021.

Depreciation expense was $ 1.2 million and $ 1.2 million for the six months ended June 30, 2022 and 2021, respectively, of which $ 0.9 million and $ 1.0 million, respectively, was allocated to cost of revenue and $ 0.3 million and $ 0.2 million, respectively, was included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2022 and 2021.

Depreciation expense was $ 0.7 million and $ 0.6 million for the three months ended September 30, 2022 and 2021, respectively, of which $ 0.4 million and $ 0.5 million, respectively, was allocated to cost of revenue and $ 0.3 million and $ 0.1 million, respectively, was included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended September 30, 2022 and 2021.

Depreciation expense was $ 1.8 million and $ 1.8 million for the nine months ended September 30, 2022 and 2021, respectively, of which $ 1.2 million and $ 1.5 million, respectively, was allocated to cost of revenue and $ 0.6 million and $ 0.3 million, respectively, was included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the nine months ended September 30, 2022 and 2021.

Goodwill and Other Intangible Assets

Prior to the STI Acquisition, goodwill, related to Former Parent’s acquisition of the Company, was recorded as $ 121.6 million and was subsequently impaired.

Total accumulated impairment as of June 30, 2022 was $ 51.9 million.

With the STI Acquisition in January 2022, the Company recorded an additional $ 335.4 million of goodwill as a result of the STI acquisition and the Company’s reporting units became Array Legacy Operations and the newly acquired STI Operations, which had goodwill of $ 69.7 million and $ 309.0 million, respectively, at June 30, 2022 and $ 69.7 million and zero , respectively, at December 31, 2021.

Total accumulated impairment as of September 30, 2022 was $ 51.9 million.

The Company recorded an additional $ 335.4 million of goodwill as a result of the STI Acquisition and the Company’s reporting units became Array Legacy Operations and the newly acquired STI Operations, which had goodwill of $ 69.7 million and $ 289.9 million, respectively, at September 30, 2022 and $ 69.7 million and zero , respectively, at December 31, 2021.

Goodwill is not deductible for tax purposes.

Changes in the carrying amount of goodwill by operating segment during the six months ended June 30, 2022 are shown below (in thousands):

Changes in the carrying amount of goodwill by operating segment during the nine months ended September 30, 2022 are shown below (in thousands):

Array Legacy Operations Segment

13 unchanged sentences

Other intangible assets consisted of the following (in thousands, except useful lives):

Estimated Useful Lives (Years) June 30, 2022 December 31, 2021

Estimated Useful Lives (Years) September 30, 2022 December 31, 2021

Developed technology 14 $ 203,800 $ 203,800

13 unchanged sentences

Total other intangible assets, net $ 384,084 $ 174,753

Amortization expense related to intangible assets amounted to $ 24.1 million and $ 5.9 million for the three months ended June 30, 2022 and 2021, respectively, and $ 46.7 million and $ 11.8 million for the six months ended June 30, 2022 and 2021, respectively.

Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through June 30, as follows (in thousands):

Amortization expense related to intangible assets amounted to $ 23.2 million and $ 5.9 million for the three months ended September 30, 2022 and 2021, respectively, and $ 69.8 million and $ 17.6 million for the nine months ended September 30, 2022 and 2021, respectively.

Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through September 30, as follows (in thousands):

2022 $ 22,365

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The investment is accounted for in accordance with ASC Topic 321 Investments—Equity Securities at its cost, less any impairment.

The investment balance as of June 30, 2022 was $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheets.

There is no impairment recorded for the six months ended June 30, 2022.

The investment balance as of September 30, 2022 was $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheets.

There is no impairment recorded for the nine months ended September 30, 2022.

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

1 unchanged sentence

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

The Company recorded income tax benefit of $ 14.2 million and $ 1.8 million for the three months ended June 30, 2022 and 2021, respectively, and income tax benefit of $ 26.6 million and $ 0.1 million for the six months ended June 30, 2022 and 2021, respectively.

The tax benefit in the three months ended June 30, 2022 was favorably impacted by non-taxable contingent income, lower transaction costs and mix of income.

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

The tax benefit in the six months ended June 30, 2022 was favorably impacted by mix of earnings in foreign jurisdictions offset by non-deductible amounts for officers’ compensation and transaction costs.

The tax benefit in the six months ended June 30, 2021 was unfavorably impacted by non-deductible equity based compensation as well as initial public offering and secondary offering costs.

For the three and six months ended June 30, 2022 and 2021, no reserves for uncertain tax positions have been recorded.

The Company recorded income tax expense (benefit) of $ 11.1 million and $( 5.4 ) million for the three months ended September 30, 2022 and 2021, respectively, and income tax expense (benefit) of $( 18.1 ) million and $ 5.5 million for the nine months ended September 30, 2022 and 2021, respectively.

The tax expense in the three months ended September 30, 2022 includes tax expense of $ 8.7 million on the legal settlement income which was recorded discretely in the quarter.

The tax, excluding the legal settlement, was favorably impacted by non-taxable contingent income, and mix of income by jurisdiction.

The tax benefit in the three months ended September 30, 2021 was unfavorably impacted by non-deductible amounts for equity-based compensation and follow-on offering costs.

The tax benefit in the nine months ended September 30, 2022 includes tax expense of $ 8.7 million on the legal settlement which was recorded discretely in the quarter.

The tax on the loss, excluding the legal settlement, was favorably impacted by mix of earnings by jurisdictions offset by non-deductible amounts for officers’ compensation and transaction costs.

The tax benefit in the nine months ended September 30, 2021 was unfavorably impacted by non-deductible equity based compensation as well as initial public offering and secondary offering costs.

For the three and nine months ended September 30, 2022 and 2021, no reserves for uncertain tax positions have been recorded.

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

In August 2022, the U.S.

Inflation Reduction Act (“IRA”) was enacted into law.

The IRA contains a number of revisions to the Internal Revenue Code that generally take effect in tax years beginning after December 31, 2022.

The Company is in the process of evaluating provisions included under the IRA and its impact to the Company’s consolidated financial statements.

Senior Secured Credit Facility

Long-term senior secured credit facility consisted of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Term loan facility $ 323,550 $ 326,775

13 unchanged sentences

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had $ 68.0 million and no outstanding balance as of June 30, 2022 and December 31, 2021, respectively, $ 35.3 million and $ 13.6 million in standby letters of credit at June 30, 2022 and December 31, 2021, respectively, and availability of $ 96.7 million and $ 186.4 million at June 30, 2022 and December 31, 2021, respectively.

Under the Revolving Credit Facility, the Company had no outstanding balance as of both September 30, 2022 and December 31, 2021, respectively, $ 33.4 million and $ 13.6 million in standby letters of credit at September 30, 2022 and December 31, 2021, respectively, and availability of $ 166.6 million and $ 186.4 million at September 30, 2022 and December 31, 2021, respectively.

The Revolving Credit Facility pays interest depending on the contracted rate for the loan which is either for the Eurocurrency Rate Loans at LIBOR plus 3.25 % and for Base Rate Loans at the higher of the Prime Rate, 1/2 of 1 % above the Federal Funds Rate or the Eurocurrency rate for the Dollar deposits for one month interest period, after giving effect to any floor plus 1 %, plus 2.25 %.

Term Loan Facility

The Term Loan Facility had a balance of $ 324.6 million and $ 326.8 million as of June 30, 2022 and December 31, 2021, respectively.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 21.2 million and $ 23.3 million as of June 30, 2022 and December 31, 2021, respectively.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of June 30, 2022 is 6.03 %.

The Term Loan Facility has an annual excess cash flow calculation, for which the prescribed formula did not result in requiring the Company to make any advance principal payments for the six months ended June 30, 2022 and 2021.

The Term Loan Facility had a balance of $ 323.6 million and $ 326.8 million as of September 30, 2022 and December 31, 2021, respectively.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 20.2 million and $ 23.3 million as of September 30, 2022 and December 31, 2021, respectively.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of September 30, 2022 is 6.75 %.

The Term Loan Facility has an annual excess cash flow calculation, for which the prescribed formula did not result in requiring the Company to make an advance principal payment for the year ended December 31, 2021.

Convertible Debt

Convertible debt consisted of the following (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

1.00 % Senior unsecured convertible notes

3 unchanged sentences

$ 413,279 $ 411,863

(1) Effective interest rate for the Convertible Notes as of June 30, 2022 and December 31, 2021 was 1.5 %.

(1) Effective interest rate for the Convertible Notes as of September 30, 2022 and December 31, 2021 was 1.5 %.

On December 3, 2021 and December 9, 2021, the Company completed a private offering of $ 375 million and $ 50 million over allotment, respectively, in aggregate principal amount of 1.00 % Convertible Senior Notes due 2028 (the “Convertible Notes”), resulting in proceeds of $ 364.7 million and $ 48.6 million, respectively, after deducting the original issue discount of 2.75 %.

The Convertible Notes were issued pursuant to an indenture, dated December 3, 2021 (the “Indenture”), between the Company and U.S.

The Convertible Notes were issued pursuant to an indenture, dated December 3, 2021, between the Company and U.S.

Bank National Association, as trustee.

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The Convertible Notes bear interest at a rate of 1.00 % per year, payable semiannually in arrears on June 1 and December 1 of each year, beginning on June 1, 2022.

The Convertible Notes were not convertible during the six months ended June 30, 2022 and none have been converted to date.

Also, given that the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact for the six months ended June 30, 2022.

The conversion rate for the Notes was initially 41.9054 shares of the Company’s common stock per $1,000 principal amount of Notes, which was equivalent to an initial conversion price of approximately $ 23.86 per share of common stock or 10.1 million shares of common stock.

The Convertible Notes were not convertible during the nine months ended September 30, 2022 and none have been converted to date.

Also, given that the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact for the nine months ended September 30, 2022.

In connection with the issuances of the Convertible Notes, the Company paid $ 52.9 million, in aggregate, to enter into capped call option agreements to reduce the potential dilution to holders of the Company’s common stock after a conversion of the Convertible Notes.

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In connection with the STI Acquisition, the Company assumed debt obligations of STI.

As of June 30, 2022, related debt balances were $ 47.0 million in short-term debt and $ 13.6 million in long-term debt.

Interest rates on the acquired debt range from 0.55 % to 2.76 % annually and maturities for the short-term portion of loans range from April 2022 to March 2023.

As of September 30, 2022, related debt balances were $ 43.3 million in short-term debt and $ 12.7 million in long-term debt.

Interest rates on the acquired debt range from 0.55 % to 2.76 % annually and maturities for the short-term portion of loans range from December 2022 to March 2023.

Maturities for the long-term portion of loans are $ 4.9 million due in 2024 and $ 7.8 million due in March 2027.

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Further, pursuant to the Securities Purchase Agreement, on September 27, 2021, the Company issued and sold to the Purchasers 776,235 shares of common stock for an aggregate purchase price of $ 776.0 (the “Prepaid Forward Contract”).

The Company used net proceeds from the Initial Closing to repay the entire $ 102.0 million amount outstanding under its existing Revolving Credit Facility and prepay $ 100 million under the Company’s Term Loan.

The Company used net proceeds from the Initial Closing to repay the entire $ 102.0 million amount outstanding under its existing Revolving Credit Facility and prepay $ 100.0 million under the Company’s Term Loan Facility.

Additionally, the Securities Purchase Agreement entitles the Purchasers to designate one representative 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 Purchasers no longer beneficially own shares of the Series A Redeemable Perpetual Preferred Stock with at least $ 100 million aggregate Liquidation Preference (as defined below).

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Additional Closings

June 30, 2023 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 $ 148.0 million (the “Delayed Draw Commitment”).

The Securities Purchase Agreement gives the Company the option to require the Purchasers to purchase, in one or more additional closings, up to 150,000 shares of Series A Redeemable Perpetual Preferred Stock until June 30, 2023 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 $ 148.0 million (the “Delayed Draw Commitment”).

This commitment has been reduced by the Additional Closing.

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As used herein, “Liquidation Preference” means, with respect to any shares of the Series A Redeemable Perpetual Preferred Stock, the initial liquidation preference of $ 1000 per share plus any accrued dividends of such share as the time of the determination.

The “Cash Regular Dividend Rate” of the Series A Redeemable 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” on the Series A Redeemable Perpetual Preferred Stock means 6.25 % per annum on the Liquidation Preference.

Permitted Accrued Dividends accrued as of June 30, 2022 are $ 12.2 million with no dividends paid for the six months ended June 30, 2022 as dividends are accruing to the Liquidation Preference.

Permitted Accrued Dividends resulted in 13 shares of the Series A Redeemable Perpetual Preferred being issued as of June 30, 2022.

There are no Permitted Accrued Dividends accrued as of September 30, 2022 with dividends paid for the nine months ended September 30, 2022 $ 18.7 million (the “Q3 Dividend Payment”).

Permitted Accrued Dividends resulted in 13 shares of the Series A Redeemable Perpetual Preferred Stock being issued as of September 30, 2022 which were settled with the Q3 Dividend Payment and no longer outstanding.

Dividends declared and paid as of December 31, 2021 were $ 8.2 million.

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The Company has presented the Series A Redeemable Perpetual Preferred Stock in temporary equity and is accreting the discount on the increasing rate dividends using the effective interest method.

Such accretion totaled $ 11.1 million for the six months ended June 30, 2022.

The Company had $ 12.2 million in dividends accreted on the carrying value of the Series A Redeemable Perpetual Preferred Stock at an accrual rate of 6.25 % as of June 30, 2022.

Such accretion totaled $ 17.2 million for the nine months ended September 30, 2022.

The Company paid the cash dividend for the three months ended September 30, 2022 of $ 6.3 million in dividends at a rate of 5.75 % as of September 30, 2022.

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

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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As discussed in the consolidated financial statements included in the 2021 Annual Report, contracts related to the Company’s federal investment tax credit (“ITC”) were determined to have multiple performance obligations satisfied at a point in time instead of one performance obligation satisfied over time.

The disaggregated revenue information above for the six months ended June 30, 2021 has been restated to correct this error, which resulted in $ 185.1 million of revenue being reclassified from over-time revenue to point in time revenue for the six months ended June 30, 2021.

The disaggregated revenue information above for the nine months ended September 30, 2021 has been restated to correct this error, which resulted in $ 223.2 million of revenue being reclassified from over-time revenue to point in time revenue for the nine months ended September 30, 2021.

Revenue recognized for the ITC-related contracts and standalone system component sales is recorded at a point in time and recognized when obligations under the terms of the contract with the Company’s customer are satisfied.

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Additionally, title and risk of loss has passed to the customer and the Company does not have the ability to use the product or direct it to another customer.

As of June 30, 2022, the Company had no contracts with customers for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties for the three and six months ended June 30, 2022.

As of September 30, 2022, the Company had no contracts with customers for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties for the three and nine months ended September 30, 2022.

Any losses incurred on point-in-time projects are recognized as the goods are delivered .

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

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Unbilled receivables $ 136,953 $ 111,224

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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):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Deferred revenue $ 154,692 $ 99,575

During the six months ended June 30, 2022, the Company converted $ 61.8 million in deferred revenue to revenue, which represented 62 % of the prior year’s deferred revenue balance.

During the nine months ended September 30, 2022, the Company converted $ 73.1 million in deferred revenue to revenue, which represented 73 % of the prior year’s deferred revenue balance.

Remaining Performance Obligations

As of June 30, 2022, the Company had $ 477 million of remaining performance obligations.

As of September 30, 2022, the Company had $ 386.3 million of remaining performance obligations.

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

Loss Per Share

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

Income (Loss) Per Share

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 2,777 ) $ ( 5,517 ) $ ( 24,831 ) $ ( 941 )

Net income (loss) $ 40,822 $ ( 27,561 ) $ 13,542 $ ( 28,502 )

Preferred dividends and accretion 12,257 5,479 36,045 5,479

Net loss to common shareholders $ ( 14,959 ) $ ( 5,517 ) $ ( 48,619 ) $ ( 941 )

Net income (loss) to common shareholders $ 28,565 $ ( 33,040 ) $ ( 22,503 ) $ ( 33,981 )

Weighted average shares 150,322 130,955 149,604 128,315

Loss per share $ ( 0.10 ) $ ( 0.04 ) $ ( 0.33 ) $ ( 0.01 )

Income (loss) per share $ 0.19 $ ( 0.25 ) $ ( 0.15 ) $ ( 0.26 )

Effect of Restricted Stock and Performance Awards 1,060 — — —

Weighted average shares 151,382 130,955 149,604 128,315

Loss per share $ ( 0.10 ) $ ( 0.04 ) $ ( 0.33 ) $ ( 0.01 )

Potentially dilutive common shares issuable pursuant to equity-based awards of 2,413,230 and 970,424 were not included as of June 30, 2022 and 2021, respectively, as their potential effect was anti-dilutive as the Company generated a net loss.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes as the stock price is below the strike price and the Company generated a net loss.

Income (loss) per share $ 0.19 $ ( 0.25 ) $ ( 0.15 ) $ ( 0.26 )

Potentially dilutive common shares issuance pursuant to equity-based awards of 108,111 were not included as their effect was anti-dilutive for the three months ended September 30, 2022.

Potentially dilutive common shares issuable pursuant to equity-based awards of 2,504,046 and 1,203,520 were not included for the nine

months ended September 30, 2022 and 2021, respectively, and 1,203,520 for the three months ended September 30, 2021, as their potential effect was anti-dilutive since the Company generated a net loss to common stock holders.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes, as the stock price is below the strike price.

Commitments and Contingencies

13 unchanged sentences

The Court accordingly consolidated the Keippel Action with the Plymouth Action for all pretrial purposes and, ordered all filings to be made in the Plymouth Action.

On July 16, 2021, a verified derivative complaint was filed in the Southern District of New York against certain officers and directors of the Company (“First Derivative Action”).

On July 16, 2021, a verified derivative complaint was filed in the Southern District of New York against certain officers and directors of the Company (“First SDNY Derivative Action”).

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 30, 2021, a second and related verified derivative complaint was filed in the Southern District of New York against certain officers and directors of the Company (“Second Derivative Action”).

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.

On August 24, 2021, the Second Derivative Action was consolidated with the First Derivative Action, the Court appointed co-lead counsel, and the case was temporarily stayed pending the entry of an order on all motions to dismiss directed at the pleadings filed in the Plymouth Action.

(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.

On August 24, 2021, the Second SDNY Derivative Action was consolidated with the First SDNY Derivative Action, the Court appointed co-lead counsel, and the case was temporarily stayed pending the entry of an order on all motions to dismiss directed at the pleadings filed in the Plymouth Action.

The stay shall remain in effect until the later of (a) the entry of an order on any motions to dismiss the Plymouth Action or, (b) to the extent the complaint in the Plymouth Action is amended, the entry of an order on any motions to dismiss any such amended complaints in the Plymouth Action.

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and (3) in the Company’s November 5, 2020 and March 9, 2021 earnings calls.

Consistent with the individual rules of practice for the Court in the Plymouth Action, on January 24, 2022, the defendants in the Plymouth Action, including the Company and certain of its officers and directors named as defendants therein, served on lead plaintiff and the Court a letter outlining why the Consolidated Amended Complaint should be dismissed in its entirety.

Lead plaintiff responded to that letter on February 23, 2022 disagreeing with the ground for dismissal outlined in the defendants’ initial letter and contending that its Consolidated Amended Complaint should not be dismissed.

Because the parties could not agree that the Consolidated Amended Complaint was deficient in any respect, the defendants, including the Company, submitted a letter to the Court on March 21, 2022 setting forth the reasons why the Consolidated Amended Complaint should be dismissed and requesting the Court’s leave to file a motion to dismiss.

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, 2022 or December 31, 2021.

On August 17, 2022, the Court in the Plymouth Action set a briefing schedule for any motion to dismiss with the opening motion and supporting memorandum to be filed on or before October 17, 2022, any opposition to be filed on or before December 16, 2022, and any reply in support of the motion to be filed on or before January 16, 2023.

The Company and other defendants in the Plymouth Action filed a joint motion to dismiss the Consolidated Amended Complaint on October 17, 2022.

On August 3, 2022, a verified derivative complaint was filed in the Court of Chancery of the State of Delaware (the “Court of Chancery”) against certain officers and directors of the Company, asserting claims for:

(1) breach of fiduciary duty and (2) unjust enrichment (“First Delaware Derivative Action”).

On August 11, 2022, a second verified derivative complaint was filed against certain officers and directors of the Company Court of Chancery, asserting claims for:

(1) breach of fiduciary duty;

(2) aiding and abetting breaches of fiduciary duty;

(3) waste of corporate assets;

(4) unjust enrichment;

(5) insider selling;

and (6) aiding and abetting insider selling (“Second Delaware Derivative Action”).

On September 2, 2022, the Second Delaware Derivative Action was consolidated with the First Delaware Derivative Action, the Court of Chancery appointed co-lead counsel, and the case was temporarily stayed pending the entry of an order on all motions to dismiss directed at the pleadings filed in the Plymouth Action.

The stay shall remain in effect until the later of (a) the entry of an order on the pending motion to dismiss the

Consolidated Amended Complaint in the Plymouth Action, (b) to the extent the Consolidated Amended Complaint in the Plymouth Action is further amended, the entry of an order on any motions to dismiss any such amended complaints in the Plymouth Action, or (c) the public announcement of a settlement of the Plymouth Action.

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 defenses.

The Company has not recorded any material loss contingency in the condensed consolidated balance sheets as of September 30, 2022 or December 31, 2021.

Contingent Consideration

5 unchanged sentences

to the former owners for certain federal, state, local and non-U.S.

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.

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 contingent consideration in the condensed consolidated statements of operations.

As of June 30, 2022 and December 31, 2021, the fair value of the TRA was $ 7.7 million and $ 14.6 million, respectively.

As of September 30, 2022 and December 31, 2021, the fair value of the TRA was $ 7.1 million and $ 14.6 million, respectively.

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

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

The TRA liability requires significant judgment and is classified as Level 3 in the fair value hierarchy.

As of June 30, 2022, the Company posted surety bonds in the total amount of approximately $ 189.8 million.

As of September 30, 2022, the Company posted surety bonds in the total amount of approximately $ 175.2 million.

The Company is 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.

2 unchanged sentences

The carrying values and the estimated fair values of debt financial instruments were as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Carrying Value Fair Value Carrying Value Fair Value

5 unchanged sentences

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

During the six months ended June 30, 2022, the Company granted an aggregate of 1,378,851 restricted stock units (“RSUs”) to employees and board of director members and 451,671 Performance Stock Units (“PSUs”) to certain executives.

During the nine months ended September 30, 2022, the Company granted an aggregate of 1,433,829 restricted stock units (“RSUs”) to employees and board of director members and 466,916 performance stock units (“PSUs”) to certain executives.

The fair value of the RSUs is determined using the market value of common stock on the grant date.

9 unchanged sentences

Forfeited ( 127,325 ) $ 18.50

Unvested, June 30, 2022

Unvested, September 30, 2022

1,958,121 $ 13.97

4 unchanged sentences

Forfeited ( 68,678 ) $ 30.74

Unvested, June 30, 2022

Unvested, September 30, 2022

545,925 $ 12.95

3 unchanged sentences

Vested Units do not forfeit upon termination and represent a residual interest in Former Parent.

Equity-based compensation cost is measured at the grant date fair value and is recognized on a straight-line basis over the requisite service period, including those Units

with graded vesting with a corresponding credit to additional paid-in capital as a capital contribution from Former Parent.

Equity-based compensation cost is measured at the grant date fair value and is recognized on a straight-line basis over the requisite service period, including those Units with graded vesting with a corresponding credit to additional paid-in capital as a capital contribution from Former Parent.

However, the amount of equity-based compensation at any date is equal to the portion of the grant date value of the award that is vested.

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On March 28, 2020, Former Parent issued 1,000 Class C Units to a member of the board of directors of Array Technologies, Inc.

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 equity-based compensation of $ 8.9 million for the six months ended June 30, 2021.

For the three months ended June 30, 2022 and 2021, the Company recognized $ 3.0 million and $ 4.1 million in equity-based compensation, respectively.

For the six months ended June 30, 2022 and 2021, the Company recognized $ 7.5 million and $ 12.0 million in equity-based compensation, respectively.

As of June 30, 2022, the Company had $ 25.4 million of unrecognized compensation costs related to RSUs which is expected to be recognized over a period of 2.4 years.

There were 119,067 forfeitures during the three and six months ended June 30, 2022 and 57,424 forfeitures during both the three and six months ended June 30, 2021.

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 equity-based compensation of $ 8.9 million for the nine months ended September 30, 2021.

For the three months ended September 30, 2022 and 2021, the Company recognized $ 4.2 million and $ 2.2 million in equity-based compensation, respectively.

For the nine months ended September 30, 2022 and 2021, the Company recognized $ 11.7 million and $ 14.3 million in equity-based compensation, respectively.

As of September 30, 2022, the Company had $ 23.0 million of unrecognized compensation costs related to RSUs and PSUs which is expected to be recognized over a period of 2 years.

There were 76,936 and 196,003 forfeitures during the three and nine months ended September 30, 2022 and 18,772 and 79,277 forfeitures during the three and nine months ended September 30, 2021, respectively.

Related Party Transactions

Accounts Payable-Related Party

The Company had $ 0.5 million and $ 0.6 million as of June 30, 2022 and December 31, 2021, respectively, of accounts payable-related party with the former shareholders of Array.

The Company had $ 0.5 million and $ 0.6 million as of September 30, 2022 and December 31, 2021, 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 and restricted cash related to Former Parent’s acquisition of the Company 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.

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Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Historically, the Company managed its business on the basis of one operating

and reportable segment.

During the six months ended June 30, 2022, the Company changed its reportable segments as a result of the STI Acquisition;

Historically, the Company managed its business on the basis of one operating and reportable segment.

During the nine months ended September 30, 2022, the Company changed its reportable segments as a result of the STI Acquisition;

the Company now operates as two segments;

Array Legacy Operations and STI Operations.

The following table provides a reconciliation of certain financial information for the Company’s reportable segments to information presented in its condensed consolidated financial statements for the three and six months ended June 30, 2022 and 2021 and as of June 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

months ended September 30, 2022 and 2021 and as of September 30, 2022 and December 31, 2021 (in thousands):

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Array Legacy Operations STI Operations Total Array Legacy Operations

1 unchanged sentence

Gross Profit $ 63,921 $ 16,302 $ 80,223 $ 5,897

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Array Legacy Operations STI Operations Total Array Legacy Operations

1 unchanged sentence

Gross Profit $ 119,029 $ 27,727 $ 146,756 $ 72,570

21 Subsequent Events

On July 15, 2022, the Company and Nextracker LLC, Daniel S.

Shugar, Marco Garcia, Flextronics International U.S.A., Inc., Scott Graybeal and Colin Mitchell entered into a monetary settlement agreement (the “Settlement”) to resolve the Nextracker Litigation.

The Company’s claims in the lawsuit included misappropriation of the Company’s trade secrets, tortious interference of contract, and breach of contract.

The Settlement provides for, among other things, a payment of $ 42.8 million which was made by Defendants and received by the Company on August 4, 2022, in resolution of the Company’s claims and a mutual limited release of all claims asserted, or that could have been asserted, in connection with the Nextracker Litigation.

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