Array Technologies, Inc. 10-K

Item 9A. Controls and Procedures 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 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, due to the material weaknesses identified below. Management’s Report on Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f). 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, 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’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 64 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, 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. generally accepted accounting principles (“US GAAP”), our management has concluded that our consolidated financial statements present fairly, in all material respects, 65 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 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 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; and 66 ◦ 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 The effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, has been audited by BDO USA, LLP, an independent registered public accounting firm, as stated in its report included herein. Changes in 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. Item 9B. Other Information We maintain a website at www.arraytechinc.com. The contents of our website are not incorporated in, or otherwise to be regarded as part of, this Annual Report on Form 10-K. 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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections None. PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this item and not set forth below will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission in connection with our 2023 Annual Meeting of Stockholders, or the Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2022, and is incorporated herein by reference. We have adopted a written Code of Business Conduct that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Business Conduct is available on our website at www.arraytechinc.com. If we make any substantive amendments to the Code of Business Conduct or grant any waiver from a provision of the Code of Business Conduct to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website or in a Current Report on Form 8-K. 67 Item 11. Executive Compensation The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference. PART IV Item 15. Exhibit and Financial Statement Schedules (a)(1) Financial Statements. The financial statements and supplementary data required by this item are included after the Signature page of this Annual Report on Form 10-K beginning on page F-1. (a)(2) Financial Statement Schedules. All schedules have been omitted because they are not required or because the required information is given in the Financial Statements or Notes thereto. (a)(3) Exhibits. The exhibits listed in the Exhibit Index below are filed or incorporated by reference as part of this Annual Report. Exhibit Index Number Description of Document Form Date No. 2.1+ Purchase Agreement, dated November 10, 2021, by and among Array Technologies, Inc., Array Tech, Inc., Amixa Capital, S.L., Aurica Trackers, S.L., and Mr. Javier Reclusa 8-K 11/12/2021 2.1 3.1 Amended and Restated Certificate of Incorporation of Array Technologies, Inc., dated October 19, 2020 8-K 10/19/2020 3.1 3.2 Amended and Restated Bylaws of Array Technologies, Inc., dated October 19, 2020 8-K 10/19/2020 3.2 3.3 Certificate of Designations of Series A Perpetual Preferred Stock 8-K 08/11/2021 3.1 4.1 Description of securities registered under Section 12 of the Exchange Act 10-K 03/10/2021 4.1 68 Number Description of Document Form Date No. 4.2 Indenture, dated December 3, 2021, among Array Technologies, Inc. and U.S. Bank National Association 8-K 12/07/2021 4.1 4.3 Form of 1.00% Convertible Senior Note due 2028 (included in Exhibit 4.1) 8-K 12/07/2021 4.2 10.1 Registration Rights Agreement, dated August 10, 2021, by and between Array Technologies, Inc. and BCP Helios Aggregator L.P. 8-K 08/11/2021 10.2 10.2 Registration Rights Agreement, dated January 11, 2022, by and among Array Technologies, Inc. and the holders identified therein 8-K 01/11/2022 10.1 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 10.2 10.4 Amended and Restated ABL Credit and Guarantee Agreement, dated March 23, 2020, by and among ATI Investment Holdings, Inc., Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto S-1/A 10/14/2020 10.1 10.5 Tax Receivable Agreement, dated July 8, 2016, between Array Tech, Inc. (f/k/a Array Technologies, Inc.) and Ron P. Corio S-1/A 10/14/2020 10.3 10.6 Form of Array Technologies, Inc. 2020 Long-Term Incentive Plan S-1/A 10/14/2020 10.7 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 10.8 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 10.9 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 10.10 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 10.11 Array Technologies, Inc. Executive Severance and Change in Control Plan 8-K 04/05/2022 10.2 10.12 Separation Agreement, dated as of March 31, 2022, by and between Array Tech , Inc. and Jim Fusaro 8-K 04/05/2022 10.3 10.13 Form of Director and Officer Indemnification Agreement S-1/A 10/14/2020 10.11 10.14 Employment Agreement Terms 10-K 03/10/2021 10.13 69 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. (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 10.14 10.16 Amendment No. 2, dated February 26, 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 8-K 03/02/2021 10.1 10.17 Form of Capped Call Confirmation 8-K 12/07/21 10.1 21.1* List of Subsidiaries of the Registrant 23.1* Consent of Independent Registered Public Accounting Firm 31.1* Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes- Oxley Act of 2002 (18 U.S.C. 1350) 31.2* Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes- Oxley Act of 2002 (18 U.S.C. 1350) 32.1** Certification of the Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) 32.2** Certification of the Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) 101* Interactive Data Files 104* Cover Page Interactive Data Files * Filed herewith ** Furnished herewith + Exhibits and schedules have been omitted pursuant to Regulation S-K Item 601(a)(5) and will be furnished on a supplemental basis to the Securities and Exchange Commission upon request. Item 16. Form 10–K Summary None. 70 SIGNATURES 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 March 22, 2023. Array Technologies, Inc. By: /s/ Kevin Hostetler Kevin Hostetler Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Signature Title Date /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 March 22, 2023 Brad Forth /s/ Paulo Almirante Member of the Board of Directors March 22, 2023 Paulo Almirante /s/ Troy Alstead Member of the Board of Directors March 22, 2023 Troy Alstead /s/ Orlando D. Ashford Member of the Board of Directors March 22, 2023 Orlando D. Ashford /s/ Jayanthi Iyengar Member of the Board of Directors March 22, 2023 Jayanthi Iyengar /s/ Bilal Khan Member of the Board of Directors March 22, 2023 Bilal Khan /s/ Tracy Jokinen Member of the Board of Directors March 22, 2023 Tracy Jokinen 71 Signature Title Date /s/ Gerrard Schmid Member of the Board of Directors March 22, 2023 Gerrard Schmid 72 INDEX TO FINANCIAL STATEMENTS Array Technologies, Inc. and Subsidiaries Reports of Independent Registered Public Accounting Firm ( BDO USA, LLP ; Austin, Texas ; PCAOB ID# 243 ) F-1 Consolidated Balance Sheets F- 6 Consolidated Statements of Operations F- 8 Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders' Equity (Deficit) F- 10 Consolidated Statements of Cash Flows F- 13 Notes to Consolidated Financial Statements F- 15 F-1 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Array Technologies, Inc. Albuquerque, New Mexico Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Array Technologies, Inc. (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, 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 These consolidated financial statements are the responsibility of the Company’s management. 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 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 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). 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 or knowledge needed. The primary procedures we performed to address this critical audit matter included: • 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 We have served as the Company's auditor since 2016 Austin, Texas March 22, 2023 F-3 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Array Technologies, Inc. Albuquerque, New Mexico Opinion on Internal Control over Financial Reporting 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. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. 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. F-4 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 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 A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ BDO USA, LLP Austin, Texas March 22, 2023 F-5 Table of Contents Array Technologies, Inc. Consolidated Balance Sheets (in thousands, except shares and par value) December 31, 2022 2021 ASSETS Current assets Cash and cash equivalents $ 133,901 $ 367,670 Accounts receivable, net 421,183 236,009 Inventories, net 233,159 205,653 Income tax receivables 3,532 9,052 Prepaid expenses and other 39,434 33,649 Total current assets 831,209 852,033 Property, plant and equipment, net 23,174 10,692 Goodwill 416,184 69,727 Other intangible assets, net 386,364 174,753 Deferred tax assets 16,466 9,345 Other assets 32,655 26,429 Total assets $ 1,706,052 $ 1,142,979 LIABILITIES, REDEEMABLE PERPETUAL PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable $ 170,430 $ 92,002 Accrued expenses and other 54,895 38,494 Accrued warranty reserve 3,690 3,192 Income tax payable 6,881 60 Deferred revenue 178,922 99,575 Current portion of contingent consideration 1,200 1,773 Current portion of debt 38,691 4,300 Other current liabilities 10,553 5,909 Total current liabilities 465,262 245,305 Deferred tax liability 72,606 — Contingent consideration, net of current portion 7,387 12,804 Other long-term liabilities 14,808 5,557 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: $ 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) F-6 Table of Contents Array Technologies, Inc. Consolidated Balance Sheets (continued) (in thousands, except shares and par value) December 31, 2022 2021 Preferred stock $ 0.001 par value; 4,500,000 shares authorized; none issued — — Common stock $ 0.001 par value; 1,000,000,000 shares authorized; 150,513,104 and 135,026,940 issued, respectively 150 135 Additional paid-in capital 383,176 202,562 Accumulated deficit ( 267,470 ) ( 271,902 ) 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. F-7 Table of Contents Array Technologies, Inc. Consolidated Statements of Operations (in thousands) Year Ended December 31, 2022 2021 2020 Revenue $ 1,637,546 $ 853,318 $ 872,662 Cost of revenue 1,410,270 770,459 669,861 Gross profit 227,276 82,859 202,801 Operating expenses General and administrative 150,777 80,974 55,634 Contingent consideration ( 4,507 ) 2,696 26,441 Depreciation and amortization 99,139 23,930 25,514 Total operating expenses 245,409 107,600 107,589 Income (loss) from operations ( 18,133 ) ( 24,741 ) 95,212 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 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 Preferred dividends and accretion 48,054 15,715 — Net income (loss) to common shareholders $ ( 43,622 ) $ ( 66,118 ) $ 59,073 Income (loss) per common share Basic $ ( 0.29 ) $ ( 0.51 ) $ 0.49 Diluted $ ( 0.29 ) $ ( 0.51 ) $ 0.49 Weighted average common shares outstanding Basic 149,819 129,984 121,467 Diluted 149,819 129,984 121,514 See accompanying Notes to Consolidated Financial Statements. F-8 Table of Contents Array Technologies, Inc. Consolidated Statements of Comprehensive Income (Loss) (in thousands) 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. F-9 Table of Contents 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 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. F-10 Table of Contents Array Technologies, Inc. Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) (in thousands) For the year ended December 31, 2021 Temporary Equity Permanent Equity Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Stockholders’ Equity (Deficit) Balance, December 31, 2020 — $ — — $ — 126,994 $ 127 $ 140,473 $ ( 221,499 ) $ — $ ( 80,899 ) Equity-based compensation — — — — 158 — 13,562 — — 13,562 Issuance of common stock, net — — — — 7,875 8 104,756 — — 104,764 Issuance of Series A Preferred, net of fees 350 229,799 — — — — — — — — Deferred tax impact of capped call — — — — — — ( 40,514 ) — — ( 40,514 ) Preferred cumulative dividends — 8,226 — — — — ( 8,226 ) — — ( 8,226 ) Payment of dividends — ( 8,052 ) — — — — — — — — Preferred accretion — 7,489 — — — — ( 7,489 ) — ( 7,489 ) 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. F-11 Table of Contents 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 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. F-12 Table of Contents Array Technologies, Inc. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2022 2021 2020 Operating activities: Net income (loss) $ 4,432 $ ( 50,403 ) $ 59,073 Adjustments to net income (loss): Provision for (recovery of) bad debts 2,599 ( 467 ) 595 Deferred tax benefit ( 31,565 ) ( 10,102 ) ( 2,739 ) Depreciation and amortization 101,059 25,946 27,474 Amortization of debt discount and issuance costs 6,857 15,036 3,366 Interest paid-in-kind — — 3,421 Equity-based compensation 14,982 13,757 4,809 Contingent consideration ( 4,507 ) 2,696 26,441 Warranty provision 4,152 516 953 Provision for inventory obsolescence ( 859 ) 990 1,225 Changes in operating assets and liabilities, net of acquisition Accounts receivable ( 76,984 ) ( 116,848 ) ( 23,038 ) Inventories 20,870 ( 88,184 ) 28,340 Income tax receivables 5,611 8,106 ( 16,530 ) Prepaid expenses and other 19,124 ( 21,226 ) 1,101 Accounts payable 12,667 7,015 ( 50,519 ) Accrued expenses and other 1,024 9,133 10,913 Income tax payable ( 755 ) ( 8,754 ) 6,870 Lease liabilities 3,784 221 — Contingent consideration — — ( 25,000 ) Deferred revenue 59,002 ( 50,619 ) ( 178,960 ) Net cash provided by (used in) operating activities 141,493 ( 263,187 ) ( 122,205 ) 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 ) Financing activities: Proceeds from Series A issuance 33,098 224,987 — Proceeds from common stock issuance 15,885 120,645 145,532 Series A equity issuance costs ( 1,893 ) ( 7,195 ) — Common stock issuance costs ( 450 ) ( 3,873 ) — F-13 Table of Contents Array Technologies, Inc. Consolidated Statements of Cash Flows (continued) (in thousands) Year Ended December 31, 2022 2021 2020 Dividends paid on Series A Preferred ( 18,670 ) ( 8,051 ) — Payments on revolving credit facility ( 116,000 ) ( 126,033 ) ( 70 ) 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 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 ) Contingent consideration ( 1,483 ) ( 7,810 ) — Deferred offering costs — — ( 6,464 ) Debt issuance costs — ( 6,590 ) ( 36,011 ) 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 ) Cash and cash equivalents, beginning of period 367,670 108,441 361,257 Cash and cash equivalents, end of period $ 133,901 $ 367,670 $ 108,441 Supplemental Cash Flow Information Cash paid for interest $ 23,118 $ 24,306 $ 6,935 Cash paid for income taxes $ 10,739 $ 13,318 $ 31,103 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. F-14 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 1. Organization and Business Array Technologies, Inc. (the “Company”), formerly ATI Intermediate Holdings, LLC, is a Delaware corporation formed in December 2018 as a wholly owned subsidiary of ATI Investment Parent, LLC (“Former Parent”). 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. 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. 2. 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 U.S. generally accepted accounting principles (“U.S. GAAP”). Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. 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. F-15 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Principles of Consolidation The consolidated financial statements include the accounts of Array Technologies, Inc. and its Subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. Use of Estimates 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. Inflation 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 For non-U.S. 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. For non-U.S. 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. F-16 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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 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. We estimate allowances for credit losses using relevant available information from both internal and external sources. We monitor the estimated credit losses associated with our trade accounts receivable and unbilled accounts receivable based primarily on our collection history and the delinquency status of amounts owed to us, which we determine based on the aging of such receivables. In evaluating the level of established reserves, management makes judgments regarding the customers’ ability to make required payments, economic events, and other factors. As the financial conditions of these customers change, circumstances develop, or additional information becomes available, adjustments to the valuation account may be required. When deemed uncollectible, the receivable is charged against the valuation account for credit losses or directly written off. 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 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. Property, Plant and Equipment 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. F-17 Table of Contents 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. Leases 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 When events, circumstances or operating results indicate that the carrying values of long-lived assets might not be recoverable through future operations, the Company prepares projections of the undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the projections indicate that the recorded amounts are not expected to be recoverable, such amounts are reduced to estimated fair value. Management determined there was no impairment for the years ended December 31, 2022, 2021 and 2020. Goodwill 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 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, 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. Otherwise, no further assessment is required. The quantitative approach compares the estimated fair value of the reporting unit to its carrying amount, including goodwill. 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. F-18 Table of Contents 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 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 did no t recognize any impairment charges for the years ended December 31, 2022, 2021 and 2020. Deferred Offering Costs Deferred offering costs consist primarily of registration fees, filing fees, listing fees, specific legal and accounting costs, and transfer agent fees, which are direct and incremental fees related to the offerings. Deferred offering costs were offset against the proceeds. 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 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 The majority of the Company’s contracts with customers are accounted for as one performance obligation, because the Company is integrating the solar tracking system components and related services as part of a single project. 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. F-19 Table of Contents 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. 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. 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. Contracts are often modified through change orders to account for changes in specifications or design, manner of performance, equipment, materials, scope of work, and/or the period of completion of the project. Although the Company evaluates each change order to determine whether such modification creates a separate performance obligation, the majority of change orders are for goods or services that are not distinct within the context of the original contract and, therefore, not treated as separate performance obligations but rather as a modification of the existing contract and performance obligation. We account for shipping and handling activities related to contracts with customers as costs to fulfill our promise to transfer the associated products. 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. Contract Estimates Accounting for contracts utilizing the cost-to-cost measure of progress is based on various assumptions to project the outcome of future events that can exceed a year. These assumptions include the cost and availability of materials. The Company reviews and updates its contract-related estimates on an ongoing basis F-20 Table of Contents 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. 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. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivable for goods delivered but not invoiced, and deferred revenue (contract liabilities) on the 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 unbilled accounts receivable. 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. Warranty Obligations 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. When little or no experience exists for an immature product line, the estimate is based on comparable product lines. These estimates are re-evaluated on an ongoing basis using best-available information and revisions to estimates are made as necessary. 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. Income Taxes 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. Provision for estimated income taxes is based upon elements of income and expense reported in the consolidated statements of operations. The Company also files certain corporate state income tax returns. Generally, the Company is subject to examination by U.S. 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. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. Adjustments for penalties and interest, if any, are also reflected in the current year tax provision or benefit. F-21 Table of Contents 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 interest expense and other expenses, respectively, in the consolidated statements of operations. No material interest or penalties were incurred in 2022. Equity-Based Compensation The Company recognizes equity-based compensation expense based on the equity award’s grant date fair value. 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. The grant date fair value of each unit is amortized on a straight-line basis over the requisite service period. Temporary Equity Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. 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 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. GAAP. 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 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 F-22 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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 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 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: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • 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. 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 ASC 820 Fair Value Measurement 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, which was determined by the Company with the assistance of third-party valuations. F-23 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 3. 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. F-24 Table of Contents 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. F-25 Table of Contents 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, 2022 2021 Revenue $ 1,645,962 $ 1,118,903 Net income (loss) $ 36,285 $ ( 74,215 ) F-26 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 4. Accounts Receivable Accounts receivable consists of the following (in thousands): December 31, 2022 2021 Accounts receivable $ 423,071 $ 236,149 Less: 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): December 31, 2022 2021 Beginning balance $ ( 140 ) $ ( 663 ) Provision for credit losses ( 2,599 ) 303 Collected 731 130 Written-off 120 90 Ending balance $ ( 1,888 ) $ ( 140 ) 5. Inventories Inventories consist of the following (in thousands): December 31, 2022 2021 Raw materials $ 72,241 $ 85,470 Finished goods 169,192 127,598 Reserve for excess or obsolete inventory ( 8,274 ) ( 7,415 ) Total $ 233,159 $ 205,653 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. F-27 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements The following table presents the change in the inventory reserve balances (in thousands): December 31, 2022 2021 Beginning balance $ ( 7,415 ) $ ( 6,425 ) Increases ( 4,044 ) ( 1,766 ) Write-offs 3,185 776 Ending balance $ ( 8,274 ) $ ( 7,415 ) 6. Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands, except for useful lives): December 31, Estimated Useful Life (Years) 2022 2021 Land N/A $ 1,583 $ 1,340 Buildings and land improvements 15 - 39 7,411 2,451 Manufacturing equipment 7 18,983 13,924 Furniture, fixtures and equipment 5 - 7 3,583 476 Vehicles 5 585 161 Hardware and software 3 - 5 3,706 1,683 Assets in progress N/A 5,142 1,880 Total 40,993 21,915 Less: accumulated depreciation ( 17,819 ) ( 11,223 ) Property, plant and equipment, net $ 23,174 $ 10,692 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. 7. Goodwill and Other Intangible Assets Goodwill 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): F-28 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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, except for useful lives): December 31, Estimated Useful Life (Years) 2022 2021 Amortizable: Costs: Developed technology 14 $ 203,800 $ 203,800 Customer relationship 10 321,935 89,500 Backlog 1 51,015 — Trade name 20 25,682 — Total amortizable intangibles 602,432 293,300 Accumulated amortization: Developed technology 94,347 79,790 Customer relationship 81,268 49,057 Backlog 49,507 — Trade name 1,246 — Total accumulated amortization 226,368 128,847 Total amortizable intangibles, net 376,064 164,453 Non-amortizable costs: Trade name 10,300 10,300 Total other intangible assets, net $ 386,364 $ 174,753 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. F-29 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements The following table presents estimated future annual amortization expense (in thousands): Amount 2023 $ 49,733 2024 47,923 2025 47,923 2026 43,616 2027 38,973 Thereafter 147,896 $ 376,064 8. Income Taxes 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 U.S. $ 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): Year Ended December 31, 2022 2021 2020 Current expense (benefit): Federal $ 12,826 $ ( 8 ) $ 17,248 State 1,630 ( 668 ) 4,196 Foreign 7,725 60 — 22,181 ( 616 ) 21,444 Deferred expense (benefit): Federal ( 6,160 ) ( 9,085 ) ( 2,799 ) State ( 960 ) ( 1,017 ) 60 Foreign ( 24,445 ) — — ( 31,565 ) ( 10,102 ) ( 2,739 ) Total income tax expense (benefit) $ ( 9,384 ) $ ( 10,718 ) $ 18,705 F-30 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): December 31, 2022 2021 Deferred tax assets: Bad debts $ 234 $ 32 Inventories 2,780 2,411 Accrued warranties 3,575 1,242 Accrued compensation 637 315 Net operating loss 1,014 1,944 Equity-based compensation 2,240 948 Lease liabilities 4,588 2,661 Premium on capped call 10,792 12,356 Interest expense carryforward 6,750 5,301 Capitalized research and development expenses 1,752 — Other 2,435 275 Deferred tax assets 36,797 27,485 Valuation allowance ( 1,449 ) ( 222 ) Deferred tax assets, net 35,348 27,263 Deferred tax liabilities: Property, plant, and equipment ( 1,592 ) ( 1,083 ) Intangible assets ( 85,927 ) ( 14,165 ) ROU assets ( 3,969 ) ( 2,670 ) Deferred tax liabilities ( 91,488 ) ( 17,918 ) Deferred tax asset (liability), net $ ( 56,140 ) $ 9,345 F-31 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements A reconciliation of income tax expense computed at the federal statutory rate of 21% to actual income tax expense at the Company’s effective rate is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Income tax rate reconciliation Income tax expense (benefit) at U.S. statutory rate $ ( 1,040 ) $ ( 12,835 ) $ 16,333 State income taxes 530 ( 1,545 ) 3,375 Officer’s compensation 740 435 — Equity-based compensation 712 1,542 852 Contingent consideration ( 947 ) 567 5,553 Tax credits ( 421 ) ( 620 ) ( 79 ) Effect of CARES Act — — ( 6,608 ) Non-U.S. income taxed at different rate than U.S. statutory rate ( 4,274 ) — — Non-U.S. 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 Total income tax expense (benefit) $ ( 9,384 ) $ ( 10,718 ) $ 18,705 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. F-32 Table of Contents 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. The Company’s assessments of its tax positions in accordance with ASC 740 did not result in changes that had a material impact on results of operations, financial condition or liquidity. The Company had no unrecognized income tax benefits at either December 31, 2022 or 2021. 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. and non-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. 9. Accrued Warranty Reserve The following table presents changes in the accrued warranty reserve balances (in thousands): December 31, 2022 2021 Beginning balance $ 3,192 $ 3,049 Provision for warranties issued 5,289 1,064 Payments ( 1,868 ) ( 373 ) Warranty expirations ( 1,137 ) ( 548 ) Ending balance $ 5,476 $ 3,192 F-33 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 10. Debt Senior Secured Credit Facility The senior secured credit facility consisted of the following (in thousands): December 31, 2022 2021 Term loan facility $ 312,475 $ 326,775 Revolving credit facility — — 312,475 326,775 Unamortized discount and issuance costs ( 19,135 ) ( 23,282 ) 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. 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 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 F-34 Table of Contents 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. 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 225 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) 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. 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). 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 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. As of December 31, 2022, the Company was in compliance with all the required covenants. 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. (f/k/a Array F-35 Table of Contents 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 Convertible debt consisted of the following (in thousands): December 31, 2022 2021 1.00 % Convertible Senior Notes $ 425,000 $ 425,000 Unamortized discount and issuance costs ( 11,248 ) ( 13,137 ) 1.00 % Convertible Senior Notes, net $ 413,752 $ 411,863 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. Redemption 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 F-36 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements day; (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 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. F-37 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Capped Calls 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; 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. Other Debt 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. F-38 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Aggregate Debt Maturities Aggregate future debt maturities are as follows (in thousands): Amount 2023 $ 38,691 2024 13,583 2025 8,257 2026 6,453 2027 297,442 Thereafter 425,000 $ 789,426 11. 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. F-39 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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. Dividends 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 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 F-40 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements of the Series A Shares by a corresponding amount. Accordingly, the discount is amortized over five years using the effective yield method. Fees Until June 30, 2023, the Company will pay the Purchasers a cash commitment premium on the unpurchased portion of Delayed Draw Commitment as follows: a. 0 % through the six-month anniversary of the Initial Closing; b. 1.5 % from the six-month anniversary of the Initial Closing through the 12-month anniversary of the Initial Closing; and c. 3.0 % from the 12-month anniversary of the Initial Closing through June 30, 2023. The Company may terminate some or all of the Delayed Draw Commitment, from time to time, at its sole discretion. Ranking and Liquidation Preference 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 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. F-41 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 12. Common and Preferred Stock Common Stock 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 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 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. 13. Revenue 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 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 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): December 31, 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 F-42 Table of Contents Array Technologies, Inc. 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): December 31, 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 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. 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 . F-43 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 14. 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, 2022 2021 2020 Net income (loss) $ 4,432 $ ( 50,403 ) $ 59,073 Preferred dividends and accretion ( 48,054 ) ( 15,715 ) — Net income (loss) to common shareholders ( 43,622 ) ( 66,118 ) 59,073 Basic: Weighted average common shares outstanding 149,819 129,984 121,467 Earnings (loss) per share $ ( 0.29 ) $ ( 0.51 ) $ 0.49 Diluted: 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 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. 15. Commitments and Contingencies Litigation The Company, in the normal course of business, is subject to claims and litigation. The Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, the Company would accrue a liability for the estimated loss. On 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”). F-44 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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”). The Keippel Action similarly alleged misstatements and/or omissions in 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 during the putative class period of October 14, 2020 through May 11, 2021. On July 6, 2021, the Court entered an order that the Keippel Action was in all material respects substantially similar to the Plymouth Action that both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties. 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 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 SDNY 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 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 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. F-45 Table of Contents 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”). The Consolidated Amended Complaint alleges misstatements and/or omissions in: (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; (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. 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. The Company has not recorded any material loss contingency in the consolidated balance sheets as of December 31, 2022. Contingent Consideration Tax Receivable Agreement 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. The TRA is F-46 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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 IRS Settlement 2,696 Fair value adjustment ( 7,810 ) Balance, December 31, 2021 14,577 Fair value adjustment ( 4,507 ) Payments ( 1,483 ) Balance, December 31, 2022 $ 8,587 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): Amount 2023 $ 1,806 2024 1,762 2025 1,615 2026 1,425 2027 1,232 Thereafter 2,516 $ 10,356 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 F-47 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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. Surety Bond 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. 16. Fair Value of Financial Instruments The carrying values and the estimated fair values of debt financial instruments were as follows (in thousands): 2022 2021 Carrying Value Fair Value Carrying Value Fair Value 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. 17. 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. 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. F-48 Table of Contents 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 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: 2022 2021 Volatility 60 % 66 % Risk-free interest rate 2.83 % 0.28 % Dividend yield — % — % F-49 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements PSU activity under the 2020 Plan was as follows: Number of Shares Weighted Average Grant Date Fair Value PSUs 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 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. 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. The Company utilizes the estimated weighted average of the Company’s expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the average of historical and implied volatility of a set of comparable companies, adjusted for size and leverage. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms. 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. F-50 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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. 401(k) 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. 18. Leases 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. The Company also elected to apply the short-term measurement and recognition exemption in which the right-of-use (“ROU”) assets and lease liabilities are not recognized for short-term leases. Adoption of this standard resulted in recording of net operating lease ROU assets and corresponding operating lease liabilities of $ 13.2 million and $ 13.5 million, respectively. 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 Company’s ROU assets and lease liabilities (in thousands): December 31, Location on the 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 F-51 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements The components of lease cost related to the Company’s operating leases were as follows (in thousands): Year Ended December 31, 2022 2021 Operating lease expense $ 7,701 $ 6,635 Variable lease expense 1,089 106 Short-term lease expense 327 — Total lease expense $ 9,117 $ 6,741 Future minimum operating lease payments as of December 31, 2022, are as follows (in thousands): Operating Leases 2023 $ 6,966 2024 5,598 2025 4,399 2026 1,606 2027 1,453 Thereafter 2,908 Total lease payments 22,930 Less: Imputed lease interest ( 2,524 ) Total lease liabilities $ 20,406 Other information pertaining to operating leases consists of the following: Year Ended December 31, 2022 2021 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): Year Ended December 31, 2022 2021 Operating cash flows from operating leases $ 5,380 $ 6,644 Non cash investing activities: Lease liabilities arising from obtaining right-of-use assets $ 12,558 $ 17,363 19. Related Party Transactions Consent Fees-Related Party 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. F-52 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Special Distribution to Former Parent 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 20 . 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. 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 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 U.S. $ 1,286,064 $ 826,639 $ 805,070 Spain 129,292 7,281 181 Brazil 144,464 — — Australia 9,429 5,509 45,216 Rest of the world 68,297 13,889 22,195 Total revenue $ 1,637,546 $ 853,318 $ 872,662 F-53 Table of Contents Array Technologies, Inc. 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): December 31, 2022 2021 U.S. $ 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 21 . Restatement (Unaudited) Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements 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. F-54 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Balance Sheets March 31, 2022 (in thousands, except per share and share amounts) (unaudited) As Previously Reported Restatement Adjustments As Restated ASSETS Current assets Cash and cash equivalents $ 49,491 $ — $ 49,491 Accounts receivable, net 390,921 — 390,921 Inventories, net 299,010 — 299,010 Income tax receivables 31,079 — 31,079 Prepaid expenses and other 46,495 ( 825 ) 45,670 Total current assets 816,996 ( 825 ) 816,171 Property, plant and equipment, net 16,878 — 16,878 Goodwill 379,840 62,382 442,222 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' EQUITY (DEFICIT) Current liabilities Accounts payable $ 187,466 $ — $ 187,466 Accounts payable - related party 478 — 478 Accrued expenses and other 54,837 — 54,837 Accrued warranty reserve 3,201 — 3,201 Income tax payable 6,452 6,452 Deferred revenue 121,624 — 121,624 Current portion of contingent consideration — — — Current portion of debt 48,180 — 48,180 Other current liabilities 10,886 — 10,886 Total current liabilities 433,124 — 433,124 Long-term liabilities Deferred tax liability 92,931 6,329 99,260 Contingent consideration, net of current portion 9,363 — 9,363 Other long-term liabilities 7,102 — 7,102 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 Total liabilities 1,325,511 6,329 1,331,840 Commitments and contingencies (Note 16) 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 F-55 Table of Contents Array Technologies, Inc. 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; 150,173,507 shares issued as of March 31, 2022 150 — 150 Additional paid-in capital 411,232 — 411,232 Accumulated deficit ( 293,956 ) ( 3,883 ) ( 297,839 ) 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 F-56 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Balance Sheets June 30, 2022 (in thousands, except per share and share amounts) (unaudited) As Previously Reported Restatement Adjustments As Restated ASSETS Current assets Cash and cash equivalents $ 51,046 $ — $ 51,046 Accounts receivable, net 452,836 — 452,836 Due from affiliates — — — Inventories, net 329,951 — 329,951 Income tax receivables 16,217 — 16,217 Prepaid expenses and other 52,831 ( 825 ) 52,006 Total current assets 902,881 ( 825 ) 902,056 Property, plant and equipment, net 17,802 — 17,802 Goodwill 378,706 38,988 417,694 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' EQUITY (DEFICIT) Current liabilities Accounts payable $ 231,798 $ — 231,798 Accounts payable - related party 478 — 478 Accrued expenses and other 51,072 — 51,072 Accrued warranty reserve 2,911 — 2,911 Income tax payable 419 419 Deferred revenue 167,556 — 167,556 Current portion of debt 51,494 — 51,494 Other current liabilities 6,949 — 6,949 Total current liabilities 512,677 — 512,677 Long-term liabilities Deferred tax liability 84,819 1,771 86,590 Contingent consideration, net of current portion 7,686 — 7,686 Other long-term liabilities 9,723 — 9,723 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 Total liabilities 1,412,518 1,771 1,414,289 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 F-57 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Stockholders’ equity — Preferred stock of $ 0.001 par value - 4,500,000 shares authorized; none issued as of June 30, 2022 — — — Common stock of $ 0.001 par value - 1,000,000,000 shares authorized; 150,279,160 shares issued as of June 30, 2022 150 — 150 Additional paid-in capital 401,614 — 401,614 Accumulated deficit ( 299,182 ) ( 3,681 ) ( 302,863 ) 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 F-58 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Balance Sheets September 30, 2022 (in thousands, except per share and share amounts) (unaudited) As Previously Reported Restatement Adjustments As Restated ASSETS Current assets Cash and cash equivalents $ 62,778 $ — $ 62,778 Accounts receivable, net 485,174 — 485,174 Inventories, net 269,775 — 269,775 Income tax receivables 12,765 — 12,765 Prepaid expenses and other 41,309 ( 825 ) 40,484 Total current assets 871,801 ( 825 ) 870,976 Property, plant and equipment, net 20,024 — 20,024 Goodwill 359,629 41,744 401,373 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 Total assets $ 1,681,825 $ 52,361 $ 1,734,186 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable $ 199,358 $ — 199,358 Accounts payable - related party 478 — 478 Accrued expenses and other 91,102 — 91,102 Accrued warranty reserve 4,237 — 4,237 Income tax payable 10,587 10,587 Deferred revenue 154,692 — 154,692 Current portion of contingent consideration — — — Current portion of debt 47,686 — 47,686 Other current liabilities 4,981 — 4,981 Total current liabilities 513,121 — 513,121 Long-term liabilities Deferred tax liability 74,139 2,725 76,864 Contingent consideration, net of current portion 7,113 — 7,113 Other long-term liabilities 9,113 — 9,113 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 Total liabilities 1,332,447 2,725 1,335,172 Commitments and contingencies (Note 16) F-59 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Series A Redeemable Perpetual Preferred Stock of $ 0.001 par value - 500,000 authorized; 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 — Preferred stock of $ 0.001 par value - 4,500,000 shares authorized; none issued as of September 30, 2022 — — — Common stock of $ 0.001 par value - 1,000,000,000 shares authorized; 150,334,261 shares issued as of September 30, 2022 150 — 150 Additional paid-in capital 392,862 — 392,862 Accumulated deficit ( 258,360 ) ( 3,859 ) ( 262,219 ) 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 F-60 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Operations Three Months Ended March 31, 2022 (in thousands, expect per share and share amounts) (unaudited) As Previously Reported Restatement Adjustment As Restated Revenue $ 300,586 $ — $ 300,586 Cost of revenue 273,999 — 273,999 Gross profit 26,587 — 26,587 Operating expenses General and administrative 39,827 5,598 45,425 Contingent consideration ( 3,731 ) — ( 3,731 ) Depreciation and amortization 22,652 585 23,237 Total operating expenses 58,748 6,183 64,931 Income (loss) from operations ( 32,161 ) ( 6,183 ) ( 38,344 ) Other expense 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 (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 ) Diluted $ ( 0.23 ) $ ( 0.03 ) $ ( 0.25 ) Weighted average number of shares Basic 148,288 — 148,288 Diluted 148,288 — 148,288 F-61 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Operations Three Months Ended June 30, 2022 (in thousands, expect per share and share amounts) (unaudited) As Previously Reported Restatement Adjustment As Restated Revenue $ 419,865 $ — $ 419,865 Cost of revenue 379,919 — 379,919 Gross profit 39,946 — 39,946 Operating expenses General and administrative 29,143 ( 207 ) 28,936 Contingent consideration ( 1,678 ) — ( 1,678 ) Depreciation and amortization 24,389 1,631 26,020 Total operating expenses 51,854 1,424 53,278 Income (loss) from operations ( 11,908 ) ( 1,424 ) ( 13,332 ) Other expense 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 benefit ( 22,036 ) ( 1,424 ) ( 23,460 ) Income tax benefit ( 16,810 ) ( 1,626 ) ( 18,436 ) Net loss ( 5,226 ) 202 ( 5,024 ) 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 common shares Basic 150,203 — 150,203 Diluted 150,203 — 150,203 F-62 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Operations Three Months Ended September 30, 2022 (in thousands, expect per share and share amounts) (unaudited) As Previously Reported Restatement Adjustments As Restated Revenue $ 515,024 $ — $ 515,024 Cost of revenue 434,801 — 434,801 Gross profit 80,223 — 80,223 Operating expenses General and administrative 38,911 ( 208 ) 38,703 Contingent consideration ( 572 ) — ( 572 ) Depreciation and amortization 23,364 1,534 24,898 Total operating expenses 61,703 1,326 63,029 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 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 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 common shares Basic 150,322 — 150,322 Diluted 151,382 — 151,382 F-63 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Operations Six Months Ended June 30, 2022 (in thousands, expect per share and share amounts) (unaudited) As Previously Reported Restatement Adjustment As Restated Revenue $ 720,451 $ — $ 720,451 Cost of revenue 653,918 — 653,918 Gross profit 66,533 — 66,533 Operating expenses General and administrative 68,970 5,391 74,361 Contingent consideration ( 5,409 ) — ( 5,409 ) Depreciation and amortization 47,041 2,216 49,257 Total operating expenses 110,602 7,607 118,209 Income (loss) from operations ( 44,069 ) ( 7,607 ) ( 51,676 ) Other expense 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 ) 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 common shares Basic 149,246 — 149,246 Diluted 149,246 — 149,246 F-64 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Operations Nine Months Ended September 30, 2022 (in thousands, expect per share and share amounts) (unaudited) As Previously Reported Restatement Adjustments As Restated Revenue $ 1,235,475 $ — $ 1,235,475 Cost of revenue 1,088,719 — 1,088,719 Gross profit 146,756 — 146,756 Operating expenses General and administrative 107,881 5,183 113,064 Contingent consideration ( 5,981 ) — ( 5,981 ) Depreciation and amortization 70,405 3,750 74,155 Total operating expenses 172,305 8,933 181,238 Income (loss) from operations ( 25,549 ) ( 8,933 ) ( 34,482 ) 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 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 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 common shares Basic 149,604 — 149,604 Diluted 149,604 — 149,604 F-65 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Comprehensive Income (Loss) Three Months Ended March 31, 2022 (in thousands) (unaudited) 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) (unaudited) 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) (unaudited) 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) (unaudited) 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 ) F-66 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Comprehensive Income (Loss) Nine Months Ended September 30, 2022 (in thousands) (unaudited) 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 ) F-67 Table of Contents 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) (unaudited) 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 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 Adjustments Balance, December 31, 2021 — $ — — $ — — $ — $ — $ — $ — $ — Net loss — — — — — — — ( 3,883 ) — ( 3,883 ) Other comprehensive income — — — — — — — — 65,686 65,686 Total Adjustments — $ — — $ — — $ — $ — $ ( 3,883 ) $ 65,686 $ 61,803 As Restated F-68 Table of Contents 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 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 F-69 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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) (unaudited) 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 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 Adjustments 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 As Restated Balance at March 31, 2022 400 $ 281,792 — $ — 150,174 $ 150 $ 411,232 $ ( 297,839 ) $ 56,675 $ 170,218 F-70 Table of Contents 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 F-71 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Statement of Changes in Shareholders' Equity/(Deficit) - Three Months Ended September 30, 2022 Temporary Equity Permanent Equity (in thousands, share amounts) (unaudited) 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 Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 592 ) — — ( 592 ) Preferred cumulative dividends plus accretion — 12,257 — — — — ( 12,257 ) — — ( 12,257 ) 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 Adjustments 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 As Restated Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368 F-72 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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 ) 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 F-73 Table of Contents 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) (unaudited) 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 ) 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 Adjustments 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 As Restated Balance, December 31, 2021 350 $ 237,462 — $ — 135,027 $ 135 $ 202,562 $ ( 271,902 ) $ — $ ( 69,205 ) F-74 Table of Contents 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 F-75 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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) (unaudited) 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 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 ) 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 Adjustments 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 As Restated F-76 Table of Contents 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 — — — — 161 — 11,454 — — 11,454 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 ) 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 F-77 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Consolidated Statements of Cash Flows Three Months Ended March 31, 2022 (in thousands) (unaudited) As Previously Reported Restatement Adjustments As Restated 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 Equity-based compensation 4,508 — 4,508 Contingent consideration ( 3,731 ) — ( 3,731 ) Warranty provision 594 — 594 Provision for inventory obsolescence 409 — 409 Changes in operating assets and liabilities, net of business acquisition Accounts receivable ( 44,268 ) — ( 44,268 ) Inventories ( 46,250 ) — ( 46,250 ) Income tax receivables ( 21,924 ) — ( 21,924 ) Prepaid expenses and other 5,960 5,598 11,558 Accounts payable 59,551 — 59,551 Accounts payable - related party ( 132 ) — ( 132 ) Accrued expenses and other 7,027 — 7,027 Income tax payable ( 8,760 ) — ( 8,760 ) Lease liabilities 6,085 — 6,085 Deferred revenue ( 18,639 ) — ( 18,639 ) Net cash used in operating activities ( 50,097 ) — ( 50,097 ) 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 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 Payments on revolving credit facility — — — Proceeds from issuance of other debt 6,229 — 6,229 F-78 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements 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) (unaudited) As Previously Reported Restatement Adjustments As Restated 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 ) Depreciation and amortization 47,579 2,216 49,795 Amortization of debt discount and issuance costs 3,286 — 3,286 Equity-based compensation 7,472 — 7,472 Contingent consideration ( 5,409 ) — ( 5,409 ) Warranty provision 1,215 — 1,215 Provision for inventory obsolescence 409 — 409 Changes in operating assets and liabilities, net of business acquisition Accounts receivable ( 106,548 ) — ( 106,548 ) Inventories ( 77,191 ) — ( 77,191 ) Income tax receivables ( 7,062 ) — ( 7,062 ) Prepaid expenses and other ( 376 ) 5,391 5,015 Accounts payable 74,645 — 74,645 Accounts payable - related party ( 132 ) — ( 132 ) Accrued expenses and other 3,356 — 3,356 Income tax payable ( 7,217 ) — ( 7,217 ) Lease liabilities 4,700 — 4,700 F-79 Table of Contents 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 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 — — — Net cash used in investing activities ( 377,713 ) — ( 377,713 ) 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 debt ( 22,377 ) — ( 22,377 ) Contingent consideration ( 1,483 ) — ( 1,483 ) Debt issuance costs — — — Net cash provided by financing activities 122,697 — 122,697 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 September 30, 2022 (in thousands) (unaudited) As Previously Reported Restatement Adjustments As Restated 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 ) Depreciation and amortization 71,207 3,750 74,957 Amortization of debt discount and issuance costs 5,003 — 5,003 Equity-based compensation 11,677 — 11,677 F-80 Table of Contents Array Technologies, Inc. Notes to Consolidated Financial Statements Contingent consideration ( 5,981 ) — ( 5,981 ) Warranty provision 4,341 — 4,341 Provision for inventory obsolescence ( 2,333 ) — ( 2,333 ) Changes in operating assets and liabilities, net of business acquisition Accounts receivable ( 139,036 ) — ( 139,036 ) Inventories ( 14,273 ) — ( 14,273 ) Income tax receivables ( 3,610 ) — ( 3,610 ) Prepaid expenses and other 11,146 5,183 16,329 Accounts payable 42,205 — 42,205 Accounts payable - related party ( 132 ) — ( 132 ) Accrued expenses and other 41,271 — 41,271 Warranty payments ( 373 ) — ( 373 ) Income tax payable 2,951 — 2,951 Lease liabilities 1,914 — 1,914 Deferred revenue 34,772 — 34,772 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 — — — Net cash used in investing activities ( 380,506 ) — ( 380,506 ) 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 ( 1,167 ) — ( 1,167 ) 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 ) 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 ) 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 ) Cash and cash equivalents, beginning of period 367,670 367,670 Cash and cash equivalents, end of period $ 62,778 $ — $ 62,778 Supplemental Cash Flow Information Stock consideration paid for acquisition of STI $ 200,224 — 200,224 F-81