What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-10 · 172 added, 143 removed, 472 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except per share and share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Current assets:

Cash and cash equivalents $ 155,966 $ 133,901

Accounts receivable, net 414,712 421,183

Accounts receivable, net of allowance of $ 1,651 and $ 1,888 , respectively

502,363 421,183

Inventories 206,857 233,159

29 unchanged sentences

(in thousands, except per share and share amounts)

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Commitments and contingencies (Note 11)

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

412,739 and 406,389 shares issued as of March 31, 2023 and December 31, 2022, respectively;

419,259 and 406,389 shares issued as of June 30, 2023 and December 31, 2022, respectively;

liquidation preference of $ 419.3 million and $ 406.4 million at respective dates

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Revenue $ 507,725 $ 419,865 $ 884,498 $ 720,451

8 unchanged sentences

Other income (expense):

Other income, net 194 743

Other income (expense), net 125 ( 371 ) 319 372

Foreign currency gain (loss) 260 ( 1,736 ) 66 2,127

15 unchanged sentences

Array Technologies, Inc.

Condensed Consolidated Statements of Comprehensive Income (unaudited)

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

(in thousands)

Three Months Ended

Three Months Ended June 30, Six Months Ended

2023 2022 2023 2022

Net income (loss) $ 64,808 $ ( 5,024 ) $ 90,940 $ ( 30,961 )

1 unchanged sentence

23,912 ( 45,208 ) 37,784 11,467

Comprehensive income $ 40,004 $ 30,738

(1) The tax effect on other comprehensive income is not significant.

Comprehensive income (loss) $ 88,720 ( 50,232 ) $ 128,724 $ ( 19,494 )

(1) The tax effect on other comprehensive income is not material.

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Temporary Equity Permanent Equity

1 unchanged sentence

Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Stockholders’ Equity

Balance at March 31, 2023 413 $ 312,054 — $ — 150,823 $ 150 $ 426,221 $ ( 241,338 ) $ 22,297 $ 207,330

Equity-based compensation — — — — 226 1 4,944 — — 4,945

Preferred cumulative dividends plus accretion 6 12,784 — — — — ( 13,541 ) — — ( 13,541 )

Net income — — — — — — — 64,808 — 64,808

Other comprehensive income — — — — — — — 23,912 23,912

Balance at June 30, 2023 419 $ 324,838 — $ — 151,049 $ 151 $ 417,624 $ ( 176,530 ) $ 46,209 $ 287,454

Array Technologies, Inc.

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

(in thousands)

Three Months Ended June 30, 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 Income Total Stockholders’ Equity

Balance at March 31, 2022 400 $ 281,792 — — 150,174 $ 150 $ 411,232 $ ( 297,839 ) $ 56,675 $ 170,218

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 at June 30, 2022 413 $ 293,974 — — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368

Array Technologies, Inc.

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

(in thousands)

Six Months Ended June 30, 2023

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 Income Total Stockholders’ Equity

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

4 unchanged sentences

Other comprehensive income — — — — — — — — 37,784 37,784

Balance at March 31, 2023 413 $ 312,054 — $ — 150,823 $ 150 $ 426,221 $ ( 241,338 ) $ 22,297 $ 207,330

Balance at June 30, 2023 419 $ 324,838 — $ — 151,049 $ 151 $ 417,624 $ ( 176,530 ) $ 46,209 $ 287,454

Array Technologies, Inc.

1 unchanged sentence

(in thousands)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Temporary Equity Permanent Equity

7 unchanged sentences

Other comprehensive income — — — — — — — — 11,467 11,467

Balance at March 31, 2022 400 $ 281,792 — $ — 150,174 $ 150 $ 411,232 $ ( 297,839 ) $ 56,675 $ 170,218

Balance at June 30, 2022 413 $ 293,974 — $ — 150,279 $ 150 $ 401,614 $ ( 302,863 ) $ 11,467 $ 110,368

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Operating activities:

30 unchanged sentences

Common stock issuance costs — ( 450 )

Payments on revolving credit facility — ( 33,000 )

Proceeds from revolving credit facility — 101,000

3 unchanged sentences

Contingent consideration payments ( 1,200 ) ( 1,483 )

Net cash provided by (used in) financing activities ( 23,762 ) 100,736

Array Technologies, Inc.

1 unchanged sentence

(in thousands)

Three Months Ended

Six Months Ended

Net cash provided by (used in) financing activities ( 39,314 ) 122,697

Effect of exchange rate changes on cash and cash equivalent balances 4,447 ( 844 )

4 unchanged sentences

Cash paid for interest $ 15,880 $ 7,428

Cash paid for income taxes $ 2,522 $ —

Cash paid for income taxes (net of refunds) $ 18,484 $ ( 230 )

Non-cash Investing and Financing Activities

9 unchanged sentences

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

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

owns subsidiaries through which it conducts substantially all operations.

The Company, through its wholly-owned subsidiary, ATI Investment Sub, Inc., owns subsidiaries through which it conducts substantially all operations.

Acquisition of STI Norland

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In connection with the acquisition of STI, the Company had understated goodwill by $ 2.0 million and overstated inventory by the same amount that was sold during fiscal 2022.

The Company corrected the goodwill balance during the current period resulting in an increase in goodwill and a decrease in cost of goods sold.

The Company corrected the goodwill balance during the first quarter of fiscal year 2023, resulting in an increase in goodwill and a decrease in cost of goods sold.

Summary of Significant Accounting Policies

1 unchanged sentence

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

GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only

normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

The results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023 or any other interim periods, or any future year or period.

GAAP”), pursuant to the rules and regulations of the SEC.

The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the

opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

The results for the three and six months ended June 30, 2023, are not necessarily indicative of results to be expected for the year ending December 31, 2023, or any other interim periods, or any future year or period.

The balance sheet as of December 31, 2022, included herein was derived from the audited financial statements as of that date.

Certain disclosures have been condensed or omitted from the interim financial statements.

These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2023, (the “2022 Annual Report”).

These financial statements should be read in conjunction with the Company’s audited financial statements included in the 2022 Annual Report.

Unless expressly stated or the context otherwise requires, the terms “the Company”, “we”, “us”, “our”, “Array”, and “Array Technologies” refer to Array Technologies, Inc.

and its consolidated subsidiaries, and the term “condensed consolidated financial statements” refers to the accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report.

Principles of Consolidation

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

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

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

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

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

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.

Business Combinations

The Company accounts for its business acquisitions under the acquisition method of accounting in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 Business Combinations (“ASC 805”).

805 Business Combinations (“ASC 805”).

The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill.

2 unchanged sentences

The functional currencies of certain of our foreign subsidiaries are their local currencies.

Accordingly, we apply period-end exchange rates to translate their assets and liabilities and average exchange rates prevailing during the period to translate their revenues, expenses, gains, and losses into U.S.

Accordingly, we apply period-end exchange rates to translate their assets and liabilities, historical exchange rates to translate their retained earnings, and average exchange rates prevailing during the period to translate their revenues, expenses, gains, and losses into U.S.

We include the associated translation adjustments as a separate component of “Accumulated other comprehensive income (loss)” within stockholders’ equity.

Certain of our foreign subsidiaries have assets and liabilities (primarily cash, receivables, inventory, property, plant and equipment, intangible assets, trade payables, accrued expenses, operating lease liabilities, and long-term debt) that are denominated in currencies other than the subsidiaries’ functional currencies.

Changes in the exchange rates between the functional currencies of our subsidiaries and the other currencies in which these assets and liabilities are denominated will create fluctuations in our reported condensed consolidated statements of operations and cash flows.

Certain of our foreign subsidiaries have local currencies that are different than the subsidiaries functional currencies.

When translating from the local currency to the functional currency, monetary assets and liabilities are translated at the current exchange rate resulting in foreign exchange gains or losses, and non-monetary assets are translated at historical exchange rates.

Changes in the exchange rates between the functional currencies of our subsidiaries and the currencies in which monetary financial assets and liabilities are denominated in, will create fluctuations in our reported condensed consolidated statements of operations and cash flows.

Derivative Financial Instruments

Both the Capped Call and the Put Option are accounted for as an asset that is recorded at fair value within Derivative assets in the consolidated balance sheets.

The changes in fair value to Derivative assets is recorded within Change in fair value of derivative assets in the Condensed Consolidated Statements of Operations.

Both the Capped Call and the Put Option are accounted for as assets that are recorded at fair value within Derivative assets on the condensed consolidated balance sheets.

The changes in fair value to Derivative assets are recorded within change in fair value of derivative assets on the Condensed Consolidated Statements of Operations.

See Note 1 – Organization, Business and Out-of-Period Adjustments , for further information.

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There was no significant impact to the Company’s condensed consolidated financial statements related to the adoption of ASU 2020-04 and ASU 2022-06.

The Company continues to evaluate the impact of the ASU 2020-04 guidance and may apply other elections as applicable as additional changes in the market occur.

continues to evaluate the impact of the ASU 2020-04 guidance and may apply other elections, as applicable, as additional changes in the market occur.

In March 2023, the Company amended an existing debt agreement to replace the London Interbank Offered Rate (“LIBOR”) interest rate provisions with interest rate provisions based on a forward-looking term rate based on the secured overnight funding rate (“SOFR”) (see Note 7 – Debt ).

1 unchanged sentence

There was no significant impact to the Company’s condensed consolidated financial statements.

Accounts Receivable, Net

Accounts receivable consists of the following (in thousands):

March 31, 2023 December 31, 2022

Accounts receivable $ 416,785 $ 423,071

allowance for credit losses ( 2,073 ) ( 1,888 )

Accounts receivable, net $ 414,712 $ 421,183

Inventories consist of the following (in thousands):

March 31, 2023 December 31, 2022

Inventories consisted of the following (in thousands):

June 30, 2023 December 31, 2022

Raw materials $ 131,830 $ 66,574

2 unchanged sentences

Property, Plant and Equipment, Net

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

Estimated Useful Lives (Years) March 31, 2023 December 31, 2022

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

Estimated Useful Lives (Years) June 30, 2023 December 31, 2022

Land N/A $ 1,588 $ 1,583

8 unchanged sentences

Property, plant and equipment, net $ 30,674 $ 23,174

Depreciation expense was $ 0.7 million and $ 0.6 million for the three months ended March 31, 2023 and 2022, respectively, of which $ 0.3 million and $ 0.5 million, respectively, was allocated to cost of revenue and $ 0.4 million and $ 0.1 million, respectively, was included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022.

Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill by operating segment during the three months ended March 31, 2023 are shown below (in thousands):

Depreciation expense was $ 0.8 million and $ 0.6 million for the three months ended June 30, 2023 and 2022, respectively, of which $ 0.3 million and $ 0.4 million was allocated to cost of revenue and $ 0.5 million and $ 0.2 million was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations for the three months ended June 30, 2023 and 2022.

Depreciation expense was $ 1.5 million and $ 1.2 million for the six months ended June 30, 2023 and 2022, respectively, of which $ 0.6 million and $ 0.9 million was allocated to cost of revenue and $ 0.9 million and $ 0.3 million was included in depreciation and amortization on the accompanying condensed consolidated statements of operations for the six months ended June 30, 2023 and 2022.

Goodwill and Other Intangible Assets, Net

Changes in the carrying amount of goodwill by operating segment during the six months ended June 30, 2023, consisted of the following (in thousands):

Array Legacy Operations (1)

2 unchanged sentences

$ 69,727 $ 346,457 $ 416,184

Correction to goodwill (see Note 1) — 2,000 2,000

Adjustment to goodwill (see Note 1) — 2,000 2,000

Foreign currency translation — 23,071 23,071

1 unchanged sentence

$ 69,727 $ 371,528 $ 441,255

(1) Goodwill attributable to Array Legacy Operations is net of accumulated impairment of $ 51.9 million.

(1) Goodwill attributable to Array Legacy Operations is net of impairment of $ 51.9 million.

Each quarter the Company evaluates if facts and circumstances indicate that it is more-likely-than-not that the fair value of its reporting units is less than their carrying value, which would require the Company to perform an interim goodwill impairment test.

During our most recent evaluation, we concluded there were no indicators of impairment as of March 31, 2023.

Other Intangible Assets

During our most recent evaluation, we concluded there were no indicators of impairment as of June 30, 2023.

Other Intangible Assets, Net

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

Estimated Useful Lives (Years) March 31, 2023 December 31, 2022

Estimated Useful Lives (Years) June 30, 2023 December 31, 2022

Developed technology 14 $ 204,441 $ 203,800

13 unchanged sentences

Total other intangible assets, net $ 375,527 $ 386,364

Amortization expense related to intangible assets was $ 13.8 million and $ 22.0 million for the three months ended March 31, 2023 and 2022, respectively.

Estimated future amortization expense of intangible assets as of March 31, is as follows (in thousands):

Amortization expense related to intangible assets was $ 12.4 million and $ 25.8 million for the three months ended June 30, 2023 and 2022, respectively, and $ 26.2 million and $ 48.9 million for the six months ended June 30, 2023 and 2022, respectively.

Estimated future amortization expense of intangible assets as of June 30, 2023, is as follows (in thousands):

Remainder of 2023 $ 24,769

Thereafter 155,562

Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset group may not be recoverable.

As of June 30, 2023, no events or circumstances were noted that would indicate the carrying amount of any of our asset groups may not be recoverable.

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

1 unchanged sentence

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

The Company recorded income tax expense of $ 9.9 million and a benefit of $ 14.7 million for the three months ended March 31, 2023 and 2022, respectively.

The tax expense for the three months ended March 31, 2023 was unfavorably impacted by higher income reported in non-U.S.

jurisdictions and an out of period increase in income tax expense of $ 1.4 million related to the Put Option (see Note 1 – Organization, Business and Out-of-Period Adjustments ), partially offset by benefits related to excess equity-based compensation deductions recorded discretely during the quarter.

The tax benefit for the three months ended March 31, 2022 was favorably impacted by losses in non-U.S.

The Company recorded income tax expense of $ 22.4 million and a benefit of $ 18.4 million for the three months ended June 30, 2023 and 2022, respectively, and an expense of $ 32.3 million and a benefit of $ 33.2 million for the six months ended June 30, 2023 and 2022, respectively.

The tax expense for the six months ended June 30, 2023 was unfavorably impacted by higher income reported in non-U.S.

jurisdictions and an increase in income tax expense related to the Put Option (see Note 1 – Organization, Business and Out-of-Period Adjustments ), partially offset by benefits related to excess equity-based compensation deductions recorded discretely during the quarter.

The tax benefit for the six months ended June 30, 2022 was favorably impacted by losses in non-U.S.

jurisdictions which have higher tax rates than the U.S., partially offset by non-deductible expenses.

For the three months ended March 31, 2023 and 2022, no reserves for uncertain tax positions have been recorded.

For the six months ended June 30, 2023 and 2022, no reserves for uncertain tax positions have been recorded.

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

The following table summarizes the Company’s total debt (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Senior Secured Credit Facility:

1 unchanged sentence

Revolving credit facility — —

301,400 312,475

Unamortized discount and issuance costs ( 17,544 ) ( 19,135 )

Carrying amount 283,856 293,340

Convertible Debt

1 % Senior Notes

425,000 425,000

Unamortized discount and issuance costs ( 10,785 ) ( 11,248 )

Carrying amount 414,215 413,752

Total secured credit facility 290,325 312,475

Convertible notes 425,000 425,000

Other debt 50,411 51,951

Total Debt 768,538 789,426

Total principal 765,736 789,426

Unamortized discount and issuance costs, total ( 25,801 ) ( 30,383 )

Carrying amount 740,209 759,043

Current portion of debt ( 37,450 ) ( 38,691 )

1 unchanged sentence

Senior Secured Credit Facility

On October 14, 2020, the Company entered into a senior secured credit facility (the “Credit Agreement”), which was amended on February 23, 2021 (the “First Amendment”), on February 26, 2021 (the “Second Amendment”) and again on March 2, 2023 (the “Third Amendment”).

The senior secured facility consists of (i) a $ 575 million senior secured 7-year term loan facility (the “Term Loan Facility”) and (ii) a $ 200 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

On October 14, 2020, the Company entered into a credit agreement (as amended, the “Credit Agreement”) governing the Company’s senior secured credit facility, consisting of (i) a $ 575 million senior secured 7-year term loan facility (the “Term Loan Facility”) and (ii) a $ 200 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 Credit Agreement was amended on February 23, 2021 (the “First Amendment”), on February 26, 2021 (the “Second Amendment”) and again on March 2, 2023 (the “Third Amendment”).

The single purpose of the Third Amendment in March 2023 was to replace the former discontinued Senior Secured Credit Facility reference rate of LIBOR, with the comparable active reference rate, SOFR.

1 unchanged sentence

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had no outstanding balance as of both March 31, 2023 and December 31, 2022, $ 40.4 million and $ 38.8 million in standby letters of credit at March 31, 2023 and December 31, 2022, respectively, and availability of $ 159.6 million and $ 161.2 million at March 31, 2023 and December 31, 2022, respectively.

In accordance with the Third Amendment, the Revolving Credit Facility pays interest at the Company’s election, at either (x) for SOFR Loans at Adjusted Term SOFR plus 3.25 % (as defined) or (y) for Base Rate Loans at the higher of the Prime Rate, 1/2 of 1% above the Federal Funds Rate or the Adjusted Term SOFR (as defined) for one month interest period, after giving effect to any floor plus 1 %, plus 2.25 %.

Under the Revolving Credit Facility, the Company had no outstanding balance as of both June 30, 2023 and December 31, 2022, $ 26.7 million and $ 38.8 million in standby letters of credit at June 30, 2023 and December 31, 2022, respectively, and availability of $ 173.3 million and $ 161.2 million at June 30, 2023 and December 31, 2022, respectively.

In accordance with the Third Amendment, the Revolving Credit Facility pays interest at the Company’s election, at either (x) for SOFR Loans at Adjusted Term SOFR (as defined in the Credit Agreement) plus 3.25 % or (y) for Base Rate Loans at the higher of the Prime Rate, one half of 1.00 % above the Federal Funds Rate or the Adjusted Term SOFR for one month interest period, after giving effect to any floor plus 1.00 %, plus 2.25 %.

Term Loan Facility

The Term Loan Facility had a balance of $ 301.4 million and $ 312.5 million as of March 31, 2023 and December 31, 2022, respectively.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 17.5 million and $ 19.1 million as of March 31, 2023 and December 31, 2022, respectively.

In accordance with the Third Amendment, the Term Loan Facility pays interest at the Company’s election, at either (x) for SOFR Loans at Adjusted Term SOFR (subject to a floor of 0.50 %) plus 3.25 % (as defined) or (y) for Base Rate Loans at the higher of the Prime Rate, 1/2 of 1% above the Federal Funds Rate or the Adjusted Term SOFR (as defined) for one-month interest period, after giving effect to any floor plus 1 %, plus 2.25 %.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of March 31, 2023 is 9.22 %.

The Term Loan Facility had a balance of $ 290.3 million and $ 312.5 million as of June 30, 2023 and December 31, 2022, respectively.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 15.5 million and $ 19.1 million as of June 30, 2023 and December 31, 2022, respectively.

above the Federal Funds Rate or the Adjusted Term SOFR for one-month interest period, after giving effect to any floor plus 1.00 %, plus 2.25 %.

The debt discount and issuance costs are being amortized using the effective interest method and the effective interest rate of the Term Loan Facility as of June 30, 2023, was 9.41 %.

The Term Loan Facility has an annual excess cash flow calculation, for which the prescribed formula did not result in requiring the Company to make an advance principal payment for the year ended December 31, 2022.

Convertible Debt

Convertible Notes

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 (the “Convertible Notes”), resulting in proceeds of $ 413.3 million ($ 364.7 million and $ 48.6 million, respectively), after deducting the original issue discount of 2.75 %.

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

The Convertible Notes were not convertible during the three months ended March 31, 2023 and none have been converted to date.

Also, given that the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact for the three months ended March 31, 2023.

The Convertible Notes were not convertible during the six months ended June 30, 2023, and none have been converted to date.

Also, given that the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact for the three and six months ended June 30, 2023.

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

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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 $ 36.02 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;

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Interest rates on other debt range from 0.55 % to 4.52 % annually.

Of the $ 42.1 million other debt balance, approximately $ 32.6 million is denominated in Euros and $ 9.5 million denominated in Brazilian Real.

Of the $ 50.4 million other debt balance, approximately $ 10.3 million is denominated in Euros and $ 40.1 million is denominated in Brazilian Real.

Redeemable Perpetual Preferred Stock

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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” or the “Put Option”).

The Company may terminate some or all of the Delayed Draw Commitment, from time to time, at its sole discretion.

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 Put Option included in the SPA required the Purchasers to purchase, up to an additional 150,000 shares of Series A Shares 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) until June 30, 2023, 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” or the “Put Option”).

The Put Option expired effective June 30, 2023.

On January 7, 2022, pursuant to the Put Option, 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 has classified the Series A Shares as temporary equity and is 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 $ 6.1 million and $ 5.4 million for the three months ended March 31, 2023 and 2022, respectively.

Such accretion totaled $ 12.4 million and $ 11.1 million for the six months ended June 30, 2023 and 2022, respectively.

Refer to Note 2 – Summary of Significant Accounting Policies for information regarding the accounting for the Put Option.

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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 three months ended March 31, 2023, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 6.3 million.

As of March 31, 2023, the Company has accrued and unpaid dividends of $ 12.7 million.

As used herein, “Liquidation Preference” means, with respect to the Series A Shares, the initial liquidation preference of $ 1,000 per share, plus accrued dividends of such share at the time of the determination.

During the six months ended June 30, 2023, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 12.9 million.

As of June 30, 2023, the Company has accrued and unpaid dividends of $ 19.3 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 .

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Accordingly, the discount is amortized over five years using the effective yield method.

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

0 % through the six-month anniversary of the Initial Closing;

1.5 % from the six-month anniversary of the Initial Closing through the 12-month anniversary of the Initial Closing;

3.0 % from the 12-month anniversary of the Initial Closing through June 30, 2023.

During the six months ended June 30, 2023, the Company paid the Purchasers a 3 % per annum cash commitment fee totaling $ 1,508 on the unpurchased portion of Put Option.

The Company disaggregates its revenue from contracts with customers by sales recorded over time and sales recorded at a point in time.

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Over time revenue $ 417,448 $ 324,851 $ 703,759 $ 532,922

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Billing sometimes occurs subsequent to revenue recognition, resulting in contract assets.

The changes in contract assets (i.e., unbilled receivables) and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings.

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

March 31, 2023 December 31, 2022

The changes in contract assets and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings.

C ontract assets are recorded within accounts receivable, net on the condensed consolidated balance sheets on a contract-by-contract basis and consisted of the following at the end of each reporting period (in thousands):

June 30, 2023 December 31, 2022

Unbilled receivables $ 141,636 $ 101,513

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

The changes in contract liabilities (i.e., deferred revenue) relate to advanced orders and payments received by the Company.

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):

March 31, 2023 December 31, 2022

The changes in contract liabilities relate to advanced orders and payments received by the Company.

Contract liabilities are recorded on a contract-by-contract basis and consisted of the following at the end of each reporting period (in thousands):

June 30, 2023 December 31, 2022

Deferred revenue $ 114,810 $ 178,922

During the three months ended March 31, 2023, the Company converted $ 125.2 million in deferred revenue to revenue, which represented 70 % of the prior year’s deferred revenue balance.

During the six months ended June 30, 2023, the Company converted $ 160.0 million in deferred revenue to revenue, which represented 89 % of the prior year’s deferred revenue balance.

Bill-and-Hold Arrangements

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

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

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

When this occurs, 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 ITC.

An example of such a situation is when 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 ITC.

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 its 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.

All bill-and-hold inventory is bundled or palletized in the Company’s warehouses, separately identified as not belonging to the Company and ready for immediate transport to the customer project upon 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.

During the three months ended March 31, 2023, the Company recognized $ 17.6 million in revenue from a single customer for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties.

During the three and six months ended June 30, 2023, the Company recognized $ 3.5 million and $ 22.8 million, respectively, in revenue from a single customer for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties.

Remaining Performance Obligations

As of March 31, 2023, the Company had $ 571.5 million of remaining performance obligations.

As of June 30, 2023, the Company had $ 452.7 million of remaining performance obligations.

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

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net income (loss) $ 64,808 $ ( 5,024 ) $ 90,940 $ ( 30,961 )

6 unchanged sentences

Income (loss) per share $ 0.34 $ ( 0.11 ) $ 0.43 $ ( 0.37 )

Potentially dilutive common shares issuable pursuant to equity-based awards of 654,277 were not included for the three months ended March 31, 2022, 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 three months ended March 31, 2023 and 2022, 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.

Potentially dilutive common shares issuable pursuant to equity-based awards of 2,413 were not included for the six months ended June 30, 2022, as their potential effect was anti-dilutive given the Company generated a net loss to common shareholders.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes for both the six months ended June 30, 2023 and 2022, as the average market price of the Company’s common stock has not exceeded the exercise price since their issuance.

Commitments and Contingencies

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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

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.

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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 May 19, 2023, the Court in the Plymouth Action granted the Company’s Motion to Dismiss.

On July 5, 2023, the Court denied the lead plaintiffs’ request for leave to amend the Consolidated Amended Complaint and dismissed the Plymouth Action with prejudice.

On August 4, 2023, the lead plaintiffs filed a notice of appeal of the Court’s dismissal of the Consolidated Amended Complaint.

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:

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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.

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.

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 condensed consolidated balance sheets as of March 31, 2023.

The Company has not recorded any material loss contingency in the condensed consolidated balance sheets as of June 30, 2023.

Contingent Consideration

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The TRA is valued based on the future expected payments under the agreement.

The TRA provides for the payment by Array Tech, Inc.

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

The TRA provides for the payment by Array Tech, Inc., to the former owners for certain federal, state, local and non-U.S.

tax benefits deemed realized in post-closing taxable periods by Array Tech, Inc., from the use of certain deductions generated by the increase in the tax value of the developed technology.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in contingent consideration in the condensed consolidated statements of operations.

As of March 31, 2023 and December 31, 2022, the fair value of the TRA was $ 8.7 million and $ 8.6 million, respectively.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in contingent consideration on the condensed consolidated statements of operations.

As of June 30, 2023 and December 31, 2022, the fair value of the TRA was $ 9.4 million and $ 8.6 million, respectively.

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

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Beginning balance $ 8,724 $ 9,364 $ 8,586 $ 14,578

3 unchanged sentences

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

As of March 31, 2023, the Company posted surety bonds in the total amount of approximately $ 208.5 million.

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

As of June 30, 2023, the Company posted surety bonds in the total amount of $ 220.9 million.

The Company is required to provide surety bonds to various parties as required for certain transactions initiated during the

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

These off-balance sheet arrangements do not adversely impact the Company’s liquidity or capital resources.

Fair Value of Financial Instruments

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

March 31, 2023 December 31, 2022

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

June 30, 2023 December 31, 2022

Carrying Value Fair Value Carrying Value Fair Value

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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 Capped Call is valued using a Black-Sholes model, with the most judgmental non-observable input being the volatility measure.

The Capped Calls are valued using a Black-Scholes model, with the most judgmental unobservable input being the volatility measure.

The value of the Capped Call is determined using unobservable inputs and is considered to be a Level 3 value in the fair value hierarchy.

The fair value of the Capped Call was $ 59.5 million at March 31, 2023.

The Put Option is exercisable into both Series A Stock and common stock.

The value of the put option is based upon the expected future price of the Series A Stock and the company’s common stock, which is then discounted back to current present value.

The present value of the Series A Stock is determined using a discounted cash flow method where the interest rate used for discounting is determined using a single-factor short-rate model.

The value of the common stock is determined by using a Monte-Carlo simulation and is then discounted back to present value.

The value of the Put Option is determined using unobservable inputs and is considered to be a Level 3 value in the fair value hierarchy.

The fair value of the Put Option was $ 3.8 million at March 31, 2023.

The fair value of the Capped Call was $ 64.0 million at June 30, 2023.

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.

The carrying values of the Term Loans outstanding under the Senior Secured Credit facility recorded in the condensed consolidated balance sheets approximate fair value due to the variable nature of the interest rates.

Other Debt totaling $ 50.4 million, consists of $ 34.6 million variable rate obligations and $ 15.8 million fixed rate obligations.

1 unchanged sentence

Due to the relative short-term maturity of these obligations, the Company believes current carrying value approximates fair value.

The carrying value of the $ 25.0 million variable rate obligations approximate fair value due to the variable nature of the interest rate.

The carrying value of the $ 34.6 million variable rate obligations approximate fair value due to the variable nature of the interest rates.

Equity-Based Compensation

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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.

RSU activity under the 2020 Plan during the three months ended March 31, 2023 was as follows:

Pursuant to the 2020 Plan, the Company grants restricted stock units (“RSUs”) to employees and members of the Company’s board of directors.

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

RSU activity under the 2020 Plan during the six months ended June 30, 2023, was as follows:

Number of Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Shares forfeited ( 117,511 ) 15.07

Outstanding non-vested, March 31, 2023 2,058,894 $ 14.73

Outstanding non-vested, June 30, 2023 1,827,995 $ 15.57

Performance Stock Units

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Treasury Constant Maturity rates.

The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the PSUs issued during the three months ended March 31, 2023 and 2022:

The following assumptions were used in the Monte Carlo simulation for computing the grant date fair value of the PSUs issued during the six months ended June 30, 2023 and 2022:

Volatility 90 % 66 %

1 unchanged sentence

Dividend yield — % — %

PSU activity under the 2020 Plan during the three months ended March 31, 2023 was as follows:

PSU activity under the 2020 Plan during the six months ended June 30, 2023, was as follows:

Number of Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Shares forfeited ( 1,465 ) 20.00

Outstanding non-vested, March 31, 2023 727,987 $ 14.59

For the three months ended March 31, 2023 and 2022, the Company recognized $ 3.3 million and $ 4.4 million, respectively, in equity-based compensation.

At March 31, 2023, the Company had $ 32.8 million of unrecognized compensation costs related to RSUs and PSUs, which is expected to be recognized over approximately 2.4 years and 2.7 years, respectively.

Outstanding non-vested, June 30, 2023 726,522 $ 14.62

For the three months ended June 30, 2023 and 2022, the Company recognized $ 5.2 million and $ 3.0 million, respectively, in equity-based compensation expense.

For the six months ended June 30, 2023 and 2022, the Company recognized $ 8.6 million and $ 7.5 million, respectively, in equity-based compensation.

At June 30, 2023, the Company had $ 28.2 million of unrecognized compensation costs related to RSUs and PSUs, which are expected to be recognized over approximately 2.2 years and 2.4 years, respectively.

14 Segment Reporting

5 unchanged sentences

Array Legacy Operations and STI Operations.

The following table provides a reconciliation of certain financial information for the Company’s reportable segments to information presented in its condensed consolidated financial statements for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

The following table provides a reconciliation of certain financial information for the Company’s reportable segments to information presented in its condensed consolidated financial statements for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30, 2023 Three Months Ended June 30, 2022

Array Legacy Operations STI Operations Total Array Legacy Operations STI Operations Total

1 unchanged sentence

Gross Profit $ 106,590 $ 43,452 $ 150,042 $ 33,840 $ 6,106 $ 39,946

Six Months Ended June 30, 2023 Six Months Ended June 30, 2022

Array Legacy Operations STI Operations Total Array Legacy Operations STI Operations Total

Revenue $ 650,465 $ 234,033 $ 884,498 $ 597,829 $ 122,622 $ 720,451

Gross Profit $ 190,064 $ 61,157 $ 251,221 $ 55,108 $ 11,425 $ 66,533

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements