What changed in this filing

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Item 9A. Controls and Procedures

2023-03-22 compared with 2022-04-06 · 1167 added, 972 removed, 1026 unchanged (68% of the section changed)

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Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2022.

Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were not effective at a reasonable assurance level as a result of the material weaknesses that existed in our internal control over financial reporting as described below.

Management’s Report on Internal Control Over Financial Reporting.

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The Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the results of this evaluation, the Company’s management concluded that

internal control over financial reporting was not effective as of December 31, 2021, due to the material weaknesses listed below.

Based on the results of this evaluation, the Company’s management concluded that internal control over financial reporting was not effective as of December 31, 2022, due to the material weaknesses listed below.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management has determined that the Company had the following material weaknesses in its internal control over financial reporting at December 31, 2021:

Control Environment and Monitoring – We did not maintain appropriately designed entity-level controls impacting the control environment and effective monitoring controls to prevent or detect material misstatements to the consolidated financial statements.

These deficiencies were attributed to (i) the lack of a sufficient number of qualified resources and inadequate oversight and accountability over the performance of controls, and (ii) ineffective evaluation and determination as to whether the components of internal control were present and functioning.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022excluded an evaluation of the internal control over financial reporting of STI, in accordance with the SEC’s staff guidance that permits the exclusion of acquisitions from management’s assessment of internal control over financial reporting for the fiscal year in which the acquisition occurred.

Due to the size, breadth and complexity of STI’s global operation, management’s evaluation of internal control over financial reporting for the fiscal year ended December 31, 2022, excludes the internal control activities of STI, which represented 17% of total consolidated assets of the Company at December 31, 2022, excluding goodwill and intangible assets, which are included within the scope of management’s assessment, and approximately 23% of total consolidated revenues of the Company for the year ended December 31, 2022.

Management identified the following material weaknesses in its internal control over financial reporting at December 31, 2022:

Control Environment, Risk Assessment and Monitoring Activities – We did not maintain appropriately designed entity-level controls impacting the control environment and effective monitoring controls to prevent or detect

material misstatements to the consolidated financial statements.

These deficiencies were attributed to (i) a lack of a sufficient number of qualified resources and inadequate oversight and accountability over the performance of control activities, (ii) ineffective identification and assessment of risks to properly design and implement relevant controls, and (iii) ineffective evaluation and determination as to whether the components of internal control were present and functioning.

Control Activities – These material weaknesses contributed to the following additional material weaknesses within certain business processes:

• Inventory – We did not appropriately design and implement controls over the existence, accuracy, and cutoff of inventory.

As previously reported, we identified a material weakness relating to inventory cut-off and in-transit inventory, which continued to exist at December 31, 2021.

In addition, we identified a material weakness relating to ineffective controls over our year-end inventory reconciliation process, which resulted in adjustments being recorded as of December 31, 2021.

• Revenue Recognition – We did not design, implement and maintain effective controls over revenue recognized for certain contracts relating to the proper application of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Specifically, we did not maintain effective controls relating to (1) the identification and recognition of performance obligations for customer contracts, and (2) evaluation of customer contracts for potential combination, which resulted in adjustments being recorded as of December 31, 2021, and restatement of the Company’s interim unaudited consolidated financial statements during 2021.

• Accounts Receivable – We did not design, implement and maintain effective controls over the existence of accounts receivable.

Specifically, we did not design controls at an appropriate precision level to identify material misstatements, which resulted in balance sheet adjustments being recorded as of December 31, 2021.

• Inventory – We did not appropriately design, implement, and execute controls over the existence, accuracy, and cutoff of inventory.

Therefore, we continue to identify a material weakness relating to the inventory process at December 31, 2022.

• Revenue Recognition – We did not appropriately design, implement and maintain effective controls over revenue recognition, relating to the proper application of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

As such, we continue to identify a material weakness in revenue recognition.

• Accounts Receivable – We did not appropriately design, implement and maintain effective controls over the existence of accounts receivable.

Specifically, we did not design certain controls at an appropriate precision level to ensure the identification of material misstatements.

Therefore, we continue to identify a material weakness relating to accounts receivable at December 31, 2022.

• Financial Reporting, Consolidation and Business Combination – We did not appropriately design, implement and maintain effective controls over the financial reporting process.

Specifically, we did not maintain effective controls related to (i) preparation of consolidated financial statements, (ii) the accounting for the business combination, including management review controls over the valuation and purchase price allocation, at an appropriate level of precision to detect a material misstatement, and (iii) consolidation of our subsidiaries.

In addition, we did not maintain sufficient appropriate audit evidence to demonstrate execution of the related controls.

• Foreign Currency – We did not appropriately design, implement, and execute controls over foreign currency, including (i) lack of identifying and recording our foreign subsidiaries’ goodwill and intangibles balances in the proper functional currency in our consolidated financial statements, and (ii) performing proper foreign currency translations.

This resulted in the restatement of the Company’s interim unaudited condensed consolidated financial statements.

• STI - Although management did not conduct a formal assessment of internal controls over financial reporting of STI as of December 31, 2022, management has identified material weaknesses in internal controls over financial reporting relating to STI as follows:

◦ We did not design, implement and monitor general information technology controls in the areas of program change management, user access, and segregation of duties for systems supporting substantially all of STI’s internal control processes.

◦ We did not design and implement formal accounting policies, procedures and controls across substantially all of the STI’s business processes to achieve timely, complete, accurate financial accounting, reporting, and disclosures.

After giving full consideration to these material weaknesses, and the additional analyses and other procedures that we performed to ensure that our consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with U.S.

GAAP, our management has concluded that our consolidated financial statements present fairly, in all material respects, our financial position, results of operations and cash flows for the periods disclosed in conformity with U.S.

generally accepted accounting principles (“US GAAP”), our management has concluded that our consolidated financial statements present fairly, in all material respects,

our financial position, results of operations and cash flows for the periods disclosed in conformity with US GAAP.

Remediation Plan for Existing Material Weaknesses

We have begun the process of, and we are focused on, designing and implementing effective measures to strengthen our internal controls over financial reporting and remediate the material weaknesses.

Our planned internal control remediation efforts include the following:

Control Environment and Monitoring – Consistent with the COSO 2013 Framework, Principle 4, attracting, developing, and retaining competent personnel, we have recently hired a Chief Accounting Officer who will provide an additional level of technical accounting expertise, oversight, and monitoring of the design and

performance of both existing and newly implemented controls as noted below.

We will continue to hire in 2022, additional accounting and IT personnel in 2022 to bolster our accounting and IT capabilities and capacity, and we will concentrate on retaining key accounting, IT, and operational personnel.

These actions will further serve to remediate the noted material weakness under the COSO 2013 Framework, Principle 16, by enhancing the efforts towards separate evaluations regarding the presence and functionality of the components of internal control, specifically in the areas of inventory, revenue recognition, and accounts receivable, as noted below.

We are in the process of, and continue to focus on, designing and implementing effective measures to strengthen our internal controls over financial reporting (“ICFR”) and remediate the material weaknesses.

Our planned remediation efforts include the following:

Control Environment, Risk Assessment and Monitoring – We have hired and will continue to hire additional resources throughout 2023 in accounting and IT to supplement our existing capabilities and capacity;

and we will concentrate on retaining key accounting, IT, and operational personnel.

Additionally, we will continue to engage additional resources with specific focus on the STI integration and future business combinations.

Finally, we will continue to enhance the design and operation of monitoring controls and other activities that will allow us to timely assess the design and the operating effectiveness of controls over financial reporting.

Control Activities:

• Inventory – We will enhance the design of existing controls and implement new controls over the accounting, processing, and recording of inventory.

Specifically, we have strengthened the design of the management review control over inventory-in-transit.

Additionally, we have implemented processes to ensure timely identification and evaluation of inventory cut-off and are requiring additional accountability from counterparties on the accuracy of incoming and outgoing shipment documentation.

We also plan to deploy information system enhancements and better use of current system capabilities in order to improve the accuracy of inventory cut-off, reporting, and reconciliation.

• Revenue Recognition – We will enhance the design of existing controls and implement new controls over the review of the application and recording of revenue for customer contracts under the guidance outlined in ASC 606.

We will also design and implement more precise reviews regarding evaluation of contract terms and whether contracts should be combined.

These reviews will include increased contract analysis from our legal team as well as ensuring qualified resources are involved and adequate oversight is performed during the internal technical accounting review process.

• Accounts Receivable – We will enhance the design of existing controls and implement new controls over the processing and review of accounts receivable billings.

We also plan to supplement our accounting staff with more experienced personnel.

Additionally, we will evaluate information system capabilities in order to reduce the manual calculations within this business process.

While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.

• Inventory – We have begun to implement planned information system enhancements and expansion of current information system capabilities, which will result in more reliance on a combination of manual and automated controls.

Additionally, we will enhance existing controls and will implement new controls over the accounting, processing and recording of inventory.

Specifically, we have strengthened the operation of control activities over inventory-in-transit, deploying multiple levels of review and validation of information and supporting documentation.

We expect to deploy final phases of information system enhancements in 2023.

• Revenue – We will continue to evaluate information system capabilities in order to reduce the manual calculations within this business process.

Additionally, we will continue to enhance existing controls to ensure completeness and accuracy of underlying source data for revenue recognition and customer billing.

Lastly, we will continue to supplement our accounting staff with more experienced personnel which will enable us to incorporate an additional level of review.

• F oreign Currency – We have planned information system enhancements which will automate this process which is currently manual.

In the interim, we continue to enhance the design of existing controls related to the foreign currency translation process and over the consolidation of foreign entities into the Company’s consolidated financial statements.

• Other Areas – We are evaluating remediation activities and plan to enhance the design and operating effectiveness of the controls around our ICFR.

We have engaged an outside firm to assist management with (i) reviewing our current processes, procedures, and systems to assess our ICFR to identify opportunities to enhance the design of controls to address relevant risks identified by management, and (ii) enhancing and implementing protocols to retain sufficient documentary evidence of operating effectiveness of such controls.

Additional activities will likely include the following:

◦ Continuing to enhance and formalize our accounting and business operations policies, procedures, and controls to achieve complete, accurate, and timely financial accounting, reporting and necessary disclosures;

◦ Enhancing policies and procedures to retain adequate documentary evidence for relevant management review controls over certain business processes including precision of review and evidence of review procedures performed to demonstrate effective operation of such controls;

◦ Developing monitoring controls and protocols that will allow us to timely assess the design and the operating effectiveness of controls over financial reporting and make necessary changes to the design of controls, if any.

While these actions taken and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles, we are committed to the continuous improvement of our internal control over financial reporting and will continue to review our internal control over financial reporting.

Remediation of a Previously Identified Material Weaknesses

Control Activities – The previously identified material weakness over Sales Order Entry (identified during the second quarter 2022 Form 10-Q/A) has been remediated.

Attestation Report of Independent Registered Public Accounting Firm

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Changes in Internal Control over Financial Reporting

During the quarter ended December 31, 2021, except for the changes discussed above, there have been no other no changes in the company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

During the quarter ended December 31, 2022, except for the changes discussed above, there have been no other changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

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The contents of our website are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K.

the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we file or furnish them electronically with the Securities and Exchange Commission (“SEC”).

We make available, free of charge on our website, access to our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and 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 file or furnish them electronically with the SEC.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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10-K 03/10/2021 4.1

Number Description of Document Form Date No.

4.2 Indenture, dated December 3, 2021, among Array Technologies, Inc.

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8-K 12/07/2021 4.2

10.1 Registration Rights Agreement, dated October 19 by and among Array Technologies, Inc.

and certain holders identified therein

8-K 10/19/2020 10.1

10.1 Registration Rights Agreement, dated August 10, 2021, by and between Array Technologies, Inc.

4 unchanged sentences

8-K 01/11/2022 10.1

10.4 Securities Purchase Agreement, dated August 10, 2021, by and between the Company and BCP Helios Aggregator L.P.

8-K 08/11/2021 10.1

10.5 Credit Agreement, dated October 14, 2020, by and among Array Technologies, Inc., as borrower, ATI Investment Sub, Inc., as guarantor, Goldman Sachs Bank USA, as administrative agent and collateral agent, and the Lenders (as defined therein) from time to time party thereto

10.3 Credit Agreement, dated October 14, 2020, by and among Array Tech, Inc.

(f/k/a Array Technologies, Inc.), as borrower, ATI Investment Sub, Inc., as guarantor, Goldman Sachs Bank USA, as administrative agent and collateral agent, and the Lenders (as defined therein) from time to time party thereto

8-K 10/19/2020

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S-1/A 10/14/2020 10.1

10.7 Tax Receivable Agreement, dated July 8, 2016, between Array Technologies, Inc.

10.5 Tax Receivable Agreement, dated July 8, 2016, between Array Tech, Inc.

(f/k/a Array Technologies, Inc.) and Ron P.

S-1/A 10/14/2020 10.3

Number Description of Document Form Date No.

10.6 Form of Array Technologies, Inc.

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S-1/A 10/14/2020 10.7

10.9 Earnout Agreement, dated June 23, 2016, by and among ATI Investment Parent, LLC, ATI Investment Sub, Inc., Array Technologies, Inc., and the seller parties thereto

S-1/A 10/14/2020 10.8

10.10 Employment Offer Letter, dated August 7, 2018, between Array Technologies, Inc.

and Stuart Bolland

S-1/A 10/14/2020 10.9

10.11 Amendment to Employment Offer Letter, dated May 25, 2019, between Array Technologies, Inc.

and Stuart Bolland

10.7 Earnout Agreement, dated June 23, 2016, by and among ATI Investment Parent, LLC, ATI Investment Sub, Inc., Array Tech, Inc.

(f/k/a Array Technologies, Inc.), and the seller parties thereto

S-1/A 10/14/2020 10.8

10.12 Employment Offer Letter, dated April 25, 2018, between Array Technologies, Inc.

and Jim Fusaro

10.8 Employment Offer Letter, dated April 25, 2018, between Array Tech, Inc.

(f/k/a Array Technologies, Inc.) and Jim Fusaro

S-1/A 10/14/2020 10.8

10.13 Employment Offer Letter, dated December 19, 2016, between Array Technologies, Inc.

and Jeff Krantz

10.9 Employment Offer Letter, dated December 19, 2016, between Array Tech, Inc.

(f/k/a Array Technologies, Inc.) and Jeff Krantz

S-1/A 10/14/2020 10.9

10.14 Amendment to Employment Offer Letter, dated May 23, 2019, between Array Technologies, Inc.

and Jeff Krantz

10.10 Amendment to Employment Offer Letter, dated May 23, 2019, between Array Tech, Inc.

(f/k/a Array Technologies, Inc.) and Jeff Krantz

S-1/A 10/14/2020 10.1

10.15 Offer Letter, dated as of April 3, 2022, by and between Array Technologies, Inc.

and Kevin Hostetler

8-K 04/05/2022 10.1

10.11 Array Technologies, Inc.

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8-K 04/05/2022 10.2

10.17 Separation Agreement, dated as of March 31, 2022, by and between Array Technologies, Inc.

10.12 Separation Agreement, dated as of March 31, 2022, by and between Array Tech , Inc.

and Jim Fusaro

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10-K 03/10/2021 10.13

Number Description of Document Form Date No.

10.15 Amendment No.

1, dated February 23, 2021, to the credit agreement by and among Array Tech, Inc., as borrower, ATI Investment Sub, Inc., as guarantor, Goldman Sachs Bank USA, as administrative agent and collateral agent, and the lenders from time to time party thereto

1, dated February 23, 2021, to the credit agreement by and among Array Tech, Inc.

(f/k/a Array Technologies, Inc.), as borrower, ATI Investment Sub, Inc., as guarantor, Goldman Sachs Bank USA, as administrative agent and collateral agent, and the lenders from time to time party thereto

10-K 03/10/2021

10.16 Amendment No.

2, dated February 26, 2021, to the credit agreement by and among Array Tech, Inc., as borrower, ATI Investment Sub, Inc., as guarantor, Goldman Sachs Bank USA, as administrative agent and collateral agent, and the lenders from time to time party thereto

2, dated February 26, 2021, to the credit agreement by and among Array Tech, Inc.

8-K 03/02/2021

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32.1** Certification of the Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

Number Description of Document Form Date No.

32.2** Certification of the Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.

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Form 10–K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 6, 2022.

Array Technologies, Inc.

/s/ Jim Fusaro

/s/ Kevin Hostetler

Kevin Hostetler

Chief Executive Officer

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Signature Title Date

/s/ Jim Fusaro Chief Executive Officer April 6, 2022

Jim Fusaro (Principal Executive Officer)

/s/ Nipul Patel Chief Financial Officer April 6, 2022

/s/ Kevin Hostetler Chief Executive Officer March 22, 2023

Kevin Hostetler (Principal Executive Officer)

/s/ Nipul Patel Chief Financial Officer March 22, 2023

Nipul Patel (Principal Financial and Accounting Officer)

/s/ Brad Forth Chairman of the Board of Directors April 6, 2022

/s/ Brad Forth Chairman of the Board of Directors March 22, 2023

/s/ Paulo Almirante

Member of the Board of Directors April 6, 2022

Member of the Board of Directors March 22, 2023

Paulo Almirante

/s/ Troy Alstead

Member of the Board of Directors April 6, 2022

Member of the Board of Directors March 22, 2023

/s/ Orlando D.

Member of the Board of Directors April 6, 2022

Member of the Board of Directors March 22, 2023

/s/ Jayanthi Iyengar

Member of the Board of Directors April 6, 2022

Member of the Board of Directors March 22, 2023

Jayanthi Iyengar

/s/ Bilal Kahn Member of the Board of Directors April 6, 2022

/s/ Bilal Khan

Member of the Board of Directors March 22, 2023

/s/ Tracy Jokinen Member of the Board of Directors March 22, 2023

Tracy Jokinen

Signature Title Date

/s/ Gerrard Schmid Member of the Board of Directors April 6, 2022

/s/ Gerrard Schmid Member of the Board of Directors March 22, 2023

Gerrard Schmid

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and Subsidiaries

Report of Independent Registered Public Accounting Firm ( BDO USA, LLP ;

Reports of Independent Registered Public Accounting Firm ( BDO USA, LLP ;

Austin, Texas ;

PCAOB ID# 243 )

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Changes in Member’s Equity /Stockholders’ Deficit

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

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We have audited the accompanying consolidated balance sheets of Array Technologies, Inc.

and Subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in member’s equity/stockholders’ deficit, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, and comprehensive income(loss) for each of the three years in the period ended December 31, 2022, changes in redeemable perpetual preferred stock and stockholders’ equity(deficit) for the years ended December 31, 2022 and 2021, changes in member’s equity and stockholders’ equity(deficit) for the year ended December 31, 2020, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated April 6, 2022 expressed an adverse opinion thereon.

Change in Accounting Method Related to Leases

As discussed in Notes 2 and 15 to the consolidated financial statements, the Company changed its method of accounting for leases during the year ended December 31, 2021 due to the adoption of Accounting Standards Codification (“ASC”) 842, Leases.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 22, 2023 expressed an adverse opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Issuance of the Security Purchase Agreement

As described in Notes 2 and 11 to the Company’s Consolidated Financial Statements, the Company entered into a Security Purchase Agreement, issuing shares of a newly designated Series A Redeemable Perpetual Preferred Stock of the Company and shares of the Company’s common stock for an aggregate purchase price of $346.0 million.

The Company has the option to require the Purchaser to purchase, in one or more additional closings, additional shares of the Series A Redeemable Perpetual Preferred Stock and Common Stock.

The Company evaluated the accounting for the instruments issued in the Securities Purchase Agreement and accounted for the Series A preferred stock as temporary equity on the consolidated balance sheets.

We identified the accounting evaluation of the Securities Purchase Agreement to be a critical audit matter.

Significant judgments and highly complex technical accounting guidance are required in the determination of the scope of the applicable accounting guidance and appropriate balance sheet classification, including the identification and evaluation of embedded features potentially requiring bifurcation as derivatives as well as the determination of initial and subsequent recognition and measurement.

Auditing these elements involved especially challenging and complex auditor judgment due to extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

The primary procedures we performed to address this critical audit matter included:

• Reading and analyzing the contract terms related to the Securities Purchase Agreement.

• Evaluating the reasonableness of the conclusions made by the Company related to the accounting treatment for issuance of the Security Purchase Agreement, including the Company’s consideration of relevant accounting standards to analyze the proper balance sheet classification, the embedded features, and the initial and subsequent recognition and measurement.

• Utilizing personnel with specialized knowledge and skills in the relevant technical accounting guidance to assist in evaluating the appropriateness of Management’s application of relevant accounting guidance for the issuance of the Security Purchase Agreement.

Accounting for Convertible Debt

As described in Note 10 to the Company’s consolidated financial statements, 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 “Notes”).

The Notes contain certain redemption, conversion, and other features that require the Company to assess if such features are embedded derivatives that require bifurcation from the Notes and receive separate accounting treatment.

The Company determined the embedded features did not require bifurcation from the Notes, and therefore were not accounted for separately.

We identified the accounting evaluation of embedded features in the Convertible Debt to be a critical audit matter because the evaluation of the appropriate accounting treatment for potential derivatives involved a high degree of auditor judgment and an increased extent of effort, including the extent of specialized skill or knowledge needed to evaluate the Company’s conclusions.

The primary procedures we performed to address this critical audit matter included:

• Reading and analyzing the contract terms included in various agreements related to the issuance of the Convertible Debt, including the indenture agreement and other agreements entered into on or around the issuance date to identify and assess the reasonableness of management's accounting treatment for the different embedded features as they impacted bifurcation conclusions.

Revenue Recognition of Certain Customer Contracts

As described in Note 2 to the Company’s consolidated financial statements, certain of the Company’s contracts are accounted for as multiple performance obligations because the delivery of the components and other services specified in the contract do not represent a single integrated project.

We identified the determination of multiple performance obligations in certain customer contracts and the timing of associated revenue recognition to be a critical audit matter because there was a significant amount of judgment exercised by management in identifying and evaluating terms and conditions of these customer contracts that impact the timing of revenue recognition.

In addition, a material weakness was identified over the accounting associated with certain contracts.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill and knowledge needed.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Fair Value of Intangible Assets Acquired

As described in Note 3 to the consolidated financial statements, on January 11, 2022, the Company completed the acquisition of Soluciones Técnicas Integrales Norland, S.L.U.

(“STI”) for total consideration transferred of $610.8 million.

The acquisition was accounted for as a business combination requiring management to determine fair values of the identifiable assets and liabilities at the acquisition date which resulted in recognizing intangible assets of $228.4 million related to customer relationships, $50.0 million related to backlog, and $26.0 million related to the trade name.

Management determined the fair value of the customer relationships and backlog using the excess earnings method, and the trade name using the relief from royalty method.

We identified management’s judgments used to determine the fair value of the customer relationships, backlog, and trade name (the “intangible assets”) acquired related to the STI acquisition as a critical audit matter.

Management was required to make significant judgments and assumptions in determining the valuation methodologies and significant underlying assumptions to determine the fair value of the intangible assets acquired, including the estimated revenue and gross margin, and the estimated discount rate (weighted average cost of capital).

The primary procedures we performed to address this critical audit matter included:

• Evaluating management’s accounting policies and practices, including the reasonableness of management’s judgments and assumptions related to the identification of each distinct performance obligation and its pattern of delivery related to certain customer contracts.

• Utilizing personnel with specialized knowledge and skill in valuation to assist in:

(i) evaluating the appropriateness of the valuation methodologies utilized to value the identifiable intangible assets and (ii) evaluating the appropriateness of the selected comparable companies and reasonableness of the discount rates utilized.

• Evaluating the reasonableness of estimated revenue and gross margin through:

(i) evaluating historical performance of STI, (ii) assessing estimated performance against market trends and guideline companies;

and (iii) testing the validity of the backlog by obtaining relevant supporting documents.

/s/ BDO USA, LLP

1 unchanged sentence

Austin, Texas

April 6, 2022

March 22, 2023

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Opinion on Internal Control over Financial Reporting

We have audited Array Technologies, Inc.’s and Subsidiaries (the “Company’s”) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

We have audited Array Technologies, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).

In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We do not express an opinion or any other form of assurance on management’s statements referring to any corrective actions taken by the Company after the date of management’s assessment.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, and comprehensive income(loss) for each of the three years in the period ended December 31, 2022, changes in redeemable perpetual preferred stock and stockholders’ equity(deficit) for the years ended December 31, 2022 and 2021, changes in member’s equity and stockholders’ equity(deficit) for the year ended December 31, 2020, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as “the financial statements”) and our report dated March 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

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We believe that our audit provides a reasonable basis for our opinion.

As indicated in the accompanying “Item 9A, Management’s Report on Internal Control over Financial Reporting”, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Soluciones Técnicas Integrales Norland, S.L.U.(“STI”), which was acquired on January 11, 2022, and which is included in the consolidated balance sheets of the Company as of December 31, 2022, and the related consolidated statements of operations, comprehensive income(loss), changes in redeemable perpetual preferred stock and member’s equity/stockholders’ equity(deficit), and cash flows for the year then ended.

STI constituted 17% of total consolidated assets of the Company excluding goodwill and intangible assets, at December 31, 2022, and approximately 23% of total consolidated revenues of the Company for the year then ended.

Management did not assess the effectiveness of internal control over financial reporting of STI because of the timing of the acquisition which was completed on January 11, 2022.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of STI.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Material weakness have been identified and described in management’s assessment.

These material weaknesses related to managements’ failure to design and maintain effective controls over financial reporting, specifically related to the following:

(1) entity-level controls impacting the control environment and effective monitoring controls to prevent or detect material misstatements to the consolidated financial statements;

(2) the design and implementation of controls over the existence, accuracy, and cutoff of inventory;

(3) the design, implementation and maintenance of effective controls over revenue recognized for certain contracts relating to the proper application of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”);

and (4) the design, implementation and maintenance of effective controls over the existence of accounts receivable.

The material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 financial statements, and this report does not affect our report dated April 6, 2022, on those financial statements.

Material weaknesses have been identified and described in management’s assessment.

These material weaknesses related to management’s failure to design and maintain controls over financial reporting, specifically related to the following:

(1) entity-level controls impacting the control environment, risk assessment and monitoring controls to prevent or detect material misstatements to the consolidated financial statements;

(2) the design, implementation and execution of controls over the existence, accuracy, and cutoff of inventory;

(3) the design, implementation and maintenance of effective controls over revenue recognized in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, (4) the design, implementation and maintenance of effective controls over the existence of accounts receivable, (5) the design, implementation and execution of controls over financial reporting, including the preparation of consolidated financial statements, the accounting for business combinations, and consolidation of subsidiaries, (6) the design, implementation and execution of control over foreign currency, including identifying and recording amounts in the proper functional currency and foreign currency translation, (7) the design, implementation and monitoring of general computer controls relating to STI, and (8) the design and implementation of formal accounting policies, procedures and controls across substantially all of the STI’s business processes.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 financial statements, and this report does not affect our report dated March 22, 2023, on those financial statements.

Definition and Limitations of Internal Control over Financial Reporting

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Austin, Texas

April 6, 2022

March 22, 2023

Array Technologies, Inc.

and Subsidiaries

Consolidated Balance Sheets

(in thousands)

(in thousands, except shares and par value)

Current assets

11 unchanged sentences

Total assets $ 1,706,052 $ 1,142,979

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES, REDEEMABLE PERPETUAL PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities

Accounts payable $ 170,430 $ 92,002

Accounts payable - related party 610 2,232

Accrued expenses and other 54,895 38,494

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Current portion of contingent consideration 1,200 1,773

Current portion of term loan 4,300 4,313

Current portion of debt 38,691 4,300

Other current liabilities 10,553 5,909

Total current liabilities 465,262 245,305

Long-term liabilities

Deferred tax liability 72,606 —

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Other long-term liabilities 14,808 5,557

Long-term debt, net of current portion, debt discount and issuance costs 711,056 423,970

Total long-term liabilities 729,417 447,820

Long-term warranty 1,786 —

Long-term debt, net of current portion 720,352 711,056

Total liabilities 1,282,201 974,722

Commitments and contingencies (Note 15)

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

350,000 and none issued as of December 31, 2021 and 2020, respectively;

liquidation preference of $ 350.0 million and none as of December 31, 2021 and 2020, respectively

Stockholders’ deficit

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

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

Series A Redeemable Perpetual Preferred Stock:

$ 0.001 par value;

500,000 shares authorized;

406,000 and 350,000 issued, respectively;

liquidation preference of $ 400.0 million and $ 350.0 million, respectively

299,570 237,462

Stockholders’ equity (deficit)

Array Technologies, Inc.

and Subsidiaries

Consolidated Balance Sheets (continued)

(in thousands)

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

135,026,940 and 126,994,467 issued as of December 31, 2021 and 2020, respectively

(in thousands, except shares and par value)

Preferred stock $ 0.001 par value;

4,500,000 shares authorized;

Common stock $ 0.001 par value;

1,000,000,000 shares authorized;

150,513,104 and 135,026,940 issued, respectively

Additional paid-in capital 383,176 202,562

Accumulated deficit ( 267,470 ) ( 271,902 )

Total stockholders’ deficit ( 69,205 ) ( 80,899 )

Total liabilities, redeemable perpetual preferred stock and stockholders’ (deficit) $ 1,142,979 $ 656,024

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

Accumulated other comprehensive income 8,425 —

Total stockholders’ equity (deficit) 124,281 ( 69,205 )

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity (deficit) $ 1,706,052 $ 1,142,979

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share amounts)

(in thousands)

Year Ended December 31,

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Income (loss) from operations ( 18,133 ) ( 24,741 ) 95,212

Other expense

Other expense, net ( 905 ) ( 2,305 ) ( 33 )

Other income (expense)

Other income (expense), net 2,789 ( 905 ) ( 2,305 )

Legal settlement 42,750 — —

Foreign currency gain 1,155 — —

Interest expense ( 33,513 ) ( 35,475 ) ( 15,129 )

Total other expense ( 36,380 ) ( 17,434 ) ( 18,830 )

Income before income tax expense (benefit) ( 61,121 ) 77,778 64,579

Income tax expense (benefit) ( 10,718 ) 18,705 24,834

Total other income (expense) 13,181 ( 36,380 ) ( 17,434 )

Income (loss) before income tax benefit ( 4,952 ) ( 61,121 ) 77,778

Income tax (benefit) expense ( 9,384 ) ( 10,718 ) 18,705

Net income (loss) 4,432 ( 50,403 ) 59,073

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Net income (loss) to common shareholders $ ( 43,622 ) $ ( 66,118 ) $ 59,073

Earnings (loss) per share

Income (loss) per common share

Basic $ ( 0.29 ) $ ( 0.51 ) $ 0.49

Diluted $ ( 0.29 ) $ ( 0.51 ) $ 0.49

Weighted average number of shares

Weighted average common shares outstanding

Basic 149,819 129,984 121,467

Diluted 149,819 129,984 121,514

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

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

and Subsidiaries

Consolidated Statements of Changes in Member’s Equity/Stockholders’ Deficit

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

For the years ended December 31, 2019 and 2020

Common Stock Additional paid-in capital Retained Earnings Total Member’s Equity/Stockholders’ Deficit

Units Amount Shares Amount

Balance, December 31, 2018 1 $ 264,474 — $ — $ — $ — $ 264,474

Capital contribution — 133 — — — — 133

Year Ended December 31,

2022 2021 2020

Net income (loss) $ 4,432 $ ( 50,403 ) $ 59,073

Change in foreign currency translation adjustments 8,425 — —

Comprehensive income (loss) $ 12,857 $ ( 50,403 ) $ 59,073

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

For the year ended December 31, 2022

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 Accumulated Other Comprehensive Loss Total Stockholders’ Equity (Deficit)

Balance at December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — 339 — 14,543 — — 14,543

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — — — ( 1,938 ) — — ( 1,938 )

Issuance of common stock, net — — — — 15,147 15 216,063 — — 216,078

Preferred cumulative dividends plus accretion 19 48,054 — — — — ( 48,054 ) — — ( 48,054 )

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

Net income — — — — — — — 4,432 — 4,432

Balance, December 31, 2019 1 305,151 — — — — 305,151

Special distribution — ( 589,000 ) — — — — ( 589,000 )

Initial public offering of common stock, net of underwriting discounts and commissions — — 7,000 7 145,525 — 145,532

Deferred offering costs — — — ( 6,464 ) — ( 6,464 )

Stock compensation expense — 3,397 — — 1,412 — 4,809

Net income (loss) — 71,394 — — — ( 12,321 ) 59,073

Corporate conversion and stock split ( 1 ) 209,058 119,994 120 — ( 209,178 ) —

Other comprehensive income — — — — — — — — 8,425 8,425

Balance, December 31, 2022 406 $ 299,570 — $ — 150,513 $ 150 $ 383,176 $ ( 267,470 ) $ 8,425 $ 124,281

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

and Subsidiaries

Consolidated Statements of Changes in Member’s Equity/Redeemable Perpetual Preferred Stock and Stockholders’ Equity/(Deficit) (continued)

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands)

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Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock Additional paid-in capital Accumulated deficit Total Stockholders’ Equity/(Deficit)

Shares Amount Shares Amount Shares Amount

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

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

2 unchanged sentences

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

Premium on capped call, net of deferred tax — — — — — — ( 40,514 ) — ( 40,514 )

Deferred tax impact of capped call — — — — — — ( 40,514 ) — — ( 40,514 )

Preferred cumulative dividends — 8,226 — — — — ( 8,226 ) — — ( 8,226 )

2 unchanged sentences

Net (loss) — — — — — — — ( 50,403 ) — ( 50,403 )

Balance at December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

Consolidated Statements of Changes in Member’s Equity and Stockholders’ Equity (Deficit)

(in thousands)

For the year ended December 31, 2020

Member’s Equity Common Stock

Units Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Member’s Equity/Stockholders’ Equity (Deficit)

Balance, December 31, 2019 1 $ 305,151 — $ — $ — $ — $ 305,151

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

Special distribution — ( 589,000 ) — — — — ( 589,000 )

Initial public offering of common stock, net of underwriting discounts and commissions — — 7,000 7 145,525 — 145,532

Deferred offering costs — — — — ( 6,464 ) — ( 6,464 )

Stock compensation expense — 3,397 — — 1,412 — 4,809

Net income (loss) — 71,394 — — — ( 12,321 ) 59,073

Corporate conversion and stock split ( 1 ) 209,058 119,994 120 — ( 209,178 ) —

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

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

2 unchanged sentences

2022 2021 2020

Cash flows used in (provided by) operating activities

Operating activities:

Net income (loss) $ 4,432 $ ( 50,403 ) $ 59,073

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

Adjustments to net income (loss):

Provision for (recovery of) bad debts 2,599 ( 467 ) 595

Deferred tax (benefit) expense ( 10,102 ) ( 2,739 ) 22,322

Deferred tax benefit ( 31,565 ) ( 10,102 ) ( 2,739 )

Depreciation and amortization 101,059 25,946 27,474

5 unchanged sentences

Provision for inventory obsolescence ( 859 ) 990 1,225

Changes in operating assets and liabilities

Changes in operating assets and liabilities, net of acquisition

Accounts receivable ( 76,984 ) ( 116,848 ) ( 23,038 )

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Accounts payable 12,667 7,015 ( 50,519 )

Accounts payable - related party ( 1,622 ) — —

Accrued expenses and other 1,024 9,133 10,913

4 unchanged sentences

Net cash provided by (used in) operating activities 141,493 ( 263,187 ) ( 122,205 )

Cash flows used in investing activities

Investing activities:

Purchase of property, plant and equipment ( 10,619 ) ( 3,357 ) ( 1,338 )

Acquisition of STI, net of cash acquired ( 373,818 ) — —

Investment in equity security — ( 11,975 ) —

Net cash used in investing activities ( 384,437 ) ( 15,332 ) ( 1,338 )

Cash flows from financing activities

Proceeds from issuance of convertible notes 413,321 — —

Premium paid on capped call ( 52,870 ) — —

Fees paid on issuance of convertible notes ( 1,591 ) — —

Dividends paid on Series A Preferred ( 8,051 ) — —

Financing activities:

Proceeds from Series A issuance 33,098 224,987 —

1 unchanged sentence

Series A equity issuance costs ( 1,893 ) ( 7,195 ) —

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

Array Technologies, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows (continued)

2 unchanged sentences

2022 2021 2020

Common stock issuance costs ( 3,873 ) — —

Proceeds from revolving credit facility 126,033 — —

Dividends paid on Series A Preferred ( 18,670 ) ( 8,051 ) —

Payments on revolving credit facility ( 116,000 ) ( 126,033 ) ( 70 )

Principal payments on term loan — ( 57,702 ) ( 25,000 )

Proceeds from term loan facility — 575,000 —

Proceeds from revolving credit facility 116,000 126,033 —

Proceeds from issuance of other debt 20,188 — —

Proceeds from issuance of convertible notes — 413,321 —

Premium paid on capped call — ( 52,870 ) —

Fees paid on issuance of convertible notes — ( 1,591 ) —

Principal payments on term loan facility ( 14,300 ) — ( 57,702 )

Proceeds from (Payments on) revolving loan — ( 70 ) ( 39,078 )

Proceeds from term loan facility — — 575,000

Principal payments on other debt ( 23,935 ) ( 133,225 ) ( 115,000 )

Payments on related party loans — — ( 45,558 )

Payment of special distribution — — ( 589,000 )

Proceeds from issuance of common stock, net of underwriting discount and commissions

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

1 unchanged sentence

Debt issuance costs — ( 6,590 ) ( 36,011 )

Capital contribution — — 133

Net cash provided by (used in) financing activities 8,440 537,748 ( 129,273 )

Effect of exchange rate changes on cash and cash equivalent balances 735 — —

Net change in cash and cash equivalents ( 233,769 ) 259,229 ( 252,816 )

4 unchanged sentences

Cash paid for income taxes $ 10,739 $ 13,318 $ 31,103

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

Non-cash Investing and Financing Activities

Dividends accrued on Series A Preferred $ 6,389 $ — $ —

Stock consideration paid for acquisition of STI $ 200,224 $ — $ —

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

3 unchanged sentences

On October 14, 2020, the Company converted from a Delaware limited liability company to a Delaware corporation and changed the Company’s name to Array Technologies, Inc.

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

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

(“ATI Investment”) owns one subsidiary through which it conducts substantially all operations;

Array Tech, Inc.

(collectively “AT”).

In connection with the corporate conversion, the Company converted all 1,000 of our outstanding member units into 100,000,000 shares of common stock and then completed a stock split of 1.19994 -for-1.

The corporate conversion and stock split representing 119,994,467 shares of common stock have been adjusted retroactively for the purposes of calculating basic and diluted earnings per share.

On January 11, 2022 (the “Acquisition Date”), the Company acquired 100 % of the share capital of Soluciones Técnicas Integrales Norland, S.L.U., a Spanish private limited liability Company, and its subsidiaries (collectively, “STI”) with cash and common stock of the Company (the “STI Acquisition”).

The STI Acquisition was accounted for as a business combination.

See Note 3 – Acquisition of STI .

Headquartered in Albuquerque, New Mexico, the Company is a leading global manufacturer and supplier of utility-scale solar tracking systems and technologies.

Summary of Significant Accounting Policies

Basis of Accounting and Presentation

The accompanying consolidated financial statements were prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S.

The accompanying consolidated financial statements were prepared on the accrual basis of accounting in accordance with U.S.

generally accepted accounting principles (“U.S.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recently Adopted Accounting Pronouncements

On January 1, 2021, the Company adopted Accounting Standards Update (“ASU”) No.

2016-02 (Topic 842) “Leases” which supersedes the lease recognition requirements in ASC Topic 840, “Leases” .

Under ASU No.

2016-02, lessees are required to recognize assets and liabilities on the consolidated balance sheets for most leases and provide enhanced disclosures.

For companies that are not emerging growth companies (“EGCs”), the ASU was effective for fiscal years beginning after December 15, 2018.

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

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

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

The Company applied the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following:

(i) whether any expired or existing contracts contain leases;

(ii) the lease classification for any expired or existing leases;

and (iii) initial direct costs for any existing leases.

The adoption did not have a material impact on its consolidated statements of operations or its consolidated statements of cash flows.

See Note 15, Leases, for further information and disclosures related to the adoption of this standard.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU No.

2019-12”), which is intended to simplify various aspects of the accounting for income taxes.

2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application.

This standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption is permitted.

The Company has adopted the pronouncement and it did not have a material impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ ASU 2021-08”).

ASU 2021-08 requires contract assets and contract liabilities obtained in a business combination to be recognized and measured in accordance with Accounting Standards Codification (“ASC”) Topic 606 Revenue from Contracts with Customers (“ ASC 606”).

At the acquisition date, the company acquiring the business should record related revenue, as if it had originated the contract.

Before the recent update, such amounts were recognized by the acquiring company at fair value.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued.

The Company early adopted ASU 2021-08 as of January 1, 2022.

See Note 3 – Acquisition of STI for further information and disclosures related to the STI Acquisition.

The standard was applied to the acquisition accounting for STI.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) .

The amendments in this update simplifies accounting for certain convertible debt instruments by removing the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature.

As a result, convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features.

Additionally, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer be available for convertible debt instruments.

The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.

The Company early adopted the new standard effective January 1, 2021 using the modified retrospective method.

There was no impact on the Company's financial statements as of the adoption date.

As further discussed in Note 10, "Convertible Debt," the Company issued $ 425 million principal amount of convertible senior notes on December 3, 2021, which have been accounted for in accordance with the provisions of ASU 2020-06.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses , which was subsequently amended by ASU No.

2018-19 and ASU No.

2019-10, requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts.

The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value.

In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists.

The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

The standard was adopted on January 1, 2021 as the Company lost it’s status as an Emerging Growth Company effective December 31, 2021 and therefore was required to adopt the standard for the year ending December 31, 2021.

The adoption of this standard did not have an impact on consolidated financial statements.

Corporate Conversion and Stock Split

On October 14, 2020, prior to the issuance of any of our shares of common stock in our initial public offering (the “IPO”), we converted from a Delaware limited liability company to a Delaware corporation.

In connection with the corporate conversion we converted all 1,000 of our outstanding member units into 100,000,000 shares of common stock and then completed a stock split of 1.19994 -for-1.

The corporate conversion and stock split representing 119,994,467 shares of common stock have been adjusted retroactively for the purposes of calculating basic and diluted earnings per share.

Principles of Consolidation

3 unchanged sentences

Use of Estimates

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

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of

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

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period.

Although management believes its estimates are reasonable, actual results could differ from those estimates.

Impact of COVID-19 Pandemic

We continue to closely monitor the ongoing impact of the COVID-19 pandemic in all the locations where we operate.

At this time, the extent to which the pandemic may affect our business, operations and plans, including the resulting impact on our expenditures and capital needs, remains uncertain and is subject to change, but overall the pandemic appears to be having a lessening impact on our business and the markets in which we operate.

On January 31, 2023, the Biden administration announced its plan to let the coronavirus public health emergency expire in May 2023.

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 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.

Inflationary pressures, while somewhat moderating recently, are expected to persist, at least in the near-term, and may continue to negatively impact our results of operation.

To mitigate the inflationary pressures on our business, we have implemented selective price increases in certain markets, accelerated productivity initiatives and expanded our supplier base, while continuing to execute on overhead cost containment practices.

Foreign Currency Translation

subsidiaries that operate in a local currency environment, assets and liabilities are translated into U.S.

dollars at period end exchange rates.

Income, expense and cash flow items are translated at average exchange rates prevailing during the period.

Translation adjustments for these subsidiaries are accumulated as a separate component of net parent investment.

subsidiaries that use a U.S.

dollar functional currency, local currency inventories and property, plant and equipment are translated into U.S.

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.

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

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Significant estimates include impairment of goodwill, impairment of long-lived assets, fair value of contingent consideration, Series A Redeemable Preferred Stock and the related future tranche, allowance for credit losses, reserve for excess or obsolete inventories, valuation of deferred tax assets and warranty reserve.

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

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

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

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

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

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

Impact of COVID-19 Pandemic

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

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

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

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

In addition, due to global tightening of supply chain and strained logistics issues we have experienced an increase in our unbilled revenues and also in some instances incurred liquidated damages.

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

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

The Company expects to use cash generated from operations and if needed, can access funds from the Revolving Credit Facility.

The Company also has $ 100 million in delayed draw ability under the Series A Redeemable Perpetual Preferred Stock future draw commitment, however this would increase the Company’s dividend obligations and outstanding common stock.

The Revolving Credit Facility has $ 186.4 million of availability;

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

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

The extent to which COVID-19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

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

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

We regularly maintain cash balances that exceed insured amounts, but we have experienced no losses associated with these amounts to date.

At December 31, 2022 all cash balances were deposited with banks, and we had no cash equivalents.

Accounts Receivable

The Company’s accounts receivable are due primarily from solar contractors across the United States and internationally.

Credit is extended in the normal course of business based on evaluation of a customer’s

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

financial condition and, generally, collateral is not required.

The Company’s accounts receivable are due primarily from solar contractors across the U.S.

and internationally.

Credit is extended in the normal course of business based on evaluation of a customer’s financial condition and, generally, collateral is not required.

Trade receivables consist of uncollateralized customer obligations due under normal trade terms requiring payment within 30-60 days of the invoice date.

Management regularly reviews outstanding accounts receivable and provides for estimated credit losses through an estimate of expected credit losses valuation account.

The Company adopted ASU No.

2016-13, Financial Instruments - Credit Losses , (“ASU 2016-13”) on January 1, 2021 which revised the methodology for measuring credit losses on financial instruments including trade accounts receivable and the timing of when such losses are recorded.

The Company adopted ASU 2016-13 using a modified retrospective approach with a cumulative effect adjustment to the opening balance of retained earnings, which had no impact on the consolidated financial statements.

The allowance for credit losses is a valuation account that is deducted from a financial asset’s amortized cost to present the net amount we expect to collect from the asset.

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When deemed uncollectible, the receivable is charged against the valuation account for credit losses or directly written off.

At December 31, 2021 and 2020, the valuation account was $ 0.1 million and $ 0.7 million, respectively.

Unbilled receivables, which represent temporary timing differences between shipments made and billing milestones achieved, were $ 111.2 million and $ 18.1 million of the accounts receivable balances as of December 31, 2021 and 2020, respectively.

These amounts have not been billed because we are waiting for agreed upon billing stipulations such as billing on a specified date of the month or upon completion of mega-watt deliveries.

The unbilled balance has increased as of December 31, 2021 due to global challenges with supply chain logistics and labor shortages in some instances causing delays in delivering specific components to complete a mega-watt delivery.

These will be invoiced once the commercial criteria have been met at which point we will invoice and expect payment within 30 to 60 days.

Amounts retained by project owners under contracts and included in accounts receivable at December 31, 2021 and 2020 were $ 13.5 million and $ 4.1 million, respectively.

Such retention amounts represent funds withheld by our customers until the products are installed by a third-party, arranged by the customer, and the project is declared operational.

Retention amounts and length of retention periods may vary.

All retention amounts outstanding as of December 31, 2021 are collectible within the next 12 months.

The following is the activity of the reserve for credit losses on accounts receivable which includes trade accounts receivable and unbilled accounts receivable (in thousands):

Beginning balance $ 663

Provision for credit losses ( 303 )

Collected ( 130 )

Written-off ( 90 )

Ending balance $ 140

The following is the activity of the allowance for doubtful accounts (in thousands):

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Beginning balance $ 162

Provision for bad debts 847

Collected ( 242 )

Written-off ( 104 )

Ending balance $ 663

Inventories consist of raw materials and finished goods.

Inventories are stated at the lower of cost or estimated net realizable value using the weighted average method.

Unbilled receivables represent temporary timing differences between shipments made and billing milestones achieved and are recorded in the accounts receivable balances.

Such amounts have not been billed due to pending commercial criteria such as billing on a specified date of the month or upon completion of mega-watt deliveries.

Unbilled receivables are invoiced once the underlying commercial criteria have been met and we expect payment within 30 to 60 days.

Inventories consist of raw materials and finished goods and are stated at the lower of cost or estimated net realizable value using primarily the weighted average method and some valued using the FIFO method.

Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values.

See Note 3 for a detail of the components that comprise the inventory balance presented on the accompanying consolidated balance sheets.

Property, Plant and Equipment

Property, plant and equipment acquired in the acquisition of Array are recorded at fair value at the date of acquisition net of accumulated depreciation and amortization;

all other property, plant and equipment are recorded at cost, net of accumulated depreciation and amortization.

Improvements, betterments and replacements which significantly extend the life of an asset are capitalized.

Property, plant and equipment are recorded at cost, net of accumulated depreciation and amortization.

Improvements, betterments and replacements which extend the life of an asset are capitalized.

Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the respective assets.

Repair and maintenance costs are expensed as incurred.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

A gain or loss on the sale of property, plant and equipment is calculated as the difference between the cost of the asset disposed of, net of depreciation, and the sales proceeds received.

A gain or loss on an asset disposal is recognized in the period that the sale occurs.

Operating lease arrangements are comprised primarily of real estate and equipment agreements.

The Company determines if an arrangement contains a lease at inception based on whether it conveys the right to control the use of an identified asset in exchange for consideration.

Lease right-of-use assets (“ROU assets”) and associated lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Certain lease agreements may include one or more options to extend or terminate a lease.

Lease terms are inclusive of these options if it is reasonably certain that the Company will exercise such options.

ROU assets also include any initial direct costs and prepayments less lease incentives.

As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.

Lease expense is recognized on a straight-line basis over the lease term.

ROU assets and the corresponding operating lease liabilities are included in other assets and other liabilities in our consolidated balance sheets.

Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets.

Impairment of Long-Lived Assets

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If the projections indicate that the recorded amounts are not expected to be recoverable, such amounts are reduced to estimated fair value.

Fair value is estimated based upon internal evaluation of each asset that includes quantitative analyses of net revenue and cash flows, review of recent sales of similar assets and market responses based upon discussions in connection with offers received from potential buyers.

Management determined there was no impairment for the years ended December 31, 2022, 2021 and 2020.

Goodwill reflects the excess of the consideration transferred, including the fair value of any contingent consideration over the assigned fair values of the identifiable net assets acquired.

Goodwill is not amortized, and is assigned to the reporting unit and tested for impairment at least on an annual basis.

Goodwill is not amortized and is assigned at the reporting unit level and tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value.

Goodwill is assessed using either a qualitative assessment or quantitative approach to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount.

The qualitative assessment evaluates factors including macroeconomic conditions, industry-specific and company-specific considerations,

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

legal and regulatory environments, and historical performance.

The qualitative assessment evaluates factors including macroeconomic conditions, industry-specific and company-specific considerations, legal and regulatory environments, and historical performance.

If the Company determines that is more likely than not that the fair value of a reporting unit is less than its carrying value, a quantitative assessment is performed.

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Impairment is indicated if the estimated fair value or the reporting unit is less than the carrying amount of the reporting unit, and an impairment charge is recognized for the differential.

The Company completes its annual goodwill impairment test as of year-end.

At December 31, 2021, the Company performed both a qualitative and quantitative test for impairment of goodwill and no impairment was recorded.

At December 31, 2020, the Company performed a qualitative assessment of its goodwill and no impairment was recorded.

At December 31, 2019, the Company performed a quantitative assessment of its goodwill and no impairment was recorded.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Investment in Equity Securities

In 2021, the Company invested $ 12.0 million in the preferred stock of a private company.

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

The equity investment is recorded in other assets on the consolidated balance sheets.

No impairment has been recognized since the date of investment.

Amortizable and Other Intangible Assets

The Company amortizes identifiable intangible assets consisting of developed technology, customer relationships, contractual backlog and internal-use software modifications because these assets have finite lives.

The Company’s intangible assets with finite lives are amortized on a straight-line basis over the estimated useful lives.

The Company amortizes identifiable finite lived intangible assets consisting of developed technology, customer relationships, contractual backlog and the STI trade name on a straight-line basis over the assets’ estimated useful lives.

The basis of amortization approximates the pattern in which the assets are utilized, over their estimated useful lives.

The Array Technologies trade name has been determined to have an indefinite life and, therefore, is not amortized but is subject to an annual impairment test or at any other time when impairment indicators exist.

The Company completed its annual impairment test for its non-amortizable asset (Trade Name) by comparing the estimated fair value to the carrying value of such asset.

Based on the results of the tests, the Company did no t recognize any impairment charges for the years ended December 31, 2021, 2020 and 2019.

The Company did no t recognize any impairment charges for the years ended December 31, 2022, 2021 and 2020.

Deferred Offering Costs

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Deferred offering costs were offset against the proceeds.

Debt Discount and Financing Costs

Debt discount and financing costs incurred to issue debt are deferred and amortized using the effective interest method as a component of interest expense over the life of the related debt agreement.

Amortization expense and write-off of debt discount and deferred financing costs was $ 15.0 million, (including $ 9.6 million in write-offs in connection with unscheduled principal payoffs that occurred in February and August of 2021 – see Notes 9 and 10), $ 3.4 million and $ 4.0 million, respectively, for the years ended December 31, 2021, 2020 and 2019.

Debt Discount and Issuance Costs

Debt discount and issuance costs incurred to issue debt are deferred and amortized using the effective interest method as a component of interest expense over the life of the related debt agreement.

Amortization expense of debt discount and deferred issuance costs was $ 6.9 million, $ 15.0 million (including $ 9.6 million in write-offs in connection with unscheduled principal payoffs that occurred in February and August of 2021) and $ 3.4 million, respectively, for the years ended December 31, 2022, 2021 and 2020.

Revenue Recognition

Under ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenues from the sale of solar tracking systems and parts and determines its revenue recognition through the following steps (i) identification of the contract or contracts with a customer, (ii) identification of the performance obligations within the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

to the performance obligations within the contract, and (v) recognition of revenue when, or as the performance obligation has been satisfied.

In accordance with ASC 606, the Company recognizes revenues from the sale of solar tracking systems and parts and determines its revenue recognition through the following steps (i) identification of the contract or contracts with a customer, (ii) identification of the performance obligations within the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations within the contract, and (v) recognition of revenue when, or as the performance obligation has been satisfied.

Performance Obligations

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Certain contracts associated with customers using the federal investment tax credit (“ITC”) for solar energy projects and other standalone tracker component sales are accounted for as multiple performance obligations because the delivery of the components and other services specified in the contract do not represent a single integrated project.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

In contracts with a single performance obligation, the Company’s obligation is satisfied over-time as control is transferred to the customer by measuring the progress toward complete satisfaction of the performance obligation using an input (i.e., the “cost-to-cost”) method.

Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract.

The Company uses the expected cost-plus margin approach to estimate the standalone selling price of each performance obligation.

In contracts with one performance obligation, the Company’s performance obligation is satisfied over-time as control is transferred to the customer by measuring the progress toward complete satisfaction of the performance obligation using an input (i.e., “cost to cost”) method.

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

Revenue recognized for the Company’s federal investment tax credit (“ITC”) related contracts and standalone system component is recorded at a point in time and recognized when obligations under the terms of the contract with our customer are satisfied.

Generally, this occurs with the transfer of control of the asset, which is typically upon delivery to the customer in line with shipping terms.

In certain situations, when product is still in our custody, and title and risk of loss has passed to the customer (known as bill-and-hold arrangement), revenue will be recognized when all the specific requirements for transfer of control under a bill-and-hold arrangement have been met.

The Company had $ 168.9 million in contracts with customers for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties.

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

In certain situations, the Company recognizes revenue under a bill-and-hold arrangement with its customers.

In arrangements related to the Federal Solar ITC, the customers purchase material prior to the start of construction of a solar project in order to meet the Five Percent Safe Harbor test to qualify for the Federal Solar ITC.

In all bill-and-hold arrangements, because the customers lack sufficient storage capacity to accept a large amount of material prior to the start of construction, they request that the Company keep the product in our custody.

The material is bundled or palletized in the Company’s warehouses, identified separately as belonging to the respective customer and is ready for immediate transport to the customer project upon customer request.

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.

In assessing the recognition of revenue, the Company also evaluates whether two or more contracts should be combined and accounted for as one contract and if the combined or single contract should be accounted for as multiple performance obligations which could change the amount of revenue and profit (loss) recorded in a period.

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Accordingly, we record amounts billed for shipping and handling costs as a component of revenue and classify such costs as a component of cost of revenue.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Contract Estimates

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These assumptions include the cost and availability of materials.

The Company reviews and updates its contract-related estimates on an ongoing basis and recognizes adjustments for any project specific facts and circumstances that could impact the measurement of the extent of progress, such as the total costs to complete the contracts, under the cumulative catch-up method.

The Company reviews and updates its contract-related estimates on an ongoing basis

Array Technologies, Inc.

Notes to Consolidated Financial Statements

and recognizes adjustments for any project specific facts and circumstances that could impact the measurement of the extent of progress, such as the total costs to complete the contracts, under the cumulative catch-up method.

Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified.

Revenue and profit in future periods of contract performance is recognized using the adjusted estimate.

If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the period it is identified .

At contract inception, any variable consideration such as liquidated damages are estimated based on probability of occurrence and then re-evaluated for probability at the end of the quarterly period.

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The changes in unbilled accounts receivable and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings for the Company’s revenue recognized over-time.

As of December 31, 2021 and December 31, 2020, unbilled accounts receivable totaled $ 111.2 million and $ 18.1 million, respectively, are included within accounts receivable on the consolidated balance sheets on a contract-by-contract basis at the end of the reporting period.

The Company also receives advances or deposits from its customers, before revenue is recognized, resulting in contract liabilities.

The changes in contract liabilities (i.e.

deferred revenue) relate to advanced orders and payments received by the Company and are the result of customers looking to take advantage of certain U.S.

federal tax incentives set to decrease at the end of 2019 and 2020.

Based on the terms of the tax incentives the customer must pay for the goods prior to December 31, 2019 and 2020, which accounts for the increase in the advanced orders and payments and the resulting deferred revenue at December 31, 2019 and 2020 and subsequent reduction for deliveries which occurred during the year ended December 31, 2020 and 2021.

As of December 31, 2021 and December 31, 2020, contract liabilities consisting of deferred revenue were $ 99.6 million and $ 149.8 million, respectively and were recorded on a contract-by-contract basis at the end of each reporting period.

During the years ended December 31, 2021 and 2020, the Company converted $ 149.8 million and $ 328.8 million deferred revenue to revenue, respectively, which represented 100 % of the prior years deferred revenue balance.

Remaining Performance Obligations

As of December 31, 2021, the Company had $ 301.5 million of remaining performance obligations.

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

Warranty Obligations

The Company offers an assurance type warranty for its products against manufacturer defects and does not contain service elements.

For these assurance type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable, which is typically when

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

products are delivered.

The Company offers a multi-year assurance type warranty for its products against manufacturer defects and does not contain service elements.

For these assurance type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable, which is typically when products are delivered.

This provision is based on historical information on the nature, frequency and average cost of claims for each product line.

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These estimates are re-evaluated on an ongoing basis using best-available information and revisions to estimates are made as necessary.

The Company provides for income taxes based on the provisions of FASB ASC Topic 740, Income Taxes, which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax rates in effect at the date of the consolidated financial statements.

Claims estimated to be payable in the following year are classified as current liabilities and those payable beyond one year are classified as long-term liabilities.

The Company provides for income taxes based on the provisions of ASC Topic 740 I ncome Taxes (“ASC 740”), which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax rates in effect at the date of the consolidated financial statements.

A valuation allowance is provided to reduce deferred income tax assets if it is more likely than not that all, or some portion, of such deferred tax assets will not be recognized.

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Generally, the Company is subject to examination by U.S.

federal (or state or local) income tax authorities for three years from the filing of a tax return.

federal, state and non-U.S.

income tax authorities.

The current provision for income taxes represents actual or estimated amounts payable on tax return filings each year.

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Adjustments for penalties and interest, if any, are also reflected in the current year tax provision or benefit.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The Company determines whether uncertain tax positions are more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.

The Company recognizes interest and penalties related to unrecognized tax benefits within the interest expense line and other expense line, respectively, in the consolidated statements of operations.

Accrued interest and penalties are included within the related liability lines in the consolidated balance sheets.

The Company recognizes interest and penalties related to unrecognized tax benefits within interest expense and other expenses, respectively, in the consolidated statements of operations.

No material interest or penalties were incurred in 2022.

Equity-Based Compensation

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The determination of the fair value of equity awards issued to employees of the Company is based upon the underlying share price and a number of assumptions, including volatility, performance period, risk-free interest rate and expected dividends.

The Company values equity awards with a market condition using a Monte Carlo simulation model.

The Company accounts for forfeitures as they occur.

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Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable, or probable of becoming redeemable.

The Series A Redeemable Perpetual Preferred Stock issued in connection with the Securities Purchase Agreement as described in Note 11 is classified as temporary equity in the

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

accompanying consolidated financial statements.

The Company elected the accreted redemption value method under which it accretes changes in redemption value over the period from the date of issuance of the Series A Redeemable Perpetual Preferred Stock to the earliest costless redemption date (the fifth anniversary) using the effective interest method.

Such adjustments are included in preferred undeclared dividends and accretion on Series A Redeemable Perpetual Preferred Stock on the Company’s consolidated statements of changes in equity and treated similarly to a dividend on preferred stock for GAAP purposes.

Earnings per Share (“EPS”)

Basic earnings per share, or EPS, is computed by dividing net income available to shareholders by the weighted average shares outstanding during the period.

The Series A Redeemable Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Shares”) issued in connection with the Securities Purchase Agreement as described in Note 11 – Redeemable Perpetual Preferred Stock are classified as temporary equity in the accompanying consolidated financial statements.

The Company elected the accreted redemption value method under which it accretes changes in redemption value over the period from the date of issuance of the Series A Shares to the earliest costless redemption date (the fifth anniversary) using the effective interest method.

Such adjustments are included in preferred undeclared dividends and accretion on Series A Shares on the Company’s consolidated statements of changes in redeemable perpetual preferred stock and stockholders’ equity (deficit) and treated similarly to a dividend on preferred stock in accordance with U.S.

Earnings per Share

Basic earnings per share (“EPS”), is computed by dividing net income available to common shareholders by the weighted average shares outstanding during the period.

Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue shares, such as stock options, unvested restricted stock, or convertible debt, were exercised and converted into shares.

The convertible debt is not currently convertible.

Diluted EPS is computed by dividing net income available to shareholders by the weighted average shares outstanding during the period, increased by the number of additional shares that would have been outstanding if the potential shares had been issued and were dilutive.

Diluted EPS is computed by dividing net income available to common shareholders by the weighted average shares outstanding during the period, increased by the number of additional shares that would have been outstanding if the potential shares had been issued and were dilutive.

Credit Concentration

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable.

The Company has no significant off balance sheet concentrations of credit risk.

The Company maintains its cash with financial institutions that are believed to be of high credit quality and has not experienced any material losses relating to any cash.

As of December 31, 2021 and December 31, 2020, $ 367.2 million and $ 108.2 million, respectively, of the Company’s bank balances were uninsured and uncollateralized and exposed to custodial credit risk.

The Company’s customer base consists primarily of solar contractors and utilities.

The Company does not require collateral on its trade receivables.

For the year ended December 31, 2021, the Company’s largest customer and five largest customers constituted 12.6 % and 46.0 % of total revenues, respectively.

Two customers made up 22.7 % of revenue and are the only customers greater than 10% of total revenue for the year ended December 31, 2021.

For the year ended December 31, 2020, the Company’s largest customer and five largest customers constituted 11.2 % and 40.9 % of total revenues, respectively.

Two customers made up 21.5 % of revenue and are the only customers constituting greater than 10% of total revenue for the year ended December 31, 2020.

For the year ended December 31, 2019, the Company’s largest customer and five largest customers constituted 17.2 % and 50.1 % of total revenues, respectively.

Two customers make up 28.7 % of revenue and are the only customers constituting greater than 10% of total revenue.

The loss of any one of the Company’s top five customers could have a materially adverse effect on the revenues and profits of the Company.

Further, the Company’s trade accounts receivable are from companies within the solar industry and, as such, the Company is exposed to normal industry credit risks.

As of December 31, 2021, the Company’s largest customer and five largest customers constituted 17.6 % and 44.6 % of trade accounts receivable, respectively.

As of December 31, 2020, the Company’s largest customer and five largest customers constituted 0.1 % and 20.9 % of trade accounts receivable, respectively.

The Company continually evaluates its reserves for potential credit losses and establishes reserves for such losses.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company follows a fair value

The Company has no significant off balance sheet concentrations of

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The Company maintains its cash with financial institutions that are believed to be of high credit quality and has not experienced any material losses relating to cash balances.

Our customer base consists primarily of large solar developers, independent power producers, utilities and EPCs.

We do not require collateral on our accounts receivable.

At December 31, 2022, the Company’s largest customer and five largest customers accounted for 7.9 % and 23.4 %, respectively, of total accounts receivable.

At December 31, 2021, the Company’s largest and five largest customers constituted 17.6 % and 44.6 % of trade accounts receivable, respectively.

During the year ended December 31, 2022, two customers accounted for 11.8 % and 10.6 %, respectively, of total revenue.

During the year ended December 31, 2021, two customers accounted for 12.6 % and 10.2 %, respectively, of total revenue.

During the year ended December 31, 2020, we had two customers each generating over 10% of total revenue for a combined total of 21.5 %.

Further, our accounts receivable are from companies within the solar industry and, as such, we are exposed to normal industry credit risk.

We continually evaluate our reserves for potential credit losses and establish reserves for such losses.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Three levels of inputs may be used to measure fair value, as follows:

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• Level 3 - Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

Assets valued using Level 1 inputs are determined by quoted market prices derived from an active market and Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets.

Level 3 inputs are valued by management’s assumptions about the assumptions the market participants would utilize in pricing the asset.

The fair values of the Company’s cash, accounts receivable, and accounts payable approximate their carrying values due to their short maturities.

The carrying value of the Company’s notes payable, capped call, and related party loans approximates their fair values, as they are based on current market rates at which the Company could borrow funds with similar terms.

The Company follows the provisions of FASB ASC Topic 820-10 for nonfinancial assets and liabilities measured at fair value on a non-recurring basis.

As it relates to the Company, this applies to certain nonfinancial assets and liabilities acquired in business combinations and measurement of goodwill impairment and non-amortizable intangibles and is thereby measured at fair value.

The Company has determined such fair value primarily by third-party valuations.

New Accounting Standards

To be adopted

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

While the Company is continuing to assess the timing of adoption and the potential impacts of ASU 2021-08, and continue to evaluate the impact that ASU 2021-08 will have, if any, on its consolidated financial statements.

The Company follows the provisions of ASC 820 Fair Value Measurement for nonfinancial assets and liabilities measured at fair value on a non-recurring basis.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Inventories consisted of the following (in thousands):

Acquisition of STI

On January 11, 2022, the Company completed the STI Acquisition pursuant to the purchase agreement, dated November 10, 2021, by and among Amixa Capital, S.L.

and Aurica Trackers, S.L., each a company duly organized under the laws of the Kingdom of Spain (together, the “Sellers”) and Mr.

Javier Reclusa Etayo (the “STI Purchase Agreement”).

The STI Acquisition was funded primarily with borrowings from the Convertible Notes (as defined below) and the issuance of the Series A Shares.

The STI Acquisition provided the Company with an immediate presence in Spain, Western Europe, Brazil 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 consolidated statement of operations for the year ended December 31, 2022.

In accordance with the 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 with an estimated fair value of $ 200.2 million based on the closing share price on the date of acquisition.

The fair value of the purchase consideration was $ 610.8 million and resulted in the Company owning 100 % of the interests in STI.

The Company has performed a valuation of the acquisition assets and liabilities and determined the related accounting impact.

The information presented below has been adjusted to give effect to the restatement discussed in Note 21.

The consideration paid to acquire STI consisted of the following (in thousands):

Cash consideration for STI $ 409,647

Cash consideration for transaction expenses of STI 896

Total cash consideration 410,543

Non-cash equity consideration 200,224

Total consideration transferred 610,767

Total purchase price consideration $ 610,767

The STI Acquisition was accounted for as a business combination in accordance with ASC 805 Business Combinations .

The equity consideration transferred consisted of the Company’s common stock and was measured at fair value based on the closing stock price on the Acquisition Date.

The purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of the respective fair values at the Acquisition Date.

Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

The factors contributing to the recognition of goodwill were the expected synergies of the combined entities that are expected to be realized from the STI Acquisition.

None of the goodwill is expected to be deductible for income tax purposes.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the Acquisition Date (in thousands):

Fair Value of Net Assets Acquired and Liabilities Assumed:

Acquisition Date Measurement Adjustment Remeasured Acquisition Date

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

Accounts receivable 110,789 — 110,789

Inventories 47,517 — 47,517

Prepaid expenses and other 23,399 — 23,399

Property, plant and equipment 4,434 — 4,434

Other intangible assets 304,431 — 304,431

Other assets 325 2,655 2,980

Total assets acquired $ 527,620 $ 2,655 $ 530,275

Accounts payable 65,761 — 65,761

Deferred revenue 20,345 — 20,345

Short-term debt 44,338 — 44,338

Other liabilities 10,115 2,655 12,770

Income tax payable 7,576 — 7,576

Deferred tax liability 95,510 — 95,510

Other long-term liabilities 4,524 — 4,524

Long-term debt 12,053 — 12,053

Total liabilities assumed $ 260,222 $ 2,655 $ 262,877

Fair value of net assets acquired 267,398 267,398

Allocation to goodwill $ 343,369 $ 343,369

The purchase price allocation was based upon Management’s estimates with the assistance of a third party valuation.

The 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, inventories, prepaid expenses and other, accounts payable, other liabilities, and deferred revenue.

The deferred tax liability was determined utilizing statutory rates in effect at the time of the acquisition, as applied to the respective intangible assets by jurisdiction.

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The purchase price allocation includes $ 304.4 million of acquired identifiable intangible assets.

(in thousands, except useful lives) Estimated Fair Value Estimated Weighted Average Useful Life in Years

Backlog $ 50,000 1

Customer relationships 228,408 10

Trade name 26,023 20

Total $ 304,431

The 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 and Level 3 inputs in the fair value hierarchy include economic life, estimated revenue, expenses based on historical results and forecasts, 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 December 31, 2022 are $ 369.7 million and $( 21.5 ) million, respectively.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma financial information presents the combined results of operations of the Company and STI as if the acquisition had occurred on January 1, 2021, after giving effect to certain unaudited pro forma adjustments.

The unaudited pro forma adjustments reflected herein include only those adjustments that are directly attributable to the STI Acquisition including amortization of intangibles, debt financing expenses and tax benefits.

The unaudited pro forma financial information does not reflect any adjustments for anticipated expense savings resulting from the STI Acquisition and is not necessarily indicative of the operating results that would have actually occurred had the STI Acquisition been consummated on January 1, 2021, (in thousands):

Year Ended December 31,

$ 1,645,962 $ 1,118,903

Net income (loss)

$ 36,285 $ ( 74,215 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Accounts Receivable

Accounts receivable consists of the following (in thousands):

Accounts receivable $ 423,071 $ 236,149

allowance for credit losses ( 1,888 ) ( 140 )

Accounts receivable, net $ 421,183 $ 236,009

Included in accounts receivable are amounts retained by project owners that represent funds withheld by our customers until the products are installed by a third-party, arranged by the customer, and the project is declared operational.

Such retention amounts were $ 47.4 million and $ 13.5 million as of December 31, 2022 and 2021, respectively.

All retention amounts outstanding as of December 31, 2022 are collectible within the next 12 months.

The following is the activity of the reserve for credit losses on accounts receivable which includes trade accounts receivable and unbilled accounts receivable (in thousands):

Beginning balance $ ( 140 ) $ ( 663 )

Provision for credit losses ( 2,599 ) 303

Collected 731 130

Written-off 120 90

Ending balance $ ( 1,888 ) $ ( 140 )

Inventories consist of the following (in thousands):

Raw materials $ 72,241 $ 85,470

2 unchanged sentences

Total $ 233,159 $ 205,653

The following is the activity of the inventory reserve (in thousands):

As of December 31, 2022, inventory valued using the average cost method and the FIFO method were $ 209.3 million and $ 23.8 million, respectively.

No inventory was valued using the FIFO method as of December 31, 2021.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The following table presents the change in the inventory reserve balances (in thousands):

Beginning balance $ ( 7,415 ) $ ( 6,425 )

Increases ( 4,044 ) ( 1,766 )

Decreases 776 1,293

Write-offs 3,185 776

Ending balance $ ( 8,274 ) $ ( 7,415 )

Property, Plant and Equipment

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

Estimated Useful Life (Years) December 31,

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

Estimated Useful Life (Years) 2022 2021

Land N/A $ 1,583 $ 1,340

4 unchanged sentences

Hardware and software 3 - 5

Assets in progress NA 1,880 —

Assets in progress N/A 5,142 1,880

Total 40,993 21,915

2 unchanged sentences

Depreciation expense was $ 2.6 million, $ 2.4 million and $ 2.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, of which $ 1.6 million, $ 2.0 million and $ 2.0 million, respectively, was allocated to cost of revenues and $ 1.0 million, $ 0.4 million and $ 0.2 million, respectively, is included in depreciation and amortization in the accompanying consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020.

Goodwill and Other Intangible Assets

At December 31, 2021 goodwill related to the Former Parent’s acquisition of the Company was $ 69.7 million, net of accumulated impairment of $ 51.9 million.

As a result of the STI Acquisition, the Company recorded $ 343.4 million of goodwill and began reporting two segments, Array Legacy Operations and the newly acquired STI Operations.

The following table presents change in goodwill balances by reportable segment (in thousands):

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Goodwill and Other Intangible Assets

Goodwill relates to Former Parent’s acquisition of Array.

At the acquisition date, July 8, 2016, goodwill was $ 121.6 million.

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

Array Legacy Operations STI Operations Total

Beginning balance as of December 31, 2021 $ 69,727 $ — $ 69,727

Acquisition of STI — 343,369 343,369

Foreign currency translation — 3,088 3,088

Ending balance as of December 31, 2022 $ 69,727 $ 346,457 $ 416,184

At March 31, 2022, the Company determined that the decrease in its stock price from December 31, 2021 and the continuing negative impact of the price of raw materials to the gross margin of the Array Legacy Operations reporting unit during the quarter were events indicating that the fair value of the Array Legacy Operations reporting unit may be less than its carrying amount.

Based on the Company’s quantitative goodwill impairment analysis of the Array Legacy Operations reporting unit at March 31, 2022, the fair value exceeded the carrying value and accordingly, no impairment was recorded.

The Company completed its annual goodwill impairment test, utilizing a qualitative impairment analysis, and concluded goodwill was not impaired as of December 31, 2022.

Other Intangible Assets

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

Estimated Useful Life (Years) December 31,

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

Estimated Useful Life (Years) 2022 2021

Developed technology 14 $ 203,800 $ 203,800

Customer relationship 10 321,935 89,500

Internal-use software modification 2.5 4,356 4,356

Backlog 1 51,015 —

Trade name 20 25,682 —

Total amortizable intangibles 602,432 293,300

2 unchanged sentences

Customer relationship 81,268 49,057

Internal-use software modification costs 4,356 4,356

Backlog 49,507 —

Trade name 1,246 —

Total accumulated amortization 226,368 128,847

4 unchanged sentences

Amortization expense related to intangible assets was $ 98.2 million, $ 23.5 million and $ 25.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through December 31, as follows (in thousands):

2022 $ 23,507

Thereafter 46,918

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

6 Investment in Equity Securities

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

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

The investment balance as of December 31, 2021 is $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheet.

There is no impairment recorded for the year ended December 31, 2021.

The following table presents estimated future annual amortization expense (in thousands):

2023 $ 49,733

Thereafter 147,896

The components of the Company’s income (loss) before provision for income taxes are as follows (in thousands):

Year Ended December 31,

2022 2021 2020

$ 34,344 $ ( 61,332 ) $ 77,778

Foreign ( 39,296 ) 211 —

Income (loss) before provision for income taxes $ ( 4,952 ) $ ( 61,121 ) $ 77,778

The provision for income taxes charged to operations consists of the following (in thousands):

1 unchanged sentence

2022 2021 2020

Current Expense:

Current expense (benefit):

Federal $ 12,826 $ ( 8 ) $ 17,248

5 unchanged sentences

State ( 960 ) ( 1,017 ) 60

Foreign ( 24,445 ) — —

( 31,565 ) ( 10,102 ) ( 2,739 )

1 unchanged sentence

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

5 unchanged sentences

Accrued compensation 637 315

Accrued settlement — 524

Net operating loss 1,014 1,944

3 unchanged sentences

Interest expense carryforward 6,750 5,301

Capitalized research and development expenses 1,752 —

Other 2,435 275

9 unchanged sentences

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

7 unchanged sentences

530 ( 1,545 ) 3,375

Permanent differences:

Derecognition of tax assets from IRS examination — — 9,284

Officer’s compensation 740 435 —

Equity-based compensation 712 1,542 852

Contingent consideration ( 947 ) 567 5,553

Credits ( 620 ) ( 79 ) ( 284 )

Other nondeductible expenses 69 437 40

Tax credits ( 421 ) ( 620 ) ( 79 )

Effect of CARES Act — — ( 6,608 )

Foreign income benefit — ( 1,201 ) ( 155 )

Officer’s compensation 435 — —

income taxed at different rate than U.S.

statutory rate ( 4,274 ) — —

tax incentives ( 4,183 ) — —

Foreign derived intangible income benefit ( 1,668 ) — ( 1,201 )

Transaction costs 1,628 950 —

Change in valuation allowance ( 534 ) 14 —

Nondeductible expenses 10 69 437

Other 63 705 43

1 unchanged sentence

$ ( 9,384 ) $ ( 10,718 ) $ 18,705

The Company files income tax returns in the U.S.

federal jurisdiction and in multiple states.

The Company is no longer subject to U.S.

federal and state income tax examinations by tax authorities for years before 2015.

As of December 31, 2021, the Company had federal income tax net operating loss (“NOL”) carryforwards of approximately $ 5.1 million.

The Company has state income tax NOL carryforwards of approximately $ 9.7 million that will expire in future years beginning in 2029.

Realization of deferred tax assets associated with federal and state net operating loss and federal tax credit carryforwards is dependent upon generating sufficient taxable income of the appropriate type, and in the appropriate jurisdictions, to utilize them prior to their expiration, if any.

It is not more likely than not that deferred tax assets from certain state net operating loss and federal tax credit carryforwards would be realized due to type and location of future earnings and as such the Company increased the valuation allowance $ 14 thousand for the years ended December 31, 2021 and none for the year ended December 31, 2020.

ASC 740, Income Taxes, addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

The Company operates under a non-U.S.

tax incentive which reduces the overall effective tax rate of the Company.

As of December 31, 2022, the Company had satisfied the conditions enumerated in these agreements.

Included in the accompanying Consolidated Financial Statements are tax benefits of $ 4.2 million for 2022 from the non-U.S.

tax incentive.

As of December 31, 2022, the Company has federal income tax net operating loss (“NOL”) carryforwards of approximately $ 4.8 million that do not expire, state income tax NOL carryforwards of approximately $ 4.5 million that will expire in future years beginning in 2029, and foreign NOLs are immaterial.

As of December 31, 2021, the Company has federal income tax NOL carryforwards of approximately $ 5.1 million that do not expire, state income tax NOL carryforwards of approximately $ 9.7 million that will expire in future years beginning in 2029, and foreign NOLs are immaterial.

Realization of deferred tax assets is dependent upon generating sufficient taxable income of the appropriate type and in the appropriate jurisdictions.

In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will not be realized.

It is not more likely than not that deferred tax assets from certain U.S.

Federal, state and foreign net operating loss would be realized due to type and location of future earnings and as such the Company has a valuation allowance of $ 1.4 million and $ 0.2 million for the years ended years ended December 31, 2022 and 2021.

A valuation allowance of $ 1.8 million was recorded as of the acquisition date of STI for deferred tax assets.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

ASC 740 addresses the determination of how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

In accordance with ASC 740, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

1 unchanged sentence

The Company had no unrecognized income tax benefits at either December 31, 2022 or 2021.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic.

Among other things, the CARES Act provided the ability for taxpayers to carryback a net operating loss (“NOL”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 to each of the five years preceding the year of the loss.

The Company generated a significant NOL during its tax year ended March 31, 2019 and filed a carryback claim in June 2020 for this NOL.

As a result of the carryback claim, the Company recorded an income tax benefit of $ 10.7 million on its consolidated statement of operations for the year ended December 31, 2020, resulting from the difference in the current U.S.

federal tax rate of 21% and the tax rate of 35% applicable in the carryback year.

The Company’s 2017 federal income tax return was selected for examination by the IRS in 2018.

As a result of the examination, an adjustment related to the value allocated to the developed technology for tax purposes was potentially required.

During 2019, the Company settled the 2017 examination and agreed to a reduction in the developed technology value from $ 210 million to $ 188 million for federal income tax purposes.

As a result of this change in the value of the acquired developed technology, the Company reduced its NOL carryforwards by approximately $ 2.8 million for previously taken amortization and increased the deferred tax liability related to the revised developed technology tax basis by approximately $ 4.6 million.

In addition, the Company will no longer receive tax basis upon payment of the Tax Receivable Agreement (“TRA”) liability, as such the related deferred tax asset of $ 4.7 million for the TRA was also written off during 2019.

The adjustments resulting from the change in developed technology value have been recorded as an income tax expense for the year ended December 31, 2020.

Refer to Note 16 - Commitments and Contingencies, for detail on the TRA, which was contingent consideration at the time of the Array acquisition.

The Company files income tax returns in the U.S.

federal jurisdiction, in multiple U.S.

states, as well as in non-U.S.

jurisdictions.

Through global expansion and the acquisition of STI, the Company has a significant presence in Spain and Brazil.

The Company and its subsidiaries are routinely examined by various U.S.

taxing authorities.

The Company is not subject to U.S.

federal, state and non-U.S.

income tax examinations by tax authorities for years before 2017.

There are currently no income tax audits in any material jurisdictions.

The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments.

Repatriation of funds could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or state income taxes and the impact of foreign currency movements.

At December 31, 2022, management believed that sufficient liquidity was available in the U.S.

The Company will consider repatriating certain funds from its non-U.S.

subsidiaries that are not needed to finance local operations;

however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company.

As of December 31, 2022, the Company has accumulated deficits in undistributable earnings in material non-U.S.

jurisdictions.

As such, no deferred taxes have been recorded.

The Company does not receive tax basis for payments made related to the Tax Receivable Agreement (“TRA”) payable to the former owner.

Refer to Note 15 - Commitments and Contingencies , for detail on the TRA, which was a contingent consideration at the time of the Array acquisition.

Accrued Warranty Reserve

The following table summarizes the activity related to the estimated accrued warranty reserve (in thousands):

The following table presents changes in the accrued warranty reserve balances (in thousands):

Beginning balance $ 3,192 $ 3,049

3 unchanged sentences

Ending balance $ 5,476 $ 3,192

Senior Secured Credit Facility

Long term debt consisted of the following (in thousands):

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Senior Secured Credit Facility

The senior secured credit facility consisted of the following (in thousands):

Term loan facility $ 312,475 $ 326,775

1 unchanged sentence

312,475 326,775

Less discount and issuance costs

Unamortized discount and issuance costs

( 19,135 ) ( 23,282 )

Long term debt, net of debt discount and financing costs 303,484 428,283

Less current portion of long-term debt ( 4,300 ) ( 4,313 )

Long-term Senior Secured Credit Facility debt, net of current portion, debt discount and financing costs $ 299,184 $ 423,970

Senior Secured Credit Facility

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

The senior secured facility consisted originally of (i) a $ 575 million senior secured seven-year term loan facility (the “Term Loan Facility”) and (ii) a $ 150 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

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

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

This results in our current rate on the Term Loan Facility decreasing to 3.75 % down from 5 % prior to the First Amendment.

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

2 (the “Second Amendment”) to the Senior Secured Credit Facility.

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

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had a zero outstanding balance as of December 31, 2021 and 2020, $ 13.6 million and $ 46.6 million in standby letters of credit as of December 31, 2021 and 2020, and availability of $ 186.4 and $ 103.4 million at December 31, 2021 and 2020.

Term Loan Facility

The Term Loan Facility had a balance of $ 326.8 million and $ 460.0 million as of December 31, 2021 and 2020, respectively.

The Company made unscheduled payoffs of the Term Loan Facility during the year in the aggregate of $ 130.0 million which resulted in the write-off of capitalized fees in the aggregate of $ 9.6 million.

The Term Loan Facility accrued interest equal to applicable margin of 1 % plus base rate ( 2.75 % and 4.00 % at December 31, 2021 and 2020, respectively).

Senior secured credit facility, net of unamortized debt discount and issuance costs 293,340 303,493

Current portion of term loan facility ( 4,300 ) ( 4,300 )

Senior secured credit facility, net of current portion and unamortized discount and issuance costs $ 289,040 $ 299,193

On October 14, 2020, the Company entered into a senior secured credit facility which was amended on February 23, 2021 (the “First Amendment”) and again on February 26, 2021 (the “Second Amendment”).

The senior secured facility consisted originally of (i) a $ 575 million senior secured 7-year term loan facility (the “Term Loan Facility”) and (ii) a $ 150 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

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

The Second Amendment increased the borrowing capacity of the Revolving Credit Facility from $ 150 million to $ 200 million.

The outstanding balance on the Term Loan Facility was $ 312.5 million and $ 326.8 million as of December 31, 2022 and 2021, respectively.

The balance of the Term Loan Facility is presented in the accompanying consolidated balance sheets, net of debt discount and issuance costs of $ 19.1 million and $ 23.3 million at December 31, 2022 and 2021, respectively.

The debt discount and issuance costs are being amortized using the effective interest method.

The rate was 4.9 % and 6.08 % at December 31, 2021 and 2020, respectively.

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 year ended December 31, 2021.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Interest Rate

Under the Revolving Credit Facility, the Company had no outstanding balance as of both December 31, 2022 and 2021, $ 38.8 million and $ 13.6 million in standby letters of credit as of December 31, 2022 and 2021, respectively, and availability of $ 161.2 million and $ 186.4 million as of December 31, 2022 and 2021, respectively.

Terms and Conditions of the Senior Secured Credit Facility

Interest Rates

The interest rates applicable to the loans under the Term Loan Facility equal, at our option, either, (i) in the case of ABR borrowings, the highest of (a) the Federal Funds Rate as of such day plus 50 basis points, (b) the prime rate and (c) the adjusted LIBOR rate as of such day for a deposit in U.S.

dollars with a maturity of one month plus 100 basis points, provided that in no event shall the ABR be less than 150 basis points, plus, in each case, the applicable margin of 300 basis points per annum;

or (ii) in the case of Eurocurrency borrowings, the greater of (a) the London interbank offered rate for the relevant currency, adjusted for statutory reserve requirements, and (b) 100 basis points, plus, in each case, the applicable margin of 400 basis points per annum.

or (ii) in the case of Eurocurrency borrowings, the greater of (a) the LIBOR for the relevant currency, adjusted for statutory reserve requirements, and (b) 100 basis points, plus, in each case, the applicable margin of 400 basis points per annum.

Pursuant to the First

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Amendment, (i) the applicable margin (a) with respect to ABR borrowings was reduced to 225 basis points and (b) with respect to Eurocurrency borrowings was reduced to 325 basis points and (ii) the LIBOR floor referred to in clause (ii)(b) above was reduced from 100 to 50 basis points.

Applicable interest rate at December 31, 2022 was 7.94 %

The interest rates applicable to the loans under the Revolving Facility equal, at our option, either, (i) in the case of ABR borrowings, the highest of (a) the Federal Funds Rate as of such day plus 50 basis points, (b) the prime rate and (c) the adjusted LIBOR rate as of such day for a deposit in U.S.

1 unchanged sentence

or (ii) in the case of Eurocurrency borrowings, the greater of (a) the London interbank offered rate for the relevant currency, adjusted for statutory reserve requirements, and (b) 50 basis points, plus, in each case, the applicable margin of 325 basis points per annum.

Prepayments and Amortization

The Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00 % per annum of the original principal amount of the loans funded thereunder.

There is no scheduled amortization under the Revolving Credit Facility.

Guarantees and Security

The obligations under the Senior Secured Credit Facility are guaranteed by ATI Investment Sub, Inc.

and its wholly owned domestic subsidiaries other than certain immaterial subsidiaries and other excluded subsidiaries.

The obligations under the Senior Secured Credit Facility are secured by a first priority security interest in substantially all of Array Tech, Inc.’s and the guarantors’ existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, material owned real property, cash and proceeds of the foregoing.

Prepayments and Amortization

Loans under the Revolving Credit Facility may be voluntarily prepaid in whole, or in part, in each case without premium or penalty.

Loans under the Term Loan Facility may be voluntarily prepaid in whole, or in part, in each case without premium or penalty (other than a 1 % premium with respect to prepayments on account of certain “repricing events,” subject to exceptions, occurring within 12 months of the closing date of the Senior Secured Credit Facility).

The Senior Secured Credit Facility requires mandatory prepayments, but not permanent reductions of commitments thereunder, for excess cash flow, asset sales, subject to a right of reinvestment, and refinancing facilities.

The Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00 % per annum of the original principal amount of the loans funded thereunder.

There is no scheduled amortization under the Revolving Credit Facility.

Additionally, the Term Loan Facility requires 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, 2022.

Restrictive Covenants and Other Matters

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Senior Secured Credit Facility contains affirmative and negative covenants including covenants that restrict our incurrence of indebtedness, incurrence of liens, dispositions, investments, acquisitions, restricted payments, transactions with affiliates, as well as other negative covenants customary for financings of this type.

The Revolving Credit Facility also includes a springing financial maintenance covenant that is tested on the last day of each fiscal quarter if the outstanding loans and certain other credit extensions under the Revolving Credit Facility exceed 35 % of the aggregate amount of commitments thereunder, subject to customary exclusions and conditions.

The Revolving Credit Facility includes a springing financial maintenance covenant that is tested on the last day of each fiscal quarter if the outstanding loans and certain other credit extensions under the Revolving Credit Facility exceed 35 % of the aggregate amount of commitments thereunder, subject to customary exclusions and conditions.

If the financial maintenance covenant is triggered, the first lien net leverage ratio will be tested for compliance not to exceed 7.10 to 1.00.

The Senior Secured Credit Facility also includes customary events of default, including the occurrence of a change of control.

As of December 31, 2022, the Company was in compliance with all the required covenants.

Future maturities of the Senior Secured Credit Facility (in thousands):

Thereafter 305,275

For the years ended December 31, 2021, 2020 and 2019, interest expense related to all long-term debt totaled $ 35.7 million, $ 11.3 million and $ 11.5 million, respectively, which consisted of cash interest, and amortization of the debt discount and financing costs.

The Senior Secured Credit Facility also contains affirmative and negative covenants customary for financings of this type, including covenants that restrict our incurrence of indebtedness and liens, dispositions, investments, acquisitions, restricted payments, and transactions with affiliates.

The Senior Secured Credit Facility also includes customary events of default, including the occurrence of a change of control.

Guarantees and Security

The obligations under the Senior Secured Credit Facility are guaranteed by ATI Investment Sub, Inc.

and its wholly owned domestic subsidiaries other than certain immaterial subsidiaries and other excluded subsidiaries.

The obligations under the Senior Secured Credit Facility are secured by a first priority security interest in substantially all of the future property and assets of the guarantor and the borrower, Array Tech, Inc.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Technologies, Inc.), including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, material owned real property, cash and proceeds of the foregoing.

Convertible Debt

1% Senior unsecured convertible notes $ 425,000 $ —

Convertible debt consisted of the following (in thousands):

1.00 % Convertible Senior Notes

$ 425,000 $ 425,000

Unamortized discount and issuance costs ( 11,248 ) ( 13,137 )

1% Senior unsecured convertible notes, net (1)

1.00 % Convertible Senior Notes, net

$ 413,752 $ 411,863

(1) Effective interest rate for the Notes for the year ended 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 “Notes”) resulting in proceeds of $ 364.7 million and $ 48.6 million, respectively, after deducting the original issue discount of 2.75 %.

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

Bank National Association, as trustee.

On December 3, 2021 and December 9, 2021, the Company completed a $ 425.0 million private offering ($ 375 million and $ 50 million, respectively), of its 1.00 % Convertible Senior Notes due 2028, resulting in proceeds of $ 413.3 million ($ 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, between the Company and U.S.

Bank National Association, as trustee (the “Indenture”).

For the year ended December 31, 2022, interest expense related to the Convertible Notes was $ 6.1 million, of which, $ 4.2 million was contractual interest and of $ 1.9 million was amortization of debt discount and issuance costs.

Interest expense for the year ended December 31, 2021 was $ 0.4 million, of which, $ 0.3 million was contractual interest and $ 0.1 million amortization of debt discount and issuance costs.

The discount and issuance costs will be amortized over the life of the debt using the effective interest rate of 1.5 %.

The Convertible Notes are senior unsecured obligations of the Company that mature on December 1, 2028, unless earlier converted, redeemed, or repurchased.

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 year ended December 31, 2022 and none have been converted to date.

As the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact to earnings per share for the year ended December 31, 2022.

At any time prior to the close of business on the business day immediately preceding June 1, 2028, the Convertible Notes are convertible at the option of the holders only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2022 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price then in effect on each applicable trading day;

(2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 principal amount of Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Convertible Notes on each such trading

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The Notes are senior unsecured obligations of the Company and will mature on December 1, 2028, unless earlier converted redeemed or repurchased.

The 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 Notes were not convertible during the quarter ended December 31, 2021 and none have been converted to date.

Also given the average market price of the common stock has not exceeded the exercise price since inception, there was no dilutive impact for the year ended December 31, 2021.

At any time prior to the close of business on the business day immediately preceding June 1, 2028, the Notes are convertible at the option of the holders only under the following circumstances:

(3) if the Company calls such Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption;

(3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date, but only with respect to the Convertible Notes called (or deemed called) for redemption;

or (4) upon the occurrence of specified corporate events as described in the Indenture.

On or after June 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Notes may convert all or any portion of their Notes at any time regardless of the foregoing circumstances.

Upon conversion of the Notes, the Company will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Notes being converted.

The Company may redeem (an “Optional Redemption”) for cash all or any portion of the Notes, at its option, on or after December 6, 2025, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company redeems less than all the outstanding Notes, at least $ 100 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption.

No sinking fund is provided for the Notes.

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 initial conversion price of the Notes represented a premium of approximately 32.5 % to the last reported sale price of the Company’s common stock on the Nasdaq Global Market on November 30, 2021.

The conversion rate for the Notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

In addition, following

On or after June 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders of the Convertible Notes may convert all or any portion of their Convertible Notes at any time regardless of the foregoing circumstances.

Upon conversion of the Convertible Notes, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted.

The Company may redeem (an “Optional Redemption”) for cash all or any portion of the Convertible Notes, at its option, on or after December 6, 2025, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

If the Company redeems less than all the outstanding Convertible Notes, at least $ 100 million aggregate principal amount of Convertible Notes must be outstanding and not subject to redemption as of the date of the relevant notice of redemption.

No sinking fund is provided for the Convertible Notes.

The conversion rate for the Convertible Notes was initially 41.9054 shares of the Company’s common stock per $ 1,000 principal amount of the Convertible 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 initial conversion price of the Convertible Notes represented a premium of approximately 32.5 % to the last reported sale price of the Company’s common stock on the Nasdaq Global Market on November 30, 2021.

The conversion rate for the Convertible Notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if the Company delivers a notice of redemption in respect of the Convertible Notes, the Company will, under certain circumstances, increase the conversion rate of the Convertible Notes for a holder who elects to convert its Convertible Notes (or any portion thereof) in connection with such a corporate event or convert its Convertible Notes called (or deemed called) for redemption during the related Redemption Period (as defined in the Indenture), as the case may be.

If the Company undergoes a Fundamental Change (as defined in the Indenture), holders may require, subject to certain conditions and exceptions, the Company to repurchase for cash all or any portion of their Convertible Notes at a Fundamental Change Repurchase Price (as defined in the Indenture) equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the Fundamental Change Repurchase Date (as defined in the Indenture).

The Indenture includes customary covenants and sets forth certain events of default after which the Convertible Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or certain of its subsidiaries after which the Convertible Notes become automatically due and payable.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

certain corporate events that occur prior to the maturity date of the Notes or if the Company delivers a notice of redemption in respect of the Notes, the Company will, under certain circumstances, increase the conversion rate of the Notes for a holder who elects to convert its Notes (or any portion thereof) in connection with such a corporate event or convert its Notes called (or deemed called) for redemption during the related Redemption Period (as defined in the Indenture), as the case may be.

If the Company undergoes a Fundamental Change (as defined in the Indenture), holders may require, subject to certain conditions and exceptions, the Company to repurchase for cash all or any portion of their Notes at a Fundamental Change Repurchase Price (as defined in the Indenture) equal to 100 % of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, to, but excluding, the Fundamental Change Repurchase Date (as defined in the Indenture).

The Indenture includes customary covenants and sets forth certain events of default after which the Notes may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Company or its Significant Subsidiaries after which the Notes become automatically due and payable.

The Convertible Notes were evaluated for embedded derivatives noting there were none that needed to be bifurcated and accounted for separately.

Interest expense on the convertible debt of $ 0.4 million was recognized for the Notes included contractual interest expense of $ 0.3 million and the amortization of debt discount and issuance cost of $ 0.1 million for the year ended December 31, 2021.

The discount and issuance costs will be amortized over the life of the debt using the effective interest rate of 1.5 %.

On November 30, 2021, concurrently with the pricing of the Notes, the Company also entered into privately negotiated capped call transactions (the “Capped Calls”) with Morgan Stanley & Co.

LLC, Credit Suisse Capital LLC, through its agent, Credit Suisse Securities (USA) LLC and JPMorgan Chase Bank, N.A., New York Branch (collectively, the “Counterparties”).

The Capped Calls each have an initial strike price of $ 23.8633 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes.

The Capped Calls have initial cap prices of $ 36.0200 per share, subject to certain adjustments.

The Capped Calls cover, subject to anti-dilution adjustments, approximately 17.8 million shares of the Company’s common stock.

The Capped Calls are expected generally to reduce potential dilution to the common stock upon conversion of any Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap based on the cap price.

The Company paid $ 52.9 million from the net proceeds from the issuance and sale of the Notes to purchase the Capped Calls.

The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event;

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.

Specifically, upon the exercise of the capped call instruments issued pursuant to the agreements (the “Capped Calls”), the Company would receive shares of its common stock equal to approximately 17.8 million shares (a) multiplied by (i) the lower of $ 36.0200 or the then-current market price of its common stock, less (ii) the applicable exercise price, and (b) divided by the then-current market price of its common stock.

The results of this formula are that the Company would receive more shares as the market price of its common stock exceeds the exercise price and approaches the cap, which was initially $ 36.0200 per share.

Consequently, if the Convertible Notes are converted, then the number of shares to be issued by the Company would be effectively partially offset by the shares of common stock received by the Company under the Capped Calls as they are exercised.

The formula above would be adjusted in the event of certain specified extraordinary events affecting the Company, including a merger;

a tender offer;

and a nationalization, insolvency or delisting involving the Company.

In addition, the Capped Calls are subject to certain specified additional disruption events that may give rise to terminations of the Capped Calls, including changes in law;

failures to deliver;

and hedging disruptions.

Certain Initial Purchasers under the Array Technologies, Inc.

1.00% Convertible Senior Notes due 2028 Purchase Agreement and Counterparties under the confirmations entered into in connection with the Capped Calls, or their affiliates, have engaged in, and may in the future engage in, other commercial dealings with the

nationalization, insolvency or delisting of the Company’s common stock;

changes in law;

failure to deliver;

insolvency filing;

stock splits, combinations, dividends, repurchases or similar events;

or an announcement of certain of the preceding actions.

The Company can also elect to receive the equivalent value of cash in lieu of shares of common stock upon settlement, except in certain circumstances.

The Capped Calls expire on December 1, 2028 and terminate upon the occurrence of certain extraordinary events such as a merger, tender offer, nationalization, insolvency, delisting, event of default, a change in law, failure to deliver, an announcement of certain of these events, or an early conversion of the Convertible Notes.

Although intended to reduce the net number of shares of common stock issued after a conversion of the Convertible Notes, the Capped Calls were separately negotiated transactions, are not a part of the terms of the Convertible Notes, and do not affect the rights of the holders of the Convertible Notes.

The Capped Calls meet the criteria for equity classification because they are indexed to the Company’s common stock and the Company has discretion to settle the Capped Calls in shares or cash.

As a result, the amount paid for the Capped Calls was recorded as a reduction to additional paid-in capital.

The Capped Calls are excluded from the calculation of diluted net income (loss) per share attributable to common stockholders as their effect is antidilutive.

The Company made a tax election to integrate the Convertible Notes and the Capped Calls.

The accounting impact of this tax election makes the Capped Calls deductible as original issue discount interest for tax purposes over the term of the note, and results in a $ 10.8 million deferred tax asset recorded as an adjustment to additional paid-in capital on the consolidated balance sheets as of December 31, 2022.

In connection with the STI Acquisition, the Company assumed the debt obligations of STI outstanding with various local banking and credit institutions (“Other Debt”).

As of December 31, 2022, the total outstanding balance on these debt obligations was $ 52.0 million, of which, approximately $ 20.3 million is subject to fixed interest rates ranging from 0.55 % to 4.52 %.

The remaining $ 31.7 million is subject to variable interest rates ranging from 1.99 % to 3.96 %.

Total interest expense for Other Debt in 2022 was $ 2.4 million.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Company or its affiliates in the ordinary course of business.

They have received, or may in the future receive, customary fees and commissions for those transactions.

The Capped Calls meet the criteria in ASC 815-40 to be classified within Stockholders' Equity, and therefore was recorded to additional paid in capital at the fair value on issuance which was equal to the premium paid.

Due to the instrument being classified in equity, it is not remeasured after issuance.

The Company made a tax election to integrate the Notes and the Capped Calls.

The accounting impact of this tax election makes the Capped Calls deductible as original issue discount interest for tax purposes over the term of the note, and results in a $ 12.4 million deferred tax asset recorded as an adjustment to Additional paid-in capital on our Balance Sheet as of December 31, 2021.

Redeemable Perpetual Preferred

Series A Redeemable Perpetual Preferred

On August 10, 2021, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which on August 11, 2021, the Company issued and sold to certain investors (the “Purchasers”) 350,000 shares of a newly designated Series A Redeemable Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Redeemable Perpetual Preferred Stock”), and 7,098,765 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”), for an aggregate purchase price of $ 346.0 million (the “Initial Closing”).

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

The Company used net proceeds from the Initial Closing to repay $ 102.0 million, which was the amount outstanding under the Company’s existing revolving credit facility and prepaid $ 100 million under the Company’s term loan.

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

The Series A Redeemable Perpetual Preferred Stock has no maturity date.

Additional Closings

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

The Company evaluated the accounting for the instruments issued in the Securities Purchase Agreement and determined the Series A Redeemable Perpetual Preferred Stock and Common Stock issued in the Initial Closing, as well as the Prepaid Forward Contract, and Delayed Draw Commitment are freestanding instruments accounted for in equity.

The Series A Redeemable Perpetual Preferred Stock is recorded in temporary equity on the consolidated balance sheets as it has redemption features upon certain triggering events that are outside the Company’s

Aggregate Debt Maturities

Aggregate future debt maturities are as follows (in thousands):

2023 $ 38,691

Thereafter 425,000

Redeemable Perpetual Preferred Stock

Series A Redeemable Perpetual Preferred Stock

The Company entered into a Securities Purchase Agreement (the “SPA”) with certain investors (the “Purchasers”) pursuant to which, on August 11, 2021, the Company issued 350,000 shares of its newly designated Series A Shares and 7,098,765 shares of the Company’s common stock for an aggregate purchase price of $ 346.0 million (the “Initial Closing”).

Further, pursuant to the SPA, on September 27, 2021, the Company issued and sold to the Purchasers 776,235 shares of common stock for an aggregate purchase price of $ 0.01 million (the “Prepaid Forward Contract”).

The Company used the net proceeds to repay the $ 102.0 million outstanding balance under its existing Revolving Credit Facility and prepay $ 100.0 million of the Company’s Term Loan Facility.

The Series A Shares have no maturity date.

The SPA gives the Company the option to require the Purchasers to purchase, up to an additional 150,000 shares of Series A Shares 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”).

On January 7, 2022, pursuant to the Delayed Draw Commitment, the Company issued and sold to the Purchasers, 50,000 shares of Series A Shares and 1,125,000 shares of the Company’s common stock in an additional closing for an aggregate purchase price of $ 49.4 million (the “Additional Closing”).

The Company evaluated the accounting for the instruments issued pursuant to the SPA and determined the Series A Shares and common stock issued in the Initial Closing, as well as the Prepaid Forward Contract, and Delayed Draw Commitment are freestanding instruments accounted for in equity.

The Series A Shares are recorded in temporary equity on the consolidated balance sheets as they have redemption features upon certain triggering events that are outside the Company’s control, such as a fundamental change.

The proceeds of the Series A Shares, net of transaction costs and discount of $ 334.6 million have been allocated to each instrument based on its relative fair value.

At the Initial Closing date, $ 229.8 million was allocated to the Series A Shares, $ 105.4 million to common stock, $ 12.4 million to the Delayed Draw Commitment, which was recorded as a debit to additional paid-in-capital, and $ 11.7 million to the Prepaid Forward Contract.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

control, such as a fundamental change.

The proceeds of the Series A Redeemable Perpetual Preferred Stock, and transactions costs and discount of $ 15.4 million have been allocated to each instrument based on its relative fair value.

At the Initial Closing date, $ 229.8 million was allocated to the Series A Redeemable Perpetual Preferred Stock, $ 105.4 million to Common Stock, $ 12.4 million to the Delayed Draw Commitment which was recorded as a debit to additional paid-in-capital, and $ 11.7 million for a Prepaid Forward Contract.

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Redeemable Perpetual Preferred Stock either in cash at the then-applicable Cash Regular Dividend Rate (as defined below), through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate of 6.25 % (the “Permitted Accrued Dividends”), or a combination thereof.

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

Direct costs associated with the issuance of the Securities were $ 11.1 million, which along with the $ 4.4 million discount, have been accounted for as a reduction in the proceeds of the Securities.

The net proceeds of $ 334.6 million have been allocated to Series A Shares of $ 229.8 million, common stock of $ 105.4 million and additional paid-in capital of $ 12.4 million for the committed financing put right.

The Additional Closing proceeds, net of transaction costs and discount of $ 1.3 million, were allocated among the Series A Shares and common stock based on the proceeds of $ 33.1 million and $ 15.9 million, respectively.

The Company has presented the Series A Shares in temporary equity and accreting the carrying amount to its full redemption amount from the date of issuance to the earliest redemption date using the effective interest method.

Such accretion totaled $ 23.2 million and $ 7.4 million for the years ended December 31, 2022 and 2021, respectively.

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Shares either in (i) cash at the then-applicable Cash Regular Dividend Rate (as defined below), (ii) through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate of 6.25 % (the “Permitted Accrued Dividends,”) or (iii) a combination thereof.

Following the fifth anniversary of the Initial Closing, dividends are payable only in cash.

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

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

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.

Dividends declared as of December 31, 2021 were $ 8.2 million and $ 8.1 million were paid.

The Series A preferred stock have similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock.

As a result, the discount on Series A preferred stock is considered an unstated dividend cost that is amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount of the Series A preferred stock by a corresponding amount.

The discount of $ 120.2 million is therefore being amortized over five years using the effective yield method.

The amortization in each period is the amount which, together with the stated dividend in the period, results in a constant rate of effective cost with regard to the carrying amount of the Series A preferred stock.

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 $ 7.4 million for the year ended December 31, 2021.

The Company had no dividends accreted to the carrying value of the Series A Redeemable Perpetual Preferred Stock the regular cash rate of dividends of 5.75 %, as they were paid as of the year ended December 31, 2021.

In the event there are Default Accrued Dividends outstanding for six consecutive quarters, the Company, at the option of the holders of the Series A Shares, will pay 100 % of the amount of Default Accrued Dividends by delivering to such holder a number of shares of the Company’s common stock equal to the quotient of (i) the amount of Default Accrued Dividends divided by (ii) 95 % of the 30-day VWAP of the Company’s common stock (“Non-Cash Dividend”).

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

As used herein, “Liquidation Preference” means, with respect to any shares of the Series A Shares, the initial liquidation preference of $ 1,000 per share plus any accrued dividends of such share as the time of the determination.

During the first nine months of fiscal year 2022, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 18.7 million.

This amount was settled with the payment of cash in September 2022.

As of December 31, 2022 the Company has accrued and unpaid dividends of $ 6.4 million.

The Series A Shares have similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock .

As a result, the discount on Series A Shares is considered an unstated dividend cost that is amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

of the Series A Shares by a corresponding amount.

Accordingly, the discount is amortized over five years using the effective yield method.

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

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

3 unchanged sentences

Ranking and Liquidation Preference

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

Upon a Liquidation, each share of Series A Redeemable Perpetual Preferred Stock would be entitled to receive an amount per share (the “Liquidation, Redemption or Repurchase Amount”) equal to the greater of (i) the Liquidation Preference of such share, plus all accrued and unpaid dividends (including any Accrued Dividends) thereon and (ii) an amount in cash equal to the sum of (a) 130.0 % of the Initial Liquidation Preference (as defined below) of such share, minus (b) the cumulative amount of cash dividends paid in respect of such share prior to such payment.

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

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

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

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

Redemption Rights

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

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

Voting and Consent Rights

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

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

The consent of the Holders of a majority of the outstanding shares of Series A Redeemable Perpetual Preferred Stock will be required for so long as the Threshold Amount remains outstanding for (i) amendments to the Company’s organizational documents that have an adverse effect on the Holders, (ii) issuances by the Company of securities that are senior to, or equal in priority with, the Series A Redeemable Perpetual Preferred Stock, (iii) entrance into, or amendments to, transactions with affiliates of the Company, (iv) incurrence by the Company of indebtedness, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such incurrence (other than drawdowns by the Company under the Company’s current

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

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

Voting Rights

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

The Holders of Series A Shares do not otherwise have any voting rights.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Revolving Credit Facility) or (v) any payment of dividends or making of distributions on equity securities of the Company ranking junior to the Series A Redeemable Perpetual Preferred Stock or redemptions, purchases or direct or indirect acquisitions of such equity securities ranking junior to or parity with the Series A Redeemable Perpetual Preferred Stock by the Company, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such dividends, distributions, redemptions, purchases or acquisitions.

Related Party Loan

The Company had a senior secured promissory note, as amended, with a unit holder of Former Parent that had a balance, net of debt discount and issuance costs, as of December 31, 2019 of $ 41.8 million for which the Company paid off the balance on July 31, 2020 to settle the obligation with respect to the Senior Secured Loan.

The Company paid interest expense for the years ended December 31, 2020 and 2019 of $ 3.8 million and $ 7.3 million, respectively, which consisted of cash interest, PIK interest and amortization of the debt discount.

Common and Preferred Stock

Authorized Shares

On October 14, 2020, in connection with the IPO, a new Certificate of Incorporation became effective for the Company, which authorized capital stock of 1,000,000,000 shares of common stock, $ 0.001 par value, and 5,000,000 shares of preferred stock, $ 0.001 par value.

Voting Rights

Each holder of Common Stock shall be entitled to one vote for each share of Common Stock held as of the applicable record date on any matter that is submitted to a vote or for the consent of the stockholders of the Company.

The holders of Common Stock shall be entitled to share equally, on a per share basis, in such dividends and other distributions of cash, property or shares of stock of the Company as may be declared by the Board of Directors of the Company (the “Board”), subject to the preferences applicable to holders of Preferred Stock.

In the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock shall be divided among and paid ratably to the holders of Common Stock, subject to the preferences applicable to holders of Preferred Stock.

In the event of a voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Corporation of whatever kind available for distribution to the holders of Common Stock shall be divided among and paid ratably to the holders of Common Stock, subject to the preferences applicable to holders of Preferred Stock.

Preferred Stock

Preferred Stock may be issued from time to time by the Company for such consideration as may be fixed by the Board.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

rights, and the qualifications, limitations or restrictions thereof, of such series of Preferred Stock and the number of shares of such series, as may be permitted under the General Corporation Law of the State of Delaware.

Preferred Stock may be issued from time to time by the Company for such consideration as may be fixed by the Company’s Board of Directors (the “Board”).

The Board is authorized to provide for one or more series of Preferred Stock and to fix the designation of such series, the voting rights, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of Preferred Stock and the number of shares of such series, as may be permitted under the General Corporation Law of the State of Delaware.

The powers, preferences and relative, participating, optional and other special rights of, and the qualifications, limitations or restrictions thereof, of each series of Preferred Stock, if any, may differ from those of any and all other series at any time outstanding.

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

The following table presents the Company’s revenue disaggregated by sales recorded over-time and sales recorded at a point in time (in thousands):

The Company disaggregates its revenue from contracts with customers by those sales recorded over-time and sales recorded at a point in time.

The following table presents the Company’s disaggregated (in thousands):

Year Ended December 31,

2022 2021 2020

Over-time Revenues $ 626,057 $ 503,238 $ 493,633

Point in time Revenues 227,261 369,424 154,266

Over-time revenue $ 1,155,848 $ 519,003 $ 503,238

Point in time revenue 481,698 334,315 369,424

Total revenue $ 1,637,546 $ 853,318 $ 872,662

As discussed in FN 22 to the consolidated financial statements, ITC-related contracts were determined to have multiple performance obligations satisfied at a point in time instead of one performance obligation satisfied over time.

Total revenue was not impacted, but the disaggregated revenue information above for 2020 and 2019 has been revised to correct this error, which resulted in $360.1 and $106.2 of revenue being reclassified from over-time revenue to point in time revenue for 2020 and 2019, respectively .

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the condensed consolidated balance sheets.

The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project.

Billing sometimes occurs subsequent to revenue recognition, resulting in contract assets.

The changes in contract assets (i.e., unbilled receivables) and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings for the Company’s revenue recognized over-time.

Earnings (Loss) per Share

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

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

2022 2021 2020

Unbilled receivables $ 101,513 $ 111,224 $ 18,073

The Company also receives advances or deposits from its customers, before revenue is recognized, resulting in contract liabilities.

The changes in contract liabilities (i.e., deferred revenue) relate to advanced orders and

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

payments received by the Company.

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):

2022 2021 2020

Deferred revenue $ 178,922 $ 99,575 $ 149,821

During the years ended December 31, 2022 and 2021, the Company converted $ 84.7 million and $ 149.8 million deferred revenue to revenue, respectively, which represented 85 % and 100 % of the prior years’ deferred revenue balance, respectively.

Bill-and-Hold Arrangement

Generally, this occurs with the transfer of control of the asset, which is typically upon delivery to the customer in line with shipping terms.

In certain situations, when product is still in our custody and title and risk of loss has passed to the customer (known as a bill-and-hold arrangement), revenue will be recognized when all the specific requirements for transfer of control under a bill-and-hold arrangement have been met.

In 2022, the Company had one contract with a customer for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties.

The related revenue was approximately $ 13.7 million, which was paid in full as of December 31, 2022 and the product was shipped to the customer in January 2023.

The Company had $ 168.9 million in total revenue 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 years ended December 31, 2021.

Remaining Performance Obligations

As of December 31, 2022, the Company had $ 719.3 million of remaining performance obligations.

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Earnings per Share

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

Year Ended December 31,

3 unchanged sentences

Net income (loss) to common shareholders ( 43,622 ) ( 66,118 ) 59,073

Weighted-average shares 129,984 121,467 119,994

Weighted average common shares outstanding 149,819 129,984 121,467

Earnings (loss) per share $ ( 0.29 ) $ ( 0.51 ) $ 0.49

Weighted-average shares 129,984 121,467 119,994

Equity compensation dilutive securities — 47 —

Weighted average common shares outstanding 149,819 129,984 121,467

Effect of Restricted Stock and Performance Awards — — 47

Weighted average dilutive shares 149,819 129,984 121,514

Earnings (loss) per share $ ( 0.51 ) $ 0.49 $ 0.33

Potentially dilutive common shares issuable pursuant to equity-based awards of 227,253 were not included for the year ended December 31, 2021 as their potential effect was anti-dilutive as the Company generated a net loss.

There were no potentially dilutive common shares issuable pursuant to our 1% Senior Notes as the stock price is below the strike price and the Company generated a net loss.

The Company’s capped call option agreement entered into in December 2021 is not included in the calculation of the earnings per share as the impact would be anti-dilutive.

The potential shares issuable under the Company’s convertible 1% notes issued in December 2021 are not included in the earnings per share calculation as the par value of the notes is required to be paid in cash upon conversion and the stock price has not exceeded the conversion price on the notes at December 31, 2021.

There were 26,671,594 Class B units and 1,000 Class C units of Former Parent issued to certain employees or directors of the Company which were not included in the calculation of basic or diluted EPS for the years ended December 31, 2020 and 2019, as the Class B and Class C units do not represent potential units of the Company.

Income (loss) per share $ ( 0.29 ) $ ( 0.51 ) $ 0.49

Potentially dilutive common shares issued pursuant to equity-based awards of 500,006 were not included as their effect was anti-dilutive for the year ended December 31, 2020.

Potentially dilutive common shares issuable pursuant to equity-based awards of 2,165,217 and 1,078,096 were not included for the years ended December 31, 2022 and 2021, respectively, as their potential effect was anti-dilutive since the Company generated a net loss to common shareholders.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes for the years ended December 31, 2022 and 2021, as the par value of the Convertible Notes is required to be paid in cash upon conversion and the stock price has not exceeded the conversion price on the Convertible Notes.

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

Commitments and Contingencies

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

On May 14, 2021, a putative class action was filed in the U.S.

District Court for the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s IPO, the Company’s December 2020 offering (the “2020 Follow-On Offering”), and the Company’s March 2021

On August 30, 2017, the Company filed its first amended complaint in the U.S.

District Court for the District of New Mexico against Nextracker LLC, Daniel S.

Shugar, Marco Garcia, Flextronics International U.S.A., Inc., Scott Graybeal and Colin Mitchell (collectively, the “Defendants”) asserting (among other claims) trade secret misappropriation, tortious interference with contract, fraud, and breach of contract (the “Nextracker Litigation”).

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

offering (the “2021 Follow-On Offering”) during the putative class period of October 14, 2020 through May 11, 2021.

On July 15, 2022, the Company settled its claims against Defendants for $ 42.8 million and received payment on August 4, 2022.

On May 14, 2021, a putative class action was filed in the U.S.

District Court for the Southern District of New York (the “Southern District of New York” or the “Court”) against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering (“IPO”), the Company’s December 2020 offering (the “2020 Follow-On Offering”), and the Company’s March 2021 offering (the “2021 Follow-On Offering”) during the putative class period of October 14, 2020 through May 11, 2021.

On June 30, 2021, a second putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11 and 15 of the Securities Exchange Act of 1933 (“Keippel Action”).

2 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.

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.

On September 21, 2021, the Court appointed a group comprised of institutional investors Plymouth County Retirement Association and Carpenters Pension Trust Fund for Northern California as lead plaintiff in the Plymouth Action.

The deadline for the lead plaintiff to file an amended complaint in the Plymouth action was originally November 19, 2021 but was subsequently extended by agreement of the parties and further order of the Court.

On September 21, 2021, the Court in the Plymouth Action appointed a group comprised of institutional investors Plymouth County Retirement Association and Carpenters Pension Trust Fund for Northern California as lead plaintiff.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

On December 7, 2021, an amended class action complaint was filed by lead plaintiff in the Plymouth Action against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2), and 15 of the Securities Exchange Act of 1933, on behalf of a putative class of persons and entities that purchased or otherwise acquired the Company’s securities during the period from October 14, 2020 through May 11, 2021 (the “Consolidated Amended Complaint”).

1 unchanged sentence

(1) certain of the Company’s registration statements and prospectuses related to the Company’s IPO, the Company’s 2020 Follow-On Offering, and the Company’s 2021 Follow-On Offering;

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Company’s annual report and associated press release announcing results for the fourth quarter and full fiscal year 2020;

(2) in the Company’s Annual Report on Form 10-K and associated press release announcing results for the fourth quarter and full fiscal year 2020;

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 must respond to that letter on or before February 23, 2022, stating the extent, if any, to which lead plaintiff concurs with the defendants’ objections and the amendments, if any, to be made to the Consolidated Amended Complaint to address them, or else stating the reasons and controlling authority that lead plaintiff asserts supports the Consolidated Amended Complaint.

If, as a result of this exchange of letters, the parties have failed to resolve their dispute about the sufficiency of the Consolidated Amended Complaint, then, on or before March 21, 2022, defendants must submit a letter to the Court setting forth the reason why a motion dismiss is warranted.

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 “Motion to Dismiss”) the Consolidated Amended Complaint on October 17, 2022.

The lead plaintiff filed a motion opposing the Motion to Dismiss on December 16, 2022, and the Company and other defendants filed a reply in support of the motion to dismiss on January 17, 2023.

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 Company’s defenses.

2 unchanged sentences

Tax Receivable Agreement

Concurrent with the Acquisition, Array Tech, Inc.

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

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

The TRA provides for the payment by Array Tech, Inc.

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.

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

At December 31, 2021 and December 31, 2020, the fair value of the TRA was $ 14.6 million and $ 19.7 million, respectively.

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

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

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

federal and state income tax returns under procedures described in the agreement.

The current portion of the TRA liability is based on tax returns.

The TRA will continue until all tax benefit payments have been made or the Company elects early termination under the terms described in the TRA.

As of December 31, 2021, the undiscounted future expected payments through December 31, under the TRA are as follows (in thousands):

Concurrent with the Former Parent’s acquisition of Array Technologies Patent Holdings Co., LLC on July 8, 2016, Array Tech, Inc.

entered into a TRA with the former majority shareholder of the Company.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Thereafter 11,532

Earn-Out Liability

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

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

the sale of equity securities or assets of Former Parent, acquirer or the Company to a third-party;

or a merger, consolidation, recapitalization or reorganization of Former Parent, acquirer or the Company.

The maximum aggregate earn-out consideration was $ 25.0 million.

The earn-out liability was paid off in the fourth quarter of the fiscal year ended December 31, 2020.

The fair value of the earn-out liability was initially determined as of the Acquisition Date using unobservable inputs.

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

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

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

TRA Earn-Out Liability Contingent Consideration

Balance, December 31, 2018 $ 17,168 $ 442 $ 17,610

IRS Settlement ( 2,727 ) — ( 2,727 )

Fair value adjustment 3,367 — 3,367

valued based on the future expected payments under the agreement.

The TRA provides for the payment by Array Tech, Inc.

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

tax benefits deemed realized in post-closing taxable periods by the Company, 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 consolidated statements of operations.

As of December 31, 2022 and December 31, 2021, the fair value of the TRA was $ 8.6 million and $ 14.6 million, respectively.

The Company considers certain factors to estimate the future expected TRA payments to the former owners include the timing of tax payments, a discount rate, book income projections, timing of expected adjustments to calculate taxable income and the projected rate of use for attributes defined in the TRA.

These factors are classified as Level 3 inputs within the fair value hierarchy as discussed in Note 2 – Summary of Significant Accounting Policies .

The following table summarizes the activity related to our estimated TRA obligation (in thousands):

TRA Liability

Balance, December 31, 2020 19,691

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Balance, December 31, 2022 $ 8,587

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

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

federal and state income tax returns under procedures described in the TRA.

The current portion of the TRA liability is based on expected tax returns.

The TRA will continue until all tax benefit payments have been made or the Company elects early termination under the terms described in the TRA.

The undiscounted future expected payments under the TRA are as follows (in thousands):

Thereafter 2,516

Earn-Out Liability

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

initial public

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

As of December 31, 2021, the maximum potential payment obligation with regard to surety bonds was $ 160.4 million.

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

the sale of equity securities or assets of Former Parent, acquirer or the Company to a third-party;

or a merger, consolidation, recapitalization or reorganization of Former Parent, acquirer or the Company.

The maximum aggregate earn-out consideration was $ 25.0 million.

The earn-out liability was fully paid in the year ended December 31, 2020.

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.

These off-balance sheet arrangements do not adversely impact the Company’s liquidity or capital resources.

As of December 31, 2022, the Company had surety bonds outstanding in the amount of $ 199.3 million.

Fair Value of Financial Instruments

The carrying values and the estimated fair values of debt financial instruments as of December 31 are as follows:

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

Carrying Value Fair Value Carrying Value Fair Value

Convertible senior notes $ 411,863 $ 410,771 $ — $ —

The carrying values of the Company's revolving credit facility recorded in long-term debt on the Balance Sheet approximate fair value due to the variable interest rate.

The fair value of the Convertible senior notes is estimated using Level 2 inputs as they are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers.

Convertible Notes $ 413,752 $ 430,236 $ 411,863 $ 410,771

The fair value of the Convertible Notes is estimated using Level 2 inputs, as they are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers.

The fair value of the Term Loans and Other Debt is estimated using Level 2 inputs.

The carrying values of the Term Loans outstanding under the Senior Secured Credit facility recorded in consolidated balance sheets approximate fair value due to the variable interest rate.

Other Debt totaling $ 52.0 million, consists of $ 31.7 million variable rate obligations and $ 20.3 million fixed rate obligations.

Of the $ 20.3 million fixed rate obligations, $ 14.9 million mature in 2023 and $ 5.4 million mature in 2024.

Due to the relative short term maturity of these obligation, the Company believes current carrying value approximates fair value.

The carrying value of the $ 31.7 million variable rate obligations approximate fair value due to the variable nature of the interest rate.

Equity-Based Compensation

2020 Equity Incentive Plan

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

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

During the year ended December 31, 2021, the Company granted an aggregate of 661,924 restricted stock units (“RSUs”) to employees and board of director members and 177,472 Performance Stock Units (PSUs) to certain executives.

Restricted Stock Units

Pursuant to the 2020 Plan, the Company grants restricted stock units (“RSUs”) to employees and board of director members.

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

RSU activity under the 2020 Plan was as follows:

Number of Shares Weighted Average Grant Date Fair Value

Outstanding non-vested, December 31, 2019 — $ —

Shares granted 500,006 $ 22.00

Shares vested — $ —

Shares forfeited — $ —

Outstanding non-vested, December 31, 2020 500,006 $ 22.00

Shares granted 661,924 $ 23.17

Shares vested ( 157,473 ) $ 22.00

Shares forfeited ( 74,048 ) $ 27.51

Outstanding non-vested, December 31, 2021 930,409 $ 22.39

Shares granted 1,484,782 $ 10.93

Shares vested ( 458,849 ) $ 20.00

Shares forfeited ( 255,518 ) $ 15.42

Outstanding non-vested, December 31, 2022 1,700,824 $ 13.81

Performance Stock Units

The Company has granted performance stock units (“PSUs”) to certain executives.

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

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

The PSUs were valued using a Monte-Carlo simulation method with a volatility assumption of 66 %, risk free interest rate of 0.28 % based on the United States Treasury Constant Maturity rates and no dividends paid assumption.

Based on results achieved in 2021 and the forecasted amounts over the remainder of the performance period, the Company does not expect the units to vest and therefore has recognized no expense in 2021.

The PSUs were valued using a Monte-Carlo simulation method on the date of grant based on the U.S.

Treasury Constant Maturity rates.

The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the PSUs with a market condition for each grant year:

Volatility 60 % 66 %

Risk-free interest rate 2.83 % 0.28 %

Dividend yield — % — %

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Activity under the 2020 Plan was as follows:

Number of Shares Weighted Average Grant Date Fair Value

Unvested, December 31, 2019 — —

Granted 500,006 $ 22.00

Forfeited — —

Unvested, December 31, 2020 500,006 $ 22.00

Granted 661,924 $ 23.17

Vested ( 157,473 ) $ 22.00

Forfeited ( 74,048 ) $ 27.51

Unvested, December 31, 2021 930,409 $ 22.39

PSU activity under the 2020 Plan was as follows:

Number of Shares Weighted Average Grant Date Fair Value

Unvested, December 31, 2020 — —

Granted 177,472 $ 28.25

Forfeited ( 29,785 ) 30.74

Unvested, December 31, 2021 147,687 $ 27.75

Outstanding non-vested, December 31, 2020 — $ —

Shares granted 177,472 $ 28.25

Shares vested — $ —

Shares forfeited ( 29,785 ) $ 30.74

Outstanding non-vested, December 31, 2021 147,687 $ 27.75

Shares granted 466,916 $ 10.88

Shares vested — $ —

Shares forfeited ( 150,210 ) $ 20.81

Outstanding non-vested, December 31, 2022 464,393 $ 11.96

For the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 14.8 million, $ 16.3 million and $ 4.8 million, respectively, in equity-based compensation.

At December 31, 2022, the Company had $ 17.9 million of unrecognized compensation costs related to RSUs and PSU, which is expected to be recognized over approximately 1.9 years and 2.2 years, respectively.

Class B Units and Class C Units of Former Parent

The Company accounted for equity grants to employees (Class B units and Class C units, “the Units”, of Former Parent) as equity-based compensation under ASC 718, Compensation-Stock Compensation .

The Units contain vesting provisions as defined in the agreement.

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

The Company accounted for equity grants to employees of Class B units and Class C units (collectively, the “Units”) of Former Parent as equity-based compensation under ASC 718 Compensation-Stock Compensation .

The Units contain vesting provisions and do not forfeit upon termination.

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.

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.

The Units issued to employees are measured at fair value on the grant date using an option pricing model.

4 unchanged sentences

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

On November 19, 2019 and May 19, 2020, Former Parent issued 22,326,653 and 4,344,941 , respectively, Class B Units to certain employees of the Company.

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

On March 23, 2021, in connection with the closing of the 2021 Follow-On Offering, all of the outstanding Class B and Class C 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 expense of $ 8.9 million for the year ended December 31, 2021.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

On November 19, 2019 and May 19, 2020, Former Parent issued 22,326,653 and 4,344,941 , respectively, Class B units to certain employees of the Company.

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 expense of $ 8.9 million.

For the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 16.3 million, $ 4.8 million and $ 0.8 million, respectively, in equity-based compensation.

At December 31, 2021, the Company had $ 16.8 million of unrecognized compensation costs related to RSU’s which is expected to be recognized over approximately 2.1 years.

There were 103,833 forfeitures during the year ended December 31, 2021, and no forfeitures during 2020 and 2019.

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

Employee Stock Purchase Plan

The Company’s Compensation Committee approved the Employee Stock Purchase Plan in December 2021.

The Plan allows employees to purchase shares at a 15 % discount off the lower of the stock price at the beginning or ending of the six months window through payroll deductions.

The plan is considered compensatory in nature and the Company recorded equity-based compensation expense on the plan beginning in 2022.

During the year ended December 31, 2022, the Company recorded $ 0.1 million in equity-based compensation related to the Employee Stock Purchase Plan.

We have a defined contribution plan (“401(k) Plan”) which allows eligible employees to contribute up to 75 % of their compensation up to the Internal Revenue Service maximum.

We match each employee’s deferrals (contributions) at 100 % for the first 3 % and 50 % of the fourth and fifth percentages of compensation and may make additional contributions at our discretion.

Employees are immediately vested in the contributions made by us.

Our contributions to the 401(k) Plan were $ 1.5 million, $ 1.1 million, and $ 0.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are recorded in cost of revenue and general and administrative expense.

We have made no discretionary contributions to the 401(k) Plan to date.

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

The Company elected the use of the package of practical expedients permitted under the transition guidance which allows the Company not to reassess whether a contract contains a lease, carry forward the historical lease classification and not reassess initial direct lease costs.

2 unchanged sentences

The standard did not materially affect the consolidated statements of income and had no impact on the consolidated statements of cash flows.

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

The following table summarizes the Company’s ROU assets and lease liabilities (in thousands):

Location on the

consolidated balance sheet December 31, 2021

ROU Asset Other assets $ 11,245

Lease liability, current portion Other current liabilities $ 5,909

Lease liability, long-term portion Other long-term liabilities 5,359

Total lease liability $ 11,268

The Company determines if an arrangement is a lease at its inception.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

Operating lease ROU assets also include any initial direct costs and prepayments less lease incentives.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

As the Company’s leases generally do not provide an implicit rate, the Company uses its collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments.

Lease expense for these leases is recognized on a straight-line basis over the lease term.

Consolidated Balance Sheets 2022 2021

ROU Assets Other assets $ 17,770 $ 11,245

Lease liabilities, current portion Other current liabilities $ 6,509 $ 5,909

Lease liabilities, long-term portion Other long-term liabilities 13,897 5,359

Total lease liabilities $ 20,406 $ 11,268

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Operating lease arrangements are comprised primarily of real estate and equipment agreements for which the right-of-use assets are included in other assets and the corresponding lease liabilities, depending on their maturity, are included in accrued liabilities or other long-term liabilities in the consolidated balance sheets.

The details of the Company’s operating leases are as follows (in thousands):

December 31, 2021

The components of lease cost related to the Company’s operating leases were as follows (in thousands):

Year Ended December 31,

Operating lease expense $ 7,701 $ 6,635

2 unchanged sentences

Total lease expense $ 9,117 $ 6,741

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

Future minimum operating lease payments as of December 31, 2022, are as follows (in thousands):

Operating Leases

3 unchanged sentences

Total lease liabilities $ 20,406

The following table represents future minimum lease obligations under non-cancelable operating leases as of December 31, 2020 (in thousands):

Operating Leases

Total $ 14,435

The Company’s weighted-average remaining lease-term and weighted-average discount rate are as follows:

December 31, 2021

Weighted average remaining lease-term 3.8 years

Other information pertaining to operating leases consists of the following:

Year Ended December 31,

Weighted average remaining lease-term 4.2 years 3.8 years

Weighted average discount rate 5.4 % 5.0 %

Supplemental cash flow and other information related to operating leases are as follows (in thousands):

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2021

Year Ended December 31,

Operating cash flows from operating leases $ 5,380 $ 6,644

2 unchanged sentences

Related Party Transactions

Accounts Payable-Related Party

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

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

Consent Fees-Related Party

The Company incurred $ 2.2 million in consent fees with the former majority shareholder of Array to allow a carryback of post-acquisition net operating losses to pre-acquisition periods under the CARES Act.

The consent fee is included in accounts payable – related party and other expense, net in the accompanying consolidated financial statements at December 31, 2020.

The Company incurred $ 2.2 million in consent fees with its former majority shareholder to allow a carryback of post-acquisition net operating losses to pre-acquisition periods under the CARES Act.

The remaining balance due was $ 0.5 million as of December 31, 2022 and is classified as accounts payable – related party in the consolidated balance sheet.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Special Distribution to Former Parent

On October 14, 2020, the Company issued a special distribution of $ 589 million to Former Parent (the “Special Distribution”).

Related Party Loans - see Note 12

Contingent Consideration - see Note 16

Geographic Information

Summary information about geographic areas:

On October 14, 2020, the Company made a special distribution of $ 589 million to Former Parent (the “Special Distribution”).

Contingent Consideration - see Note 15 – Commitments and Contingencies

Segment and Geographic Information

ASC 280 Segment Reporting establishes standards for reporting information about operating segments.

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.

The Company manages its business on the basis of one operating and reportable segment and derives revenues from selling its product.

The Company’s long-lived assets are located in the United States.

Revenues within geographic areas based upon Customers’ project location (in thousands):

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

During the year ended December 31, 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.

Segment revenue and gross profit were as follows during the periods presented (in thousands):

Year Ended December 31,

2022 2021 2020

United States $ 826,639 $ 805,070 $ 563,157

Array Legacy Operations STI Operations Total Array Legacy Operations Array Legacy Operations

Revenue $ 1,267,883 $ 369,663 $ 1,637,546 $ 853,318 $ 872,662

Gross Profit $ 168,170 $ 59,106 $ 227,276 $ 82,859 $ 202,801

The total assets of the Array Legacy segment are $ 843 million or approximately 49 % of total consolidated assets.

The total assets of the STI segment are $ 863 million or approximately 51 % of total consolidated assets.

The following table presents revenues by geographic region, based on the customers project location (in thousands):

Year Ended December 31,

2022 2021 2020

$ 1,286,064 $ 826,639 $ 805,070

Spain 129,292 7,281 181

Brazil 144,464 — —

Australia 9,429 5,509 45,216

2 unchanged sentences

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

The following table presents property, plant and equipment, net by geographic region at the end of the period (in thousands):

$ 17,789 $ 9,959

Spain 2,676 —

Brazil 1,676 —

Australia 1 —

Rest of the world 1,032 733

Total property, plant and equipment, net $ 23,174 $ 10,692

Restatement (Unaudited)

Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements

During the preparation of the consolidated financial statements as of and for the year ended December 31, 2021, the Company identified errors in the accounting for certain contracts under ASC 606.

Specifically, certain contracts were inappropriately combined with other contracts and ITC related contracts were determined to have multiple performance obligations satisfied at a point in time instead of one performance obligation satisfied over time.

The Company’s management and the audit committee of the Company’s Board of Directors concluded that it is appropriate to restate the quarterly unaudited condensed consolidated financial statements for the quarterly periods ended March 31, 2021, June 30, 2021 and September 30, 2021.

The following presents the restated quarterly unaudited financial statements as of March 31, 2021, June 30, 2021 and September 30, 2021, as well as the statements for the three month period ended March 31, 2021, the three and six month periods ended June 30, 2021 and the three and nine month periods ended September 30, 2021.

During the preparation of the Company’s consolidated financial statements for the year ended December 31, 2022, the Company noted that intangible assets acquired and goodwill recognized in connection with the STI Acquisition were not initially recorded at proper amounts and were not allocated to the appropriate entities or maintained in the appropriate functional currency.

In addition, an asset capitalized in connection with the STI Acquisition was identified that should have been expensed as incurred.

The Company’s management and the audit committee of the Company’s Board of Directors concluded that it is appropriate to restate the unaudited quarterly condensed consolidated financial statements for the quarterly periods ended March 31, 2022, June 30, 2022 and September 30, 2022.

The following presents the restated unaudited quarterly condensed financial statements as of March 31, 2022, June 30, 2022 and September 30, 2022 and for the three month period ended March 31, 2022, the three and six month periods ended June 30, 2022 and the three and nine month periods ended September 30, 2022.

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Balance Sheets

March 31, 2022

11 unchanged sentences

Other intangible assets, net 470,690 11,345 482,035

Deferred tax assets — — —

Other assets 31,314 ( 4,770 ) 26,544

Total assets $ 1,715,718 $ 68,132 $ 1,783,850

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities

6 unchanged sentences

Current portion of contingent consideration — — —

Current portion of term loan 4,300 4,300

Current portion of debt 48,180 — 48,180

Other current liabilities 10,886 — 10,886

4 unchanged sentences

Other long-term liabilities 7,102 — 7,102

Long-term debt, net of current portion, debt discount and issuance costs 391,682 391,682

Long-term warranty 4,743 — 4,743

Long-term debt, net of current portion 778,248 — 778,248

Total long-term liabilities 892,387 6,329 898,716

1 unchanged sentence

Commitments and contingencies (Note 16)

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

none issued as of March 31, 2021

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

400,000 shares issued as of March 31, 2022;

liquidation preference of $ 400.0 million as of March 31, 2022

281,792 — 281,792

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Stockholders’ equity (deficit)

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

none issued as of March 31, 2022

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

2 unchanged sentences

Accumulated deficit ( 293,956 ) ( 3,883 ) ( 297,839 )

Total stockholders’ deficit ( 70,115 ) 1,689 ( 68,426 )

Total liabilities and stockholders’ deficit $ 583,276 $ 2,308 $ 585,584

Accumulated other comprehensive (loss) income ( 9,011 ) 65,686 56,675

Total stockholders’ equity 108,415 61,803 170,218

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity $ 1,715,718 $ 68,132 $ 1,783,850

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Balance Sheets

June 30, 2022

As Previously Reported Restatement Adjustments As Reported

(in thousands, except per share and share amounts)

(unaudited) As Previously Reported Restatement Adjustments As Restated

Current assets

1 unchanged sentence

Accounts receivable, net 452,836 — 452,836

Due from affiliates — — —

Inventories, net 329,951 — 329,951

5 unchanged sentences

Other intangible assets, net 421,862 14,687 436,549

Deferred tax assets 18,521 — 18,521

Other assets 30,573 ( 4,564 ) 26,009

Total assets $ 1,770,345 $ 48,286 $ 1,818,631

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities

5 unchanged sentences

Deferred revenue 167,556 — 167,556

Current portion of contingent consideration 1,908 1,908

Current portion of term loan 4,300 4,300

Current portion of debt 51,494 — 51,494

Other current liabilities 6,949 — 6,949

2 unchanged sentences

Deferred tax liability 84,819 1,771 86,590

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Contingent consideration, net of current portion 7,686 — 7,686

Other long-term liabilities 9,723 — 9,723

Long-term debt, net of current portion, debt discount and issuance costs 493,945 493,945

Long-term warranty 4,056 — 4,056

Long-term debt, net of current portion 793,557 — 793,557

Total long-term liabilities 899,841 1,771 901,612

1 unchanged sentence

Commitments and contingencies (Note 16)

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

412,606 shares issued as of June 30, 2022;

liquidation preference of $ 413.0 million as of June 30, 2022.

293,974 — 293,974

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Stockholders’ equity —

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

4 unchanged sentences

Accumulated deficit ( 299,182 ) ( 3,681 ) ( 302,863 )

Total stockholders’ deficit ( 68,609 ) ( 3,811 ) ( 72,420 )

Total liabilities and stockholders’ deficit $ 622,318 $ ( 5,707 ) $ 616,611

Accumulated other comprehensive (loss) income ( 38,729 ) 50,196 11,467

Total stockholders’ equity 63,853 46,515 110,368

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity $ 1,770,345 $ 48,286 $ 1,818,631

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Balance Sheets

September 30, 2022

As Previously Reported Restatement Adjustments As Restated

(in thousands, except per share and share amounts)

(unaudited) As Previously Reported Restatement Adjustments As Restated

Current assets

Cash and cash equivalents $ 62,778 $ — $ 62,778

Restricted cash — —

Accounts receivable, net 485,174 — 485,174

6 unchanged sentences

Other intangible assets, net 384,084 15,799 399,883

Deferred tax assets 18,785 — 18,785

Other assets 27,502 ( 4,357 ) 23,145

4 unchanged sentences

Accounts payable - related party 478 — 478

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Accrued expenses and other 91,102 — 91,102

3 unchanged sentences

Current portion of contingent consideration — — —

Current portion of term loan 4,300 4,300

Current portion of debt 47,686 — 47,686

Other current liabilities 4,981 — 4,981

4 unchanged sentences

Other long-term liabilities 9,113 — 9,113

Long-term debt, net of current portion, debt discount and issuance costs 299,212 299,212

Long-term warranty 3,852 — 3,852

Long-term debt, net of current portion 725,109 — 725,109

Total long-term liabilities 819,326 2,725 822,051

1 unchanged sentence

Commitments and contingencies (Note 16)

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

350,000 issued as of September 30, 2021;

liquidation preference of $ 352.8 million at September 30, 2021

400,000 shares issued as of September 30, 2022;

liquidation preference of $ 400.0 million as of September 30, 2022

287,561 — 287,561

Stockholders’ equity/(deficit) —

Stockholders’ equity —

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

zero issued as of September 30, 2021

none issued as of September 30, 2022

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

2 unchanged sentences

Accumulated deficit ( 258,360 ) ( 3,859 ) ( 262,219 )

Total stockholders’ equity/(deficit) 7,284 ( 5,820 ) 1,464

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity/(deficit) $ 776,589 $ ( 6,325 ) $ 770,264

Accumulated other comprehensive (loss) income ( 72,835 ) 53,495 ( 19,340 )

Total stockholders’ equity 61,817 49,636 111,453

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity $ 1,681,825 $ 52,361 $ 1,734,186

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Statements of Operations

Three Months Ended

10 unchanged sentences

Total operating expenses 58,748 6,183 64,931

Income from operations 13,053 2,308 15,361

Income (loss) from operations ( 32,161 ) ( 6,183 ) ( 38,344 )

Other expense

Other expense, net ( 78 ) ( 78 )

Other income (expense), net 743 — 743

Foreign currency gain 3,863 — 3,863

Interest expense ( 6,942 ) — ( 6,942 )

Total other expense ( 2,336 ) — ( 2,336 )

Income before income tax expense 3,966 2,308 6,274

Income tax expense 1,079 619 1,698

Net income $ 2,887 $ 1,689 $ 4,576

Earnings per share

Income (loss) before income tax expense (benefit) ( 34,497 ) ( 6,183 ) ( 40,680 )

Income tax expense (benefit) ( 12,443 ) ( 2,300 ) ( 14,743 )

Net income (loss) ( 22,054 ) ( 3,883 ) ( 25,937 )

Preferred dividends and accretion 11,606 — 11,606

Net income (loss) to common shareholders $ ( 33,660 ) $ ( 3,883 ) $ ( 37,543 )

Earnings (loss) per share

Basic $ ( 0.23 ) $ ( 0.03 ) $ ( 0.25 )

4 unchanged sentences

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Statements of Operations

Three Months Ended

12 unchanged sentences

Other expense

Other expense, net ( 122 ) ( 122 )

Other income (expense), net ( 371 ) — ( 371 )

Foreign currency gain (loss) ( 1,736 ) — ( 1,736 )

Interest expense ( 8,021 ) — ( 8,021 )

Total other expense ( 10,128 ) — ( 10,128 )

Loss before income tax expense ( 1,067 ) ( 6,280 ) ( 7,347 )

Loss before income tax benefit ( 22,036 ) ( 1,424 ) ( 23,460 )

Income tax benefit ( 16,810 ) ( 1,626 ) ( 18,436 )

Net loss ( 5,226 ) 202 ( 5,024 )

Loss per share

Preferred dividends and accretion 12,182 — 12,182

Net loss to common shareholders $ ( 17,408 ) $ 202 $ ( 17,206 )

Loss per common share

Basic $ ( 0.12 ) $ — $ ( 0.11 )

Diluted $ ( 0.12 ) $ — $ ( 0.11 )

Weighted average number of shares

Weighted average number of common shares

Basic 150,203 — 150,203

1 unchanged sentence

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Statements of Operations

Three Months Ended

10 unchanged sentences

Total operating expenses 61,703 1,326 63,029

Loss from operations ( 16,134 ) ( 3,382 ) ( 19,516 )

Other expense

Income (loss) from operations 18,520 ( 1,326 ) 17,194

Other income (expense)

Other expense, net ( 399 ) — ( 399 )

Legal settlement 42,750 — 42,750

Foreign currency gain (loss) ( 159 ) — ( 159 )

Interest expense ( 8,746 ) — ( 8,746 )

Total other expense ( 13,406 ) — ( 13,406 )

Loss before income tax benefit ( 29,540 ) ( 3,382 ) ( 32,922 )

Income tax benefit ( 3,988 ) ( 1,373 ) ( 5,361 )

Net loss $ ( 25,552 ) $ ( 2,009 ) $ ( 27,561 )

Total other income (expense) 33,446 — 33,446

Income (loss) before income tax (benefit) expense 51,966 ( 1,326 ) 50,640

Income tax (benefit) expense 11,144 ( 1,148 ) 9,996

Net income (loss) 40,822 ( 178 ) 40,644

Preferred dividends and accretion 12,257 — 12,257

Net loss to common shareholders $ ( 31,031 ) $ ( 2,009 ) $ ( 33,040 )

Loss per share

Net income (loss) to common shareholders $ 28,565 $ ( 178 ) $ 28,387

Income (loss) per common share

Basic $ 0.19 $ — $ 0.19

Diluted $ 0.19 $ — $ 0.19

Weighted average number of shares

Weighted average number of common shares

Basic 150,322 — 150,322

1 unchanged sentence

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Statements of Operations

Six Months Ended

1 unchanged sentence

(in thousands, expect per share and share amounts)

As Previously Reported Restatement Adjustments As Restated

As Previously Reported Restatement Adjustment As Restated

Revenue $ 720,451 $ — $ 720,451

8 unchanged sentences

Other expense

Other expense, net ( 200 ) ( 200 )

Other income (expense), net 372 — 372

Foreign currency gain (loss) 2,127 — 2,127

Interest expense ( 14,963 ) — ( 14,963 )

Total other expense ( 12,464 ) — ( 12,464 )

Income (loss) before income tax expense 2,899 ( 3,972 ) ( 1,073 )

Income tax expense (benefit) 29 ( 161 ) ( 132 )

Net income (loss) $ 2,870 $ ( 3,811 ) $ ( 941 )

Earnings (loss) per share

Loss before income tax benefit ( 56,533 ) ( 7,607 ) ( 64,140 )

Income tax benefit ( 29,253 ) ( 3,926 ) ( 33,179 )

Net loss ( 27,280 ) ( 3,681 ) ( 30,961 )

Preferred dividends and accretion 23,788 — 23,788

Net loss to common shareholders $ ( 51,068 ) $ ( 3,681 ) $ ( 54,749 )

Loss per common share

Basic $ ( 0.34 ) $ ( 0.02 ) $ ( 0.37 )

Diluted $ ( 0.34 ) $ ( 0.02 ) $ ( 0.37 )

Weighted average number of shares

Weighted average number of common shares

Basic 149,246 — 149,246

1 unchanged sentence

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Consolidated Statements of Operations

Nine Months Ended

11 unchanged sentences

Income (loss) from operations ( 25,549 ) ( 8,933 ) ( 34,482 )

Other expense

Other income (expense)

Other expense, net ( 27 ) — ( 27 )

Legal settlement 42,750 — 42,750

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

Interest expense ( 23,709 ) — ( 23,709 )

Total other expense ( 29,266 ) — ( 29,266 )

Loss before income tax benefit ( 26,641 ) ( 7,354 ) ( 33,995 )

Income tax benefit ( 3,959 ) ( 1,534 ) ( 5,493 )

Net loss $ ( 22,682 ) $ ( 5,820 ) $ ( 28,502 )

Total other income (expense) 20,982 — 20,982

Income (loss) before income tax (benefit) expense ( 4,567 ) ( 8,933 ) ( 13,500 )

Income tax (benefit) expense ( 18,109 ) ( 5,074 ) ( 23,183 )

Net income (loss) 13,542 ( 3,859 ) 9,683

Preferred dividends and accretion 36,045 — 36,045

Net loss to common shareholders $ ( 28,161 ) $ ( 5,820 ) $ ( 33,981 )

Loss per share

Net income (loss) to common shareholders $ ( 22,503 ) $ ( 3,859 ) $ ( 26,362 )

Income (loss) per common share

Basic $ ( 0.15 ) $ ( 0.03 ) $ ( 0.18 )

Diluted $ ( 0.15 ) $ ( 0.03 ) $ ( 0.18 )

Weighted average number of shares

Weighted average number of common shares

Basic 149,604 — 149,604

1 unchanged sentence

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Statement of Changes in Shareholders' Deficit- Three Months Ended March 31, 2021

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended

March 31, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net loss $ ( 22,054 ) $ ( 3,883 ) $ ( 25,937 )

Change in foreign currency translation adjustments ( 9,011 ) 65,686 56,675

Comprehensive income (loss) $ ( 31,065 ) $ 61,803 $ 30,738

Consolidated Statements of Comprehensive Loss

Three Months Ended

June 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ ( 5,226 ) $ 202 $ ( 5,024 )

Change in foreign currency translation adjustments ( 29,718 ) ( 15,490 ) ( 45,208 )

Comprehensive loss $ ( 34,944 ) $ ( 15,288 ) $ ( 50,232 )

Consolidated Statements of Comprehensive Income

Three Months Ended

September 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ 40,822 $ ( 178 ) $ 40,644

Change in foreign currency translation adjustments ( 34,106 ) 3,299 ( 30,807 )

Comprehensive income $ 6,716 $ 3,121 $ 9,837

Consolidated Statements of Comprehensive Income (Loss)

Six Months Ended

June 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net loss $ ( 27,280 ) $ ( 3,681 ) $ ( 30,961 )

Change in foreign currency translation adjustments ( 38,729 ) 50,196 11,467

Comprehensive income (loss) $ ( 66,009 ) $ 46,515 $ ( 19,494 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Comprehensive Income (Loss)

Nine Months Ended

September 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ 13,542 $ ( 3,859 ) $ 9,683

Change in foreign currency translation adjustments ( 72,835 ) 53,495 ( 19,340 )

Comprehensive income (loss) $ ( 59,293 ) $ 49,636 $ ( 9,657 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) - Three Months Ended March 31, 2022

Temporary Equity Permanent Equity

(in thousands, share amounts)

Preferred Stock Common Stock Additional

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

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

Balance, December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — — — 4,413 — — 4,413

Net Income — — — — — 2,887 2,887

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,147 15 215,863 — — 215,878

Preferred cumulative dividends plus accretion — 11,606 — — — — ( 11,606 ) — — ( 11,606 )

Net loss — — — — — — — ( 22,054 ) — ( 22,054 )

Other comprehensive loss — — — — — — — — ( 9,011 ) ( 9,011 )

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

Balance, December 31, 2021 — $ — — $ — — $ — $ — $ — $ — $ —

Net Income — — — — — 1,689 1,689

Net loss — — — — — — — ( 3,883 ) — ( 3,883 )

Other comprehensive income — — — — — — — — 65,686 65,686

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,883 ) $ 65,686 $ 61,803

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Balance, December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — — — 4,413 — — 4,413

Net Income — — — — — 4,576 4,576

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,147 15 215,863 — — 215,878

Preferred cumulative dividends plus accretion — 11,606 — — — — ( 11,606 ) — — ( 11,606 )

Net loss — — — — — — — ( 25,937 ) — ( 25,937 )

Other comprehensive income — — — — — — — — 56,675 56,675

Balance, March 31, 2022 - As Restated 400 $ 281,792 — $ — 150,174 $ 150 $ 411,232 $ ( 297,839 ) $ 56,675 $ 170,218

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Statement of Changes in Shareholders' Deficit- Three Months Ended June 30, 2021

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) - Three Months Ended June 30, 2022

Temporary Equity Permanent Equity

(in thousands, share amounts)

Preferred Stock Common Stock Additional

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

Balance, March 31, 2021 — $ — 126,994 127 148,370 ( 218,612 ) $ ( 70,115 )

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

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

Equity-based compensation — — — — 105 — 2,944 — — 2,944

Net loss — — — — — ( 17 ) ( 17 )

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

Balance, March 31, 2021 — $ — — $ — $ — $ 1,689 1,689

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 380 ) — — ( 380 )

Preferred cumulative dividends plus accretion 13 12,182 — — — — ( 12,182 ) — — ( 12,182 )

Net loss — — — — — — — ( 5,226 ) — ( 5,226 )

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

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

Balance at March 31, 2022 — $ — — $ — — $ — $ — $ ( 3,883 ) $ 65,686 $ 61,803

Net income — — — — — — — 202 — 202

Other comprehensive loss — — — — — — — — ( 15,490 ) ( 15,490 )

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

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

Balance at March 31, 2022 400 $ 281,792 — $ — 150,174 $ 150 $ 411,232 $ ( 297,839 ) $ 56,675 $ 170,218

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Equity-based compensation — — — — 105 — 2,944 — — 2,944

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 380 ) — — ( 380 )

Preferred cumulative dividends plus accretion 13 12,182 — — — — ( 12,182 ) — — ( 12,182 )

Net loss — — — — — — — ( 5,024 ) — ( 5,024 )

Other comprehensive loss — — — — — — — — ( 45,208 ) ( 45,208 )

Balance, June 30, 2022 - As Restated 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

2 unchanged sentences

(in thousands, share amounts)

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock Additional

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

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

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

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

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

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

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 592 ) — — ( 592 )

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

Net loss — — — — — — — ( 25,552 ) ( 25,552 )

Balance, September 30, 2021 350 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 244,181 ) $ 7,284

Balance, June 30, 2021 — — — $ — — $ — $ — $ ( 3,811 ) ( 3,811 )

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

Balance at June 30, 2022 — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

Net loss — — — — — — — ( 178 ) — ( 178 )

Other comprehensive loss — — — — — — — — 3,299 3,299

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,859 ) $ 53,495 $ 49,636

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

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

Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

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

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

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

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 592 ) — — ( 592 )

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

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

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

Net income — — — — — — — 40,644 — 40,644

Other comprehensive loss — — — — — — — — ( 30,807 ) ( 30,807 )

Balance, September 30, 2022 - As Restated 400 $ 287,561 — $ — 150,334 $ 150 $ 392,862 $ ( 262,219 ) $ ( 19,340 ) $ 111,453

Statement of Changes in Shareholders' Deficit- Six Months Ended June 30, 2021

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) - Six Months Ended June 30, 2022

Temporary Equity Permanent Equity

(in thousands, share amounts)

Preferred Stock Common Stock Additional

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

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

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

Balance at December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — — — 7,357 — — 7,357

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,252 15 215,483 — — 215,498

Preferred cumulative dividends plus accretion 13 23,788 — — — — ( 23,788 ) — — ( 23,788 )

Net loss — — — — — — — ( 27,280 ) — ( 27,280 )

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

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

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

Balance, December 31, 2021 — $ — — $ — — $ — $ — $ — $ — $ —

Net loss — — — — — — — ( 3,681 ) — ( 3,681 )

Other comprehensive income — — — — — — — — 50,196 50,196

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

Balance, December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Equity-based compensation — — — — — — 7,357 — — 7,357

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,252 15 215,483 — — 215,498

Issuance of common stock, net — — — — — — — — — —

Preferred cumulative dividends plus accretion 13 23,788 — — — — ( 23,788 ) — — ( 23,788 )

Net loss — — — — — — — ( 30,961 ) — ( 30,961 )

Other comprehensive income — — — — — — — — 11,467 11,467

Balance, June 30, 2022 - As Restated 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Statement of Changes in Shareholders' Equity/(Deficit) - Nine Months Ended September 30, 2021

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) - Nine Months Ended September 30, 2022

Temporary Equity Permanent Equity

(in thousands, share amounts)

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock Additional

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

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

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

Balance at December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — 161 — 11,454 — — 11,454

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

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

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,146 15 214,891 — — 214,906

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

Net loss — — — — — — — ( 22,682 ) ( 22,682 )

Balance, September 30, 2021 350 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 244,181 ) $ 7,284

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

Balance, December 31, 2021 — $ — — $ — — $ — $ — $ — $ — $ —

Net loss — — — — — — — ( 3,859 ) — ( 3,859 )

Other comprehensive income — — — — — — — — 53,495 53,495

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,859 ) $ 53,495 $ 49,636

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

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Balance, December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 )

Equity-based compensation — — — — 161 — 11,454 — — 11,454

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

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,146 15 214,891 — — 214,906

Issuance of common stock, net — — — — — — — — — —

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

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

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

Net income — — — — — — — 9,683 — 9,683

Other comprehensive loss — — — — — — — — ( 19,340 ) ( 19,340 )

Balance, September 30, 2022 - As Restated 400 $ 287,561 — $ — 150,334 $ 150 $ 392,862 $ ( 262,219 ) $ ( 19,340 ) $ 111,453

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Statement of Cash Flows

Consolidated Statements of Cash Flows

Three Months Ended

2 unchanged sentences

As Previously Reported Restatement Adjustments As Restated

Cash flows used in operating activities

Net income $ 2,887 $ 1,689 $ 4,576

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

Recovery of bad debts ( 535 ) ( 535 )

Deferred tax benefit ( 71 ) ( 38 ) ( 109 )

Cash flows from operating activities

Net income (loss) $ ( 22,054 ) $ ( 3,883 ) $ ( 25,937 )

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

Provision for (recovery of) bad debts 145 — 145

Deferred tax expense (benefit) 6,649 ( 2,300 ) 4,349

Depreciation and amortization 23,023 585 23,608

Amortization of debt discount and issuance costs 1,710 — 1,710

Interest paid-in-kind — —

Equity-based compensation 4,508 — 4,508

1 unchanged sentence

Warranty provision 594 — 594

Changes in operating assets and liabilities —

Provision for inventory obsolescence 409 — 409

Changes in operating assets and liabilities, net of business acquisition

Accounts receivable ( 44,268 ) — ( 44,268 )

9 unchanged sentences

Net cash used in operating activities ( 50,097 ) — ( 50,097 )

Cash flows used in investing activities

Cash flows from investing activities

Purchase of property, plant and equipment ( 2,357 ) — ( 2,357 )

Acquisition of STI, net of cash acquired ( 373,816 ) — ( 373,816 )

Investment in equity security — — —

Net cash used in investing activities ( 376,173 ) — ( 376,173 )

Cash flows used in financing activities

Cash flows from financing activities

Proceeds from Series A issuance 33,098 — 33,098

Proceeds from common stock issuance 15,885 — 15,885

Series A equity issuance costs ( 175 ) — ( 175 )

Common stock issuance costs ( 450 ) — ( 450 )

Proceeds from revolving credit facility 52,000 — 52,000

Principal payments on term loan facility ( 30,000 ) ( 30,000 )

Debt issuance costs ( 6,590 ) ( 6,590 )

Net cash used in financing activities ( 36,590 ) — ( 36,590 )

Net decrease in cash, cash equivalents and restricted cash ( 89,308 ) — ( 89,308 )

Cash, cash equivalents and restricted cash, beginning of period 108,441 108,441

Cash, cash equivalents, and restricted cash, end of period $ 19,133 $ — $ 19,133

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Payments on revolving credit facility — — —

Proceeds from issuance of other debt 6,229 — 6,229

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Statement of Cash Flows

Principal payments on debt ( 4,368 ) — ( 4,368 )

Contingent consideration ( 1,483 ) — ( 1,483 )

Debt issuance costs — — —

Net cash provided by (used in) financing activities 100,736 — 100,736

Effect of exchange rate changes on cash and cash equivalent balances 7,355 — 7,355

Net change in cash and cash equivalents ( 318,179 ) — ( 318,179 )

Cash and cash equivalents, beginning of period 367,670 367,670

Cash and cash equivalents, end of period $ 49,491 $ — $ 49,491

Supplemental Cash Flow Information

Stock consideration paid for acquisition of STI $ 200,224 — 200,224

Consolidated Statements of Cash Flows

Six Months Ended

June 30, 2022

(in thousands)

As Previously Reported Restatement Adjustments As Restated

Cash flows used in operating activities

Net income $ 2,870 $ ( 3,811 ) $ ( 941 )

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

Recovery of bad debts ( 551 ) ( 551 )

Cash flows from operating activities

Net loss $ ( 27,280 ) $ ( 3,681 ) $ ( 30,961 )

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

Provision for (recovery of) bad debts 510 — 510

Deferred tax benefit ( 19,984 ) ( 3,926 ) ( 23,910 )

1 unchanged sentence

Amortization of debt discount and issuance costs 3,286 — 3,286

Interest paid-in-kind — —

Equity-based compensation 7,472 — 7,472

2 unchanged sentences

Provision for inventory obsolescence 409 — 409

Changes in operating assets and liabilities —

Changes in operating assets and liabilities, net of business acquisition

Accounts receivable ( 106,548 ) — ( 106,548 )

7 unchanged sentences

Lease liabilities 4,700 — 4,700

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Deferred revenue 47,263 — 47,263

Net cash used in operating activities ( 60,764 ) — ( 60,764 )

Cash flows used in investing activities

Cash flows from investing activities

Purchase of property, plant and equipment ( 3,895 ) — ( 3,895 )

Acquisition of STI, net of cash acquired ( 373,818 ) — ( 373,818 )

Investment in equity security — — —

1 unchanged sentence

Cash flows from financing activities

Proceeds from Series A issuance 33,098 — 33,098

Proceeds from common stock issuance 15,885 — 15,885

Series A equity issuance costs ( 575 ) — ( 575 )

Common stock issuance costs ( 450 ) — ( 450 )

Payments on revolving credit facility ( 33,000 ) — ( 33,000 )

Proceeds from issuance of other debt 30,599 — 30,599

Proceeds from revolving credit facility 101,000 — 101,000

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

Payments on related party loans — —

Principal payments on debt ( 22,377 ) — ( 22,377 )

Contingent consideration ( 1,483 ) — ( 1,483 )

1 unchanged sentence

Net cash provided by financing activities 122,697 — 122,697

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

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Cash, cash equivalents and restricted cash, beginning of period 108,441 108,441

Cash, cash equivalents, and restricted cash, end of period $ 17,682 $ — $ 17,682

Statement of Cash Flows

Effect of exchange rate changes on cash and cash equivalent balances ( 844 ) — ( 844 )

Net change in cash and cash equivalents ( 316,624 ) — ( 316,624 )

Cash and cash equivalents, beginning of period 367,670 367,670

Cash and cash equivalents, end of period $ 51,046 $ — $ 51,046

Supplemental Cash Flow Information

Stock consideration paid for acquisition of STI $ 200,224 — 200,224

Consolidated Statements of Cash Flows

Nine Months Ended

2 unchanged sentences

As Previously Reported Restatement Adjustments As Restated

Cash flows used in operating activities

Net loss $ ( 22,682 ) $ ( 5,820 ) $ ( 28,502 )

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

Recovery of bad debts ( 574 ) ( 574 )

Cash flows from operating activities

Net income (loss) $ 13,542 $ ( 3,859 ) $ 9,683

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

Provision for (recovery of) bad debts 660 — 660

Deferred tax benefit ( 30,928 ) ( 5,074 ) ( 36,002 )

1 unchanged sentence

Amortization of debt discount and issuance costs 5,003 — 5,003

Interest paid-in-kind — —

Equity-based compensation 11,677 — 11,677

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Contingent consideration ( 5,981 ) — ( 5,981 )

1 unchanged sentence

Provision for inventory obsolescence ( 2,333 ) — ( 2,333 )

Changes in operating assets and liabilities —

Changes in operating assets and liabilities, net of business acquisition

Accounts receivable ( 139,036 ) — ( 139,036 )

5 unchanged sentences

Accrued expenses and other 41,271 — 41,271

Warranty payments ( 373 ) — ( 373 )

Income tax payable 2,951 — 2,951

1 unchanged sentence

Deferred revenue 34,772 — 34,772

Net cash used in operating activities ( 165,837 ) — ( 165,837 )

Cash flows used in investing activities

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

Cash flows from investing activities

Purchase of property, plant and equipment ( 6,690 ) — ( 6,690 )

Acquisition of STI, net of cash acquired ( 373,816 ) — ( 373,816 )

Investment in equity security — — —

1 unchanged sentence

Cash flows from financing activities

Proceeds from revolving credit facility 102,000 102,000

Principal payments on term loan facility ( 132,150 ) ( 132,150 )

Proceeds from Series A issuance 33,098 — 33,098

1 unchanged sentence

Series A equity issuance costs ( 1,167 ) — ( 1,167 )

Array Technologies, Inc.

and Subsidiaries

Notes to Consolidated Financial Statements

Common stock issuance costs ( 450 ) — ( 450 )

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

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

Payments on related party loans — —

Proceeds from issuance of other debt 39,219 — 39,219

Proceeds from revolving credit facility 116,000 — 116,000

Principal payments on debt ( 33,286 ) — ( 33,286 )

Contingent consideration ( 1,483 ) — ( 1,483 )

Deferred offering costs — —

Debt issuance costs ( 6,590 ) — ( 6,590 )

Net cash provided by financing activities 33,146 — 33,146

Effect of exchange rate changes on cash and cash equivalent balances ( 1,555 ) — ( 1,555 )

Net change in cash and cash equivalents ( 304,892 ) — ( 304,892 )

1 unchanged sentence

Cash and cash equivalents, end of period $ 62,778 $ — $ 62,778

Subsequent Events

STI Acquisition

On January 11, 2022 (the “Closing Date”), the Company completed the previously announced STI Acquisition, pursuant to that certain definitive agreement (the “Purchase Agreement”), dated as of November 10, 2021, by and among Array Tech, Inc, a wholly-owned subsidiary of the Company, Amixa Capital, S.L.

and Aurica Trackers, S.L., each a company duly organized under the laws of the Kingdom of Spain, and Mr.

Javier Reclusa Etayo.

In accordance with the Purchase Agreement, the Company paid closing consideration to STI consisting of $ 410.5 million in cash (the “Cash Consideration”) and 13,894,800 shares of the Company’s common stock (the “Stock Consideration”).

The fair value of the purchase consideration was $ 610.7 million and resulted in the Company owning 100 % of the interests in STI.

The Company is in the process of determining the acquisition assets and liabilities and the related accounting impact.

The purchase price will be increased by the amount that is four times the audited Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of the target less € 47.0 million ($ 53.5 million at current exchange rates), such that the amount of contingent consideration is subject to a cap of € 45.0 million ($ 52.0 million at current exchange rates).

Subsequent to December 31, 2021, it was determined that the targets were not met.

The acquisition of STI will provide the Company with an immediate presence in Brazil as well as Western Europe.

Transaction expenses incurred in connection with the acquisition are estimated to be $ 5.3 million.

Series A Redeemable Preferred Issuance

In connection with the Stock Purchase Agreement and the Certificate of Designations governing the Series A Redeemable Perpetual Preferred Stock (see Note 11 - Redeemable Perpetual Preferred), on January 7, 2022, the Company issued and sold to the Purchasers 50,000 shares of Series A Redeemable Perpetual Preferred Stock and 1,125,000 shares of Common Stock in an Additional Closing for an aggregate purchase price of $ 49,376,125 .

Employee Stock Purchase Plan

The Company’s Compensation Committee approved the Employee Stock Purchase Plan in December 2021.

The Plan allows employees to purchase shares at 15 % off the lower of the stock price at the beginning or ending of the six months window through payroll deductions.

The plan is considered compensatory in nature and the Company will record stock compensation expense on the plan beginning in 2022.

Supplemental Cash Flow Information

Stock consideration paid for acquisition of STI $ 200,224 — 200,224

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 9A. Controls and Procedures