What changed in this filing

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Item 9A. Controls and Procedures

2024-02-28 compared with 2023-03-22 · 779 added, 1192 removed, 1001 unchanged (66% of the section changed)

5 unchanged sentences

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.

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

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

Management’s Report on Internal Control Over Financial Reporting.

3 unchanged sentences

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

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,

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

Our independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of our internal control over financial reporting as of December 31, 2023, as stated in their report, which appears herein.

We have concluded that the following material weaknesses in our internal control over financial reporting that were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, have not been remediated as of December 31, 2023:

• We have identified a material weakness due to a deficiency in one of the principles associated with the Control Environment component of the COSO framework, specifically relating to a lack of a sufficient complement of qualified personnel at the appropriate levels to perform control activities in support of preparing the financial statements in accordance with U.S.

• Control Activities – STI.

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 and 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.

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;

◦ 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.

Management has been actively engaged in remediation efforts to address the material weaknesses throughout 2023, and these efforts will continue into 2024.

We have made enhancements to our control environment by improving guidance, communication of expectations and importance of internal controls.

We made progress towards addressing our material weakness in our lack of qualified personnel by hiring additional qualified accounting and finance personnel during 2023, which has helped to provide additional capacity and expertise to enhance our accounting and reporting review procedures.

Specifically, in the fourth quarter of 2023, the Company hired a new Chief Financial Officer and additional qualified accounting resources, who are currently assessing if additional personnel should be hired at STI in connection with the planned system implementation, and elsewhere in the organization, in order to perform control activities in support of preparation of the financial statements in accordance with U.S.

We expect that this assessment will be completed during the first quarter of 2024, with appropriate action taken during 2024, to ensure that the Company has a sufficient complement of qualified personnel at the right levels, based on any identified gaps in personnel requirements.

Due to accounting system limitations at STI, management is limited in its ability to effectively design and implement general information technology controls at STI, which support the underlying business cycle controls.

The accounting system was in place when the Company acquired STI, and management is planning on implementing a new accounting system in the first half of 2024.

The new system will allow management to effectively design and implement appropriate general information technology controls including system

enforced segregation of duties.

Management is currently assessing the process level risks at STI, designing controls based upon the planned accounting system.

In addition, with the assistance of an outside consulting firm, we are in the process of formalizing our STI accounting and business operation policies and procedures, in advance of this system implementation.

Remediation of Previously Identified Material Weaknesses

The following entity level material weaknesses were previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022:

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

We have concluded that with the exception of a lack sufficient number of qualified personnel as discussed above, that these material weaknesses have been remediated.

Specifically, management, with the assistance of an outside consulting firm, implemented a process level risk assessment for all material classes of transactions, identified and designed relevant controls to mitigate the identified risks of material misstatement, and tested the design, implementation, and operating effectiveness of those controls.

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, we also identified material weaknesses related to Control Activities.

With the exception of the STI related material weakness above we have completed our remediation efforts previously identified in Item 9A “Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2022.

Based on our testing of the design and operating effectiveness of the enhanced internal controls, we have concluded that the following material weaknesses related to Control Activities that existed as of December 31, 2022, exclusive of STI, have been remediated:

• Revenue Recognition

• Accounts Receivable

• Financial Reporting, Consolidation and Business Combination

• Foreign Currency.

Changes in Internal Control over Financial Reporting

1 unchanged sentence

Other Information

Immaterial Correction of Interim Condensed Consolidated Financial Statements

In connection with the pricing of the Convertible Notes, we entered into capped call transactions with the Option Counterparties.

At issuance the Company concluded that the Capped Calls met 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.

When the Company entered into the Capped Calls, the Company executed certain side letters (the “Side Letters”) with the counterparties that replaced some of the terms described in the primary contract including the volatility inputs used to value the Capped Calls under certain circumstances.

Upon further evaluation of the accounting during the three months ended March 31, 2023, the Company concluded that the modification to the volatility inputs in the side letters precluded the Capped Calls from being accounted for as an equity instrument indexed to its own stock and should be accounted for as a freestanding derivative instrument asset recognized at fair value, with subsequent changes in fair value recognized in earnings.

During the three months ended March 31, 2023, the Company began to account for the Capped Calls as derivative assets, with subsequent changes in fair value being recorded through earnings.

During the three months ended December 31, 2023, after consultation with the staff of the Office of the Chief Accountant of the SEC, the Company concluded that the original equity classification accounting treatment was acceptable.

As a result, the Company reclassified the derivative asset recognized during the interim periods of 2023 as a reduction to equity and reversed the related mark to market adjustments recognized during the interim periods of 2023.

Redeemable Perpetual Preferred Stock

At issuance, 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 Put Option are freestanding instruments that are classified in equity.

During the first quarter of 2023, the Company reconsidered the provisions of the Put Option and concluded that it should be accounted for as a freestanding derivative instrument asset accounted for at fair value with subsequent fair value adjustments recognized in earnings.

During the fourth quarter of 2023, after consultation with the staff of the Office of the Chief Accountant of the SEC, the Company concluded that the original equity accounting classification was correct.

As a result, the Company reclassified the derivative asset recognized during the interim periods of 2023 as a reduction of equity and also reversed the related fair value adjustments.

Management evaluated the above misstatements and concluded they were not material to the interim periods of 2023, individually or in aggregate.

As a result, the Company plans to prospectively correct the relevant prior period condensed consolidated financial statements and related footnotes for these misstatements.

The following tables reflect the effects of the correction on all affected line items of the Company’s previously reported condensed consolidated interim financial statements to be presented as comparative in the Form 10-Q for the nine months ended September 30, 2024:

Condensed Consolidated Statements of Operations (unaudited)

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

(in thousands)

As Previously Reported Adjustments As Corrected As Previously Reported Adjustments As Corrected

Change in fair value of derivative assets

$ 116 $ (116) $ — $ (1,140) $ 1,140 $ —

Total other income (expense)

(9,762) (116) (9,878) (30,242) 1,140 (29,102)

Income (loss) before income tax expense 30,443 (116) 30,327 153,662 1,140 154,802

Income tax expense (benefit)

7,229 — 7,229 39,508 (2,604) 36,904

Net income (loss)

23,214 (116) 23,098 114,154 3,744 117,898

Net income (loss) to common shareholders

$ 10,123 $ (116) $ 10,007 $ 75,795 $ 3,744 $ 79,539

Income per common share

$ 0.07 $ — $ 0.07 $ 0.50 $ 0.02 $ 0.52

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

Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023

(in thousands)

As Previously Reported Adjustments As Corrected As Previously Reported Adjustments As Corrected

Net income (loss)

$ 23,214 $ (116) $ 23,098 $ 114,154 $ 3,744 $ 117,898

Comprehensive income (loss)

$ 719 $ (116) $ 603 $ 129,443 $ 3,744 $ 133,187

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

Three Months Ended September 30, 2023

(in thousands)

Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

As Previously Reported

Balance at June 30, 2023

$ 417,624 $ (176,530) $ 287,454

— 23,214 23,214

Balance at September 30, 2023

407,916 (153,316) 278,465

Balance at June 30, 2023

(52,914) 3,860 (49,054)

— (116) (116)

Balance at June 30, 2023

364,710 (172,670) 238,400

— 23,098 23,098

Balance at September 30, 2023

$ 355,002 $ (149,572) $ 229,295

Nine Months Ended September 30, 2023

(in thousands) Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

As Previously Reported

Balance at December 31, 2022

$ 383,176 $ (267,470) $ 124,281

Correction of the Capped Call and Put Option errors

52,914 — 52,914

— 114,154 114,154

Balance at September 30, 2023

407,916 (153,316) 278,465

Correction of the Capped Call and Put Option errors

(52,914) — (52,914)

— 3,744 3,744

Balance at December 31, 2022

383,176 (267,470) 124,281

Correction of the Capped Call and Put Option errors

— 117,898 117,898

Balance at September 30, 2023

$ 355,002 $ (149,572) $ 229,295

Condensed Consolidated Statements of Cash Flows (unaudited)

Nine Months Ended September 30, 2023

(in thousands) As Previously Reported Adjustments As Corrected

$ 114,154 $ 3,744 $ 117,898

Deferred tax expense (benefit)

284 (2,612) (2,328)

Change in fair value of derivative assets

1,140 (1,140) —

Income tax payable

$ (738) $ 8 $ (730)

The following tables reflect the effects of the correction on all affected line items of the Company’s previously reported condensed consolidated financial statements to be presented as comparative in the Form 10-Q for six months ended June 30, 2024:

Condensed Consolidated Statements of Operations (unaudited)

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

(in thousands)

As Previously Reported Adjustments As Corrected As Previously Reported Adjustments As Corrected

Change in fair value of derivative assets

$ 694 $ (694) $ — $ (1,256) $ 1,256 $ —

Total other income (expense) (9,030) (694) (9,724) (20,480) 1,256 (19,224)

Income (loss) before income tax expense 87,211 (694) 86,517 123,219 1,256 124,475

Income tax expense (benefit)

22,403 (1,051) 21,352 32,279 (2,604) 29,675

Net income 64,808 357 65,165 90,940 3,860 94,800

Net income to common shareholders $ 52,024 $ 357 $ 52,381 $ 65,672 $ 3,860 $ 69,532

Income per common share

$ 0.34 $ — $ 0.34 $ 0.44 $ 0.03 $ 0.47

$ 0.34 $ — $ 0.34 $ 0.43 $ 0.03 $ 0.46

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

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023

(in thousands)

As Previously Reported Adjustments As Corrected As Previously Reported Adjustments As Corrected

Net income $ 64,808 $ 357 $ 65,165 $ 90,940 $ 3,860 $ 94,800

Comprehensive income $ 88,720 $ 357 $ 89,077 $ 128,724 $ 3,860 $ 132,584

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

Three Months Ended June 30, 2023

(in thousands)

Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

As Previously Reported

Balance at March 31, 2023 $ 426,221 $ (241,338) $ 207,330

— 64,808 64,808

Balance at June 30, 2023 417,624 (176,530) 287,454

Balance at March 31, 2023 (52,914) 3,503 (49,411)

Net income — 357 357

Balance at March 31, 2023 373,307 (237,835) 157,919

— 65,165 65,165

Balance at June 30, 2023 $ 364,710 $ (172,670) $ 238,400

Six Months Ended June 30, 2023

(in thousands) Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

As Previously Reported

Balance at December 31, 2022

$ 383,176 $ (267,470) $ 124,281

Correction of the Capped Call and Put Option errors

52,914 — 52,914

— 90,940 90,940

Balance at June 30, 2023 417,624 (176,530) 287,454

Correction of the Capped Call and Put Option errors

(52,914) — (52,914)

— 3,860 3,860

Balance at December 31, 2022

383,176 (267,470) 124,281

Correction of the Capped Call and Put Option errors

— 94,800 94,800

Balance at June 30, 2023 $ 364,710 $ (172,670) $ 238,400

Condensed Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 2023

(in thousands) As Previously Reported Adjustments As Corrected

$ 90,940 $ 3,860 $ 94,800

Deferred tax expense (benefit)

816 (2,612) (1,796)

Change in fair value of derivative assets

1,256 (1,256) —

Income tax payable

$ 9,830 $ 8 $ 9,838

Condensed Consolidated Statements of Operations (unaudited)

Three Months Ended March 31, 2023

(in thousands)

As Previously Reported Adjustments As Corrected

Change in fair value of derivative assets

$ (1,950) $ 1,950 $ —

Total other income (expense)

(11,450) 1,950 (9,500)

Income before income tax benefit 36,008 1,950 37,958

Income tax expense (benefit)

9,876 (1,553) 8,323

Net income 26,132 3,503 29,635

Net income to common shareholders $ 13,648 $ 3,503 $ 17,151

Income per common share

$ 0.09 $ 0.02 $ 0.11

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

Three Months Ended March 31, 2023

(in thousands)

As Previously Reported Adjustments As Corrected

Net income $ 26,132 $ 3,503 $ 29,635

Comprehensive income $ 40,004 $ 3,503 $ 43,507

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

Three Months Ended March 31, 2023

(in thousands) Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity

As Previously Reported

Balance at December 31, 2022

$ 383,176 $ (267,470) $ 124,281

Correction of the Capped Call and Put Option errors

52,914 — 52,914

— 26,132 26,132

Balance at March 31, 2023 426,221 (241,338) 207,330

Correction of the Capped Call and Put Option errors

(52,914) — (52,914)

— 3,503 3,503

Balance at December 31, 2022

383,176 (267,470) 124,281

Correction of the Capped Call and Put Option errors

— 29,635 29,635

Balance at March 31, 2023 $ 373,307 $ (237,835) $ 157,919

Condensed Consolidated Statements of Cash Flows (unaudited)

Three Months Ended March 31, 2023

(in thousands) As Previously Reported Adjustments As Corrected

$ 26,132 $ 3,503 $ 29,635

Deferred tax expense (benefit)

4,555 (1,553) 3,002

Change in fair value of derivative assets

$ 1,950 $ (1,950) $ —

Trading Arrangements

During the fiscal quarter ended December 31, 2023, certain of our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) entered into contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information.

We refer to these contracts, instructions, and written plans as “ Trading Plans ” and each one as a “Trading Plan.”

Director/Officer

Action & Date of Action

Commencement of Trading Period

Scheduled Termination of Trading Period (1)

Security Covered

Maximum Number of Securities to be Purchased or Sold Pursuant to the Rule 10b5-1 Trading Plan (2)

Covers Purchase or Sale?

Travis Rose , Chief Revenue Officer

Adoption November 16, 2023

February 20, 2024

December 31, 2024

We maintain a website at www.arraytechinc.com.

5 unchanged sentences

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.

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.

7 unchanged sentences

The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.

Auditor Firm Id:

34 Auditor Name:

Deloitte & Touche LLP Auditor Location:

Tempe, AZ, United States

Exhibit and Financial Statement Schedules

7 unchanged sentences

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

2 unchanged sentences

8-K 10/19/2020 3.2

Number Description of Document Form Date No.

3.3 Certificate of Designations of Series A Perpetual Preferred Stock

2 unchanged sentences

10-K 03/10/2021 4.1

Number Description of Document Form Date No.

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

1 unchanged sentence

8-K 12/07/2021 4.1

4.3 Form of 1.00% Convertible Senior Note due 2028 (included in Exhibit 4.1)

4.3 Form of 1.00% Convertible Senior Note due 2028

8-K 12/07/2021 4.1

16 unchanged sentences

S-1/A 10/7/2020 10.4

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

10.9 Employment Offer Letter, dated April 3, 2022, 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

and Kevin Hostetler

4/5/2022 10.1

Employment Offer Letter, dated March 7, 2019 , between Array Tech, Inc.

(f/k/a Array Technologies, Inc.

and Nipul Patel

Employment Offer Letter, dated July 25, 2022, between Array Tech, Inc.

and Terrance Collins

Employment Offer Letter, dated April 7, 2022, between Array Tech, Inc.

and Tyson Hottinger

Employment Offer Letter, dated November 28 , 20 22 , between Array Tech, Inc.

and Neil Manning

10.14 Employment Offer Letter, dated November 3, 2023 , between Array Tech, Inc.

and Kurt Wood

8-K 11/07/2023 10.1

10.15 Array Technologies, Inc.

1 unchanged sentence

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

10.16 Transition and Separation Agreement, dated November 3, 2023, by and between Array Technologies, Inc.

and Nipul Patel

11/07/2023 10.2

10.17 Form of Director and Officer Indemnification Agreement

13 unchanged sentences

8-K 12/07/21 10.1

F orm of Capped Call Side Letter

21.1* List of Subsidiaries of the Registrant

23.1* Consent of Independent Registered Public Accounting Firm

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.

2 unchanged sentences

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

Array Technologies, Inc.

Clawback Policy

101* Interactive Data Files

4 unchanged sentences

Form 10–K Summary

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 22, 2023.

Array Technologies, Inc.

5 unchanged sentences

Signature Title Date

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

/s/ Kevin Hostetler Chief Executive Officer February 27, 2024

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

/s/ Kurt Wood

Chief Financial Officer February 27, 2024

(Principal Financial and Accounting Officer)

/s/ Brad Forth Chairman of the Board of Directors February 27, 2024

/s/ Paulo Almirante

Member of the Board of Directors March 22, 2023

Member of the Board of Directors February 27, 2024

Paulo Almirante

/s/ Troy Alstead

Member of the Board of Directors March 22, 2023

Member of the Board of Directors February 27, 2024

/s/ Orlando D.

Member of the Board of Directors March 22, 2023

Member of the Board of Directors February 27, 2024

/s/ Jayanthi Iyengar

Member of the Board of Directors March 22, 2023

Member of the Board of Directors February 27, 2024

Jayanthi Iyengar

/s/ Bilal Khan

Member of the Board of Directors March 22, 2023

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

Member of the Board of Directors February 27, 2024

/s/ Tracy Jokinen Member of the Board of Directors February 27, 2024

Tracy Jokinen

Signature Title Date

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

/s/ Gerrard Schmid Member of the Board of Directors February 27, 2024

Gerrard Schmid

2 unchanged sentences

and Subsidiaries

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

Austin, Texas ;

PCAOB ID# 243 )

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets

4 unchanged sentences

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.

To the shareholders and the Board of Directors of Array Technologies, Inc.

Opinion on the Financial Statements

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

(the "Company") as of December 31, 2023, the related consolidated statements of operations, comprehensive income (loss), changes in redeemable perpetual preferred stock and stockholders’ equity (deficit), and cash flows, for the year then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also 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, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 27, 2024 , expressed an adverse opinion on the Company’s internal control over financial reporting because of material weaknesses.

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.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements 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 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 conducted our audit 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 financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the 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 financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Goodwill – STI Operations Reporting Unit – Refer to Note 2 and 7 to the financial statements

Critical Audit Matter Description

The Company’s goodwill for its STI Operations reporting unit (“STI”) is tested annually for impairment during the fourth quarter of each year, and more frequently if events and circumstances indicate that the assets might be impaired.

The Company’s evaluation of its STI goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value.

The Company used a quantitative approach to determine the fair value of STI based upon the discounted cash flow method, which was compared to an indication of value using the guideline publicly-traded companies method.

The fair value determination using the discounted cash flow method requires management to make significant estimates and assumptions related to forecasts of future revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins and the discount rate.

The comparison of the fair value of the reporting unit to the marketplace multiples determined under the public company guideline method requires management to make assumptions related to marketplace EBITDA multiples from within a peer public company group.

The goodwill balance was $435.6 million as of December 31, 2023, of which $365.9 million was allocated to STI.

The fair value of STI exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized.

Given the significant judgments made by management to estimate the fair value of STI, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenues and EBITDA margins, as well as the selection of the discount rate and the comparison of the fair value to marketplace multiples, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and EBITDA margins ("forecasts"), the selection of the discount rate and the comparison of the fair value to marketplace multiples for STI included the following, among others:

• We tested the effectiveness of controls over management's goodwill impairment evaluation over the determination of the fair value of STI, such as controls related to management's forecasts and the selection of the discount rate and market multiples used.

• We evaluated the reasonableness of management's forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, (3) inquiry with non-accounting personnel and (4) forecasted information included in industry reports that STI operates within.

• With the assistance of our fair value specialists, we evaluated (1) the valuation methodologies used, (2) the marketplace multiples used by management to compare to the DCF fair value, and (3) the discount rate used in determining the present value of the expected cash flows by developing independent estimates and comparing those to the rate selected by management.

• We considered the impact of (1) changes in the industry and (2) current macroeconomic factors on management's forecasts.

Accounting for Capped Calls -- Refer to Note 11 to the financial statements

Critical Audit Matter Description

In December 2021, in connection with the offering of convertible senior notes, the Company entered into capped call agreements (the “Capped Calls”) related to the issuance of the convertible senior notes.

At inception, the Company paid $52.9 million for the capped calls which have been classified as equity.

We identified the key judgements around whether the Capped Calls should be equity classified under Accounting Standards Codification Topic 815, Derivatives and Hedging, ("ASC 815”) or accounted for as a derivative asset with subsequent changes in fair value recorded through earnings at the end of each accounting period.

When the Company entered into the Capped Calls, the Company executed certain side letters (the “Side Letters”) with the counterparties that modified some of the terms in the primary contract including the volatility inputs used to value the Capped Calls under certain circumstances.

The evaluation of the impact of the Side Letters on the volatility inputs requires significant judgement in determining if the Capped Calls can be considered indexed to the Company’s own stock under ASC 815-40-15.

This judgement requires a high degree of auditor judgment, and an increased extent of effort, including the need to involve professionals having expertise in accounting for complex financial instruments, when performing audit procedures to evaluate management's judgments and conclusions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to determining the accounting for the Capped Calls within the financial statements included the following, among others:

• We tested the effectiveness of internal controls over management's accounting evaluation of the impact of the side letters on the volatility inputs.

• We read the underlying agreements and the related side letters and evaluated the Company's accounting analysis over the accounting of the Capped Calls, including managements conclusions around the impact of the side letters on equity classification.

• With the assistance of professionals in our firm having expertise in capped calls and ASC 815, we evaluated the Company's conclusions regarding the accounting guidance and the impact of the side letters on the equity classification of the Capped Calls.

/s/ Deloitte & Touche LLP

Tempe, Arizona

February 27, 2024

We have served as the Company's auditor since 2023.

Austin, Texas

March 22, 2023

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors

Array Technologies, Inc.

Albuquerque, New Mexico

To the shareholders and the Board of Directors of Array Technologies, Inc.

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.

We have audited the internal control over financial reporting of Array Technologies, Inc.

(the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weaknesses identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 27, 2024, expressed an unqualified opinion on those consolidated financial statements.

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”.

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 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.

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

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.

We conducted our audit 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.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and 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.

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

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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;

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.

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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.

Material Weaknesses

The following material weaknesses have been identified and included in management's assessment:

Control Environment - management identified a material weakness due to a deficiency in one of the principles associated with the Control Environment component of the COSO framework, specifically relating to a lack of a sufficient complement of qualified personnel at the appropriate levels to perform control activities in support of preparing the financial statements in accordance with U.S.

Control Activities - the Company 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 and 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.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

Tempe, Arizona

February 27, 2024

Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors

Array Technologies, Inc.

Albuquerque, New Mexico

Opinion on the Consolidated Financial Statements

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

(the “Company”) as of December 31, 2022, the related consolidated statements of operations, and comprehensive income(loss), changes in redeemable perpetual preferred stock and stockholders’ equity(deficit), and cash flows for each of the two 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 the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022 , in conformity with accounting principles generally accepted in the United States of America.

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.

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.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

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

/s/ BDO USA, LLP

We served as the Company's auditor from 2016 to 2023

Austin, Texas

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Consolidated Balance Sheets

(in thousands, except shares and par value)

(in thousands, except per share and share amounts)

Current assets

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Accounts receivable, net 332,152 421,183

Inventories, net 233,159 205,653

Inventories 161,964 233,159

Income tax receivables — 3,532

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Other intangible assets, net 350,396 386,364

Deferred tax assets 16,466 9,345

Deferred income tax assets 15,870 16,466

Other assets 40,717 32,655

Total assets $ 1,706,741 $ 1,706,052

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

LIABILITIES, REDEEMABLE PERPETUAL PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities

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Total current liabilities 335,691 465,262

Deferred tax liability 72,606 —

Deferred income tax liabilities 66,858 72,606

Contingent consideration, net of current portion 8,936 7,387

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351,260 299,570

Stockholders’ equity (deficit)

Array Technologies, Inc.

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(in thousands, except shares and par value)

Preferred stock $ 0.001 par value;

4,500,000 shares authorized;

Common stock $ 0.001 par value;

1,000,000,000 shares authorized;

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

Stockholders’ equity

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

none issued at respective dates

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

151,242,120 and 150,513,104 shares issued at respective dates

Additional paid-in capital 344,517 383,176

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Accumulated other comprehensive income 44,810 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

Total stockholders’ equity 259,248 124,281

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity $ 1,706,741 $ 1,706,052

See accompanying Notes to Consolidated Financial Statements.

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Cost of revenue:

Cost of product and service revenue 1,146,442 1,410,270 770,459

Amortization of developed technology 14,558 14,558 14,558

Total cost of revenue 1,161,000 1,424,828 785,017

Gross profit 415,551 212,718 68,301

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General and administrative 159,535 150,777 80,974

Contingent consideration ( 4,507 ) 2,696 26,441

Change in fair value of contingent consideration 2,964 ( 4,507 ) 2,696

Depreciation and amortization 38,928 84,581 9,372

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Income (loss) from operations 214,124 ( 18,133 ) ( 24,741 )

Other income (expense)

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

Other (expense) income, net ( 1,015 ) 2,789 ( 905 )

Interest income 8,330 3,181 209

Legal settlement — 42,750 —

Foreign currency gain 1,155 — —

Foreign currency transaction (loss) gain, net ( 53 ) 1,155 —

Interest expense ( 44,229 ) ( 36,694 ) ( 35,684 )

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

Total other (expense) income ( 36,967 ) 13,181 ( 36,380 )

Income (loss) before income tax expense (benefit) 177,157 ( 4,952 ) ( 61,121 )

Income tax expense (benefit) 39,917 ( 9,384 ) ( 10,718 )

Net income (loss) 137,240 4,432 ( 50,403 )

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Net income (loss) $ 137,240 $ 4,432 $ ( 50,403 )

Change in foreign currency translation adjustments 8,425 — —

Foreign currency (1)

36,385 8,425 —

Comprehensive income (loss) $ 173,625 $ 12,857 $ ( 50,403 )

See accompanying Notes to Consolidated Financial Statements.

Array Technologies, Inc.

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

(in thousands)

For the year ended December 31, 2022

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

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

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

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

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

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

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

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

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

(1) There are no tax effects on foreign currency adjustments.

See accompanying Notes to Consolidated Financial Statements.

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(in thousands)

For the year ended December 31, 2021

Temporary Equity Permanent Equity

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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.

Balance, 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 and commitment fees 19 48,054 — — — — ( 48,054 ) — — ( 48,054 )

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

Array Technologies, Inc.

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

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock 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)

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)

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

Foreign currency translation — — — — — — — — 8,425 8,425

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

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 ) —

Equity-based compensation — — — — 729 1 14,540 — — 14,541

Preferred cumulative dividends plus accretion and commitment fees 26 51,690 — — — — ( 53,199 ) — — ( 53,199 )

Net income — — — — — — — 137,240 — 137,240

Foreign currency translation — — — — — — — — 36,385 36,385

Balance, December 31, 2023 432 $ 351,260 — $ — 151,242 $ 151 $ 344,517 $ ( 130,230 ) $ 44,810 $ 259,248

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Depreciation and amortization 40,268 86,501 11,388

Amortization of developed technology 14,558 14,558 14,558

Amortization of debt discount and issuance costs 10,570 6,857 15,036

Interest paid-in-kind — — 3,421

Gain on debt refinancing ( 457 ) — —

Equity-based compensation 14,540 14,982 13,757

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Warranty provision 4,666 4,152 516

Provision for inventory obsolescence ( 859 ) 990 1,225

Changes in operating assets and liabilities, net of acquisition

Write-down of inventories 6,431 ( 859 ) 990

Changes in operating assets and liabilities, net of business acquisition:

Accounts receivable 92,800 ( 76,984 ) ( 116,848 )

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Lease liabilities 1,177 3,784 221

Contingent consideration — — ( 25,000 )

Deferred revenue ( 111,986 ) 59,002 ( 50,619 )

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Purchase of property, plant and equipment ( 16,989 ) ( 10,619 ) ( 3,357 )

Retirement/disposal of PP&E 168 — —

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

Investment in equity security — ( 11,975 ) —

Investment in equity securities — — ( 11,975 )

Net cash used in investing activities ( 16,821 ) ( 384,437 ) ( 15,332 )

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Proceeds from common stock issuance — 15,885 120,645

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

Series A equity issuance costs and commitment fees ( 1,509 ) ( 1,893 ) ( 7,195 )

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

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Principal payments on term loan facility ( 74,300 ) ( 14,300 ) —

Proceeds from term loan facility — — 575,000

Principal payments on other debt ( 88,063 ) ( 23,935 ) ( 133,225 )

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

Payment of special distribution — — ( 589,000 )

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

Deferred offering costs — — ( 6,464 )

Contingent consideration payments ( 1,200 ) ( 1,483 ) ( 7,810 )

Debt issuance costs — — ( 6,590 )

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

Net cash (used in) provided by financing activities ( 101,761 ) 8,440 537,748

Effect of exchange rate changes on cash and cash equivalent balances 1,806 735 —

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Notes to Consolidated Financial Statements

Organization and Business

Organization, Business and Out-of-Period Adjustments

Array Technologies, Inc.

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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”).

On January 11, 2022, 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 .

Upon completion of the STI Acquisition, the Company began operating as two reportable operating segments:

the Array Legacy operating segment (“Array Legacy Operations”) and the newly acquired operations (the “STI Legacy Operations”) operating segment pertaining to STI.

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

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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.

Beginning in the third quarter of 2023, the Company reclassified amounts recorded for amortization of certain acquired intangible assets in prior presentations from Total operating expenses under the caption "Depreciation and amortization" to Total cost of revenue under the caption "Amortization of developed technology" in the consolidated statements of operations.

The Company believes this presentation enhances the comparability of the Company’s financial statements to industry peers.

This reclassification resulted in $ 14.6 million recorded to Amortization of developed technology within Total cost of revenue and a $ 14.6 million decrease to Depreciation and amortization within Total operating expenses during the year ended December 31, 2022.

This reclassification did not impact the Company’s operating income (loss), net income (loss) or earnings (loss) per share for any current or historical periods.

These reclassifications also did not impact the consolidated balance sheets or consolidated statements of cash flows for the dates and annual periods presented.

Revenue in 2023, excludes a Brazil value-added tax benefit, Imposto sobre Circulação de Mercadorias e Servicos (“ICMS”), that has been reclassified and included in cost of revenues in the current year.

For the year ended December 31, 2023, the Brazil ICMS value-added tax benefit was $ 23.2 million.

For the year ended December 31, 2022, an ICMS benefit of $ 12.3 million was included in revenues.

This reclassification in the current year had no impact on the Company’s gross profit, income (loss) from operations, net income or income (loss) per common share in the current period.

These reclassifications also did not impact the consolidated balance sheets or consolidated statements of cash flows.

Array Technologies, Inc.

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

Impact of COVID-19 Pandemic

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

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

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

Impact of the Ongoing Conflict in Ukraine

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

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

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

Impact of the Ongoing Russian-Ukraine Conflict

The ongoing Russian-Ukraine conflict 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 the ultimate severity or duration of the conflict, 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.

Impact of Attacks on Shipping in the Red Sea

Houthi rebels in Yemen have significantly stepped-up attacks against commercial vessels in the Bab-el-Mandeb strait between the Arabian peninsula and the Horn of Africa since late November of 2023, which has led to many shipping companies pausing shipments through the Suez Canal and the Red Sea.

Many of these shipments are being redirected around the Cape of Good Hope in South Africa, adding between 3,000 – 3,500 nautical miles to routes connecting Europe with Asia.

As an additional result of the reroute, certain ports could see crowding and delays in unloading shipments.

We do not yet know the duration of these disruptions or the severity of their impact on our operations, but we continue to monitor the situation and evaluate our procurement strategy and supply chain to reduce any negative impact on our business, financial condition and results of operations.

Inflationary pressures 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.

Foreign Currency Translation

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

dollars at period end exchange rates.

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

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

subsidiaries that use a U.S.

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

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

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

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

Vendor Rebates

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was enacted into law, which includes numerous green energy credits.

The 45X Advanced Manufacturing Production Tax Credit (“45X Credit”) was established as part of the IRA.

The 45X Credit is a per-unit tax credit that is earned over time for each clean energy component domestically produced and sold by a manufacturer.

The Company has, and will continue to, enter into arrangements with torque tube manufacturing vendors that produce 45X Credit eligible parts, in which the vendors agree to share a portion of the benefit received related to Array purchases, in the form of “Vendor Rebates”.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The Company accounts for these Vendor Rebates as a reduction of the purchase prices of the vendors’ products and therefore a reduction of inventory until the inventory is sold, at which time the Company recognizes such rebates as a reduction of cost of revenues on the consolidated statements of operations.

Rebates related to purchases that were made prior to the execution of the agreements are deferred and recognized as a reduction of the prices of future purchases.

During the three months ended December 31, 2023, the Company had accumulated a total of $ 49.9 million in Vendor Rebates from current year activity, of which $ 48.4 million was outstanding and included in Prepaid expenses and other, and $ 40.6 million of deferred consideration was included in Other current liabilities, on the consolidated balance sheet as of December 31, 2023.

Foreign Currency Translation

Our foreign subsidiaries have functional currencies that are different than our reporting currency.

When translating balances from the functional currency to the reporting currency, assets and liabilities are translated into U.S.

dollars at period end exchange rates, retained earnings is translated at historical rates, and income, expenses, and cash flow items are translated at average exchange rates prevailing during the period.

Translation adjustments for these subsidiaries are accumulated within accumulated other comprehensive income.

In situations when a foreign subsidiary has a local currency that is different than the functional currency, monetary assets and liabilities are translated into the functional currency at the period end exchange rates, and non-monetary assets and the related income statement effects are translated into the functional currency using historical rates.

Gains and losses that result from remeasurement from a local currency to the functional currency are included in earnings.

Cash and Cash Equivalents

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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

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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.

Trade receivables consist of uncollateralized customer obligations due under normal trade terms requiring payment within 30 to 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 Accounting Standards Updated (“ASU”) No.

2016-13, Financial Instruments - Credit Losses, 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.

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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.

As the financial conditions of these customers change, circumstances develop, or additional

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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

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

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

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

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Repair and maintenance costs are expensed as incurred.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Impairment of Long-Lived Assets

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Management determined there was no impairment for the years ended December 31, 2023, 2022 and 2021.

Goodwill and Indefinite-Lived Intangible Asset

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.

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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.

If the Company cannot determine if it is more likely than not that the fair value of a reporting unit is greater than its carrying value, a quantitative assessment is performed.

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.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

When determining the fair value of a reporting unit using the quantitative approach, we determine the fair value of the reporting unit using both a discounted cash flow (“DCF”) analysis and guideline publicly-traded companies (“GPC”) analysis to determine the fair value of the reporting unit.

The Company has one indefinite-lived intangible asset for a Trade name it acquired as part of a past acquisition.

The Company performs an annual impairment test on its Trade name indefinite-lived intangible asset, utilizing a qualitative or quantitative impairment analysis during the fourth quarter of each year.

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 investment is accounted for, in accordance with ASC 321 Investments — Equity Securities.

Because the securities do not have a readily determined fair value, they are valued at cost, less any impairment.

If the Company identifies an observable price change in an orderly transaction, the Company will measure the investment at fair value as of the date the observable transaction occurred.

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

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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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.

Amortization expense of debt discount and deferred issuance costs was $ 10.6 million, $ 6.9 million and $ 15.0 million (including $ 9.6 million in write-offs in connection with unscheduled principal payoffs that occurred in February and August of 2021), for the years ended December 31, 2023, 2022 and 2021, respectively.

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.

In accordance with ASC 606, the Company recognizes revenues from the sale of solar tracking systems, parts, installation services, extended warranties on solar tracker system components and software licenses along with associated maintenance and support.

The Company 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.

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.

Further, the Company assesses whether control of the product or services promised under the contract is transferred to the customer at a point in time or over time.

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.

The Company’s contracts for specific solar tracker system projects with customers are predominantly accounted for as a single performance obligation, because the Company is integrating the solar tracking system components and related services as part of a single project.

The Company’s performance creates and enhances an asset that the customer controls as the Company performs under the contract, which is principally as tracker system components are delivered to the designated project site.

The Company sources the component parts from third party manufacturers, it obtains control and receives title of such parts before transferring them to the customer because the Company is responsible for fulfillment to its customer.

The Company’s engineering services and professional services are interdependent with the component parts whereby the parts form an input into a combined output for which it is the principal, and the Company could redirect the parts before they are transferred to the customer if needed.

The customer owns the work-in-process over the course of the project and the Company’s performance enhances a customer-controlled asset, resulting in the recognition of the performance obligation over time.

Array Technologies, Inc.

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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 costs of materials and hardware components are recognized as incurred, which is typically upon delivery to the customer site or upon transfer of control while in transit.

For contracts with customers that result in 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.

These contracts include contracts for the sale of components, contracts with installation services, solar tracker systems sold with an extended warranty, and contracts that include the sale of software and maintenance.

For all years presented, the transaction price associated with extended warranties and the sale of software and maintenance was not material.

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.

For contracts related to the sale of components as opposed to contracts to provide an integrated solar tracker project, the Company’s obligation to the customer is to deliver components that are used by the customer to create a tracker system and does not include engineering or other professional services or the obligation to provide such services in the future.

Under these arrangements, each component is a distinct performance obligation, and often the components are delivered in batches at different points in time.

The Company estimates the standalone selling price (“SSP”) of each performance obligation based on a cost-plus margin approach.

Revenue allocated to a component is recognized at the point in time that control of the component transfers to the customer, which is usually upon delivery to the customer’s site.

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.

Bill and Hold Arrangements

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

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.

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

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

These assumptions include the cost and

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.

availability of materials.

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

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

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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.

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

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 timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivable for goods or services 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.

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

Practical Expedients and Exemptions

The Company has elected to adopt certain practical expedients and exemptions as allowed under ASC 606, such as (i) recording sales commissions as incurred because the amortization period is less than one year, (ii) not adjusting for the effects of significant financing components when the contract term is less than one year, (iii) excluding collected sales tax amounts from the calculation of revenue and (iv) accounting for the costs of shipping and handling activities that are incurred after the customer obtains control of the product as fulfillment costs rather than a separate service provided to the customer for which consideration would need to be allocated.

Warranty Obligations

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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.

A valuation allowance is provided to reduce deferred income tax assets if it is more likely than not that all, or some portion,

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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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.

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.

The Company does not have any uncertain tax positions.

Equity-Based Compensation

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

The Series A Redeemable Perpetual Preferred Stock 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 Series A Redeemable Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Shares”) issued in connection with the SPA as described in Note 12 – 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.

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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.

Diluted EPS takes into account the potential

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

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

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At December 31, 2022, the Company’s largest and five largest customers constituted 7.9 % and 23.4 % of trade accounts receivable, respectively.

During the year ended December 31, 2023, one customer accounted for 13.4 % of total revenue.

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.

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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.

The carrying value of the Company’s notes payable approximate their fair values, as they are based on current market rates at which the Company could borrow funds with similar terms.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

Recent Accounting Pronouncements

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 11 – Debt ).

There were no other changes to the agreement.

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

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments in this ASU will require public entities to disclose significant segment expenses and other segment items and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually.

Public entities with a single reportable segment will also be required to provide the new disclosures and all the disclosures required under ASC 280.

The guidance is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments in this ASU should be applied retrospectively to all periods presented unless it is impracticable.

The Company is currently assessing the impact of the guidance on its financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

The standard will become effective for the Company’s fiscal year ended December 31, 2025, with early adoption permitted.

The Company is currently assessing the impact of the new guidance on the its consolidated financial statements.

Acquisition of STI

8 unchanged sentences

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.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

35 unchanged sentences

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

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.

16 unchanged sentences

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.

The amounts of revenue and net income of STI included in the Company’s consolidated statement of operations from the Acquisition Date through December 31, 2023 are $ 773.4 million and $ 9.9 million, respectively.

Pro Forma Financial Information (Unaudited)

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Accounts receivable consists of the following (in thousands):

2023 2022 2021

Accounts receivable $ 335,976 $ 423,071 $ 236,149

2 unchanged sentences

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.

Such retention amounts were $ 24.0 million, $ 47.4 million, and $ 13.5 million as of December 31, 2023, 2022, and 2021, respectively.

All retention amounts outstanding as of December 31, 2023, 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):

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

2023 2022 2021

Beginning balance $ ( 1,888 ) $ ( 140 ) $ ( 663 )

6 unchanged sentences

Finished goods 75,350 166,585

Reserve for excess or obsolete inventory ( 8,274 ) ( 7,415 )

Total $ 161,964 $ 233,159

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.

The Company values a portion of its inventory using the moving average cost method that approximates the First In, First Out method (“FIFO”).

As of December 31, 2023, inventory valued using moving average cost and FIFO was $ 129.5 million and $ 32.5 million, respectively.

As of December 31, 2022, inventory valued using moving average cost and FIFO, was $ 209.3 million and $ 23.8 million, respectively.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

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

Increases ( 4,044 ) ( 1,766 )

Write-offs 3,185 776

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

Property, Plant and Equipment

7 unchanged sentences

Hardware and software 3 - 5

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

Construction in progress N/A 6,525 5,142

Total 53,978 40,993

1 unchanged sentence

Property, plant and equipment, net $ 31,886 $ 23,174

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.

Depreciation expense was $ 3.5 million, $ 2.6 million and $ 2.4 million for the years ended December 31, 2023, 2022 and 2021, respectively, of which $ 1.3 million, $ 1.6 million and $ 2.0 million, respectively, was included in cost of revenues and $ 2.2 million, $ 1.0 million and $ 0.4 million, respectively, was included in depreciation and amortization in the accompanying consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021.

Goodwill and Other Intangible Assets

At December 31, 2022, 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):

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

These reportable segments are separate operating segments and reporting units.

Changes in the carrying amount of goodwill by reporting unit during the year ended December 31, 2023, consisted of the following (in thousands):

Array Legacy Operations (1)

STI Operations Total

Beginning balance

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

Adjustment to goodwill — ( 2,000 ) ( 2,000 )

Foreign currency translation — 21,407 21,407

Ending balance

$ 69,727 $ 365,864 $ 435,591

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

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.

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 2022.

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

The Company performs an annual goodwill impairment test, utilizing a qualitative or quantitative impairment analysis during the fourth quarter of each year.

The results of this analysis indicated that goodwill was not impaired as of December 31, 2023 and 2022.

Other Intangible Assets

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Developed technology 14 $ 203,800 $ 203,800

Customer relationship 10 321,935 89,500

Customer relationships 10 336,134 321,935

Backlog 1 54,438 51,015

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Developed technology 108,905 94,347

Customer relationship 81,268 49,057

Customer relationships 115,444 81,268

Backlog 54,322 49,507

2 unchanged sentences

Total amortizable intangibles, net 340,096 376,064

Non-amortizable costs:

Non-amortizable:

Trade name 10,300 10,300

Total other intangible assets, net $ 350,396 $ 386,364

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.

Amortization expense related to intangible assets was $ 51.3 million, $ 98.2 million and $ 23.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, of which $ 14.6 million was included in amortization of developed technology, a component of cost of revenue, in all three periods.

The remaining amortization expense of $ 36.7 million, $ 83.6 million and $ 8.9 million, respectively, was included in depreciation and amortization, on the accompanying consolidated statements of operations.

Array Technologies, Inc.

3 unchanged sentences

Thereafter 116,767

The Company performs an annual impairment test on its Trade name indefinite-lived intangible asset, utilizing a qualitative or quantitative impairment analysis during the fourth quarter of each year.

The results of this analysis indicated that its Trade name was not impaired as of December 31, 2023 and 2022.

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

56 unchanged sentences

Tax credits ( 407 ) ( 421 ) ( 620 )

Effect of CARES Act — — ( 6,608 )

income taxed at different rate than U.S.

statutory rate 2,658 ( 4,274 ) —

tax incentives ( 4,183 ) — —

indirect tax incentives ( 5,035 ) ( 4,183 ) —

Foreign derived intangible income benefit ( 403 ) ( 1,668 ) —

5 unchanged sentences

$ 39,917 $ ( 9,384 ) $ ( 10,718 )

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.

The Company receives a non-U.S.

indirect tax incentive which is excluded from the local income tax base, resulting in a reduction of the overall effective tax rate of the Company.

The income tax benefits from the non-U.S.

indirect tax incentive is $ 5.0 million and 4.2 million for 2023 and 2022, respectively.

Due to recent legislation, effective in 2024 these non-U.S.

indirect tax incentives will no longer be excluded from the local income tax base.

As of December 31, 2023, the Company has federal income tax net operating loss (“NOL”) carryforwards of approximately $ 6.8 million that do not expire, state income tax NOL carryforwards of approximately $ 2.3 million that will expire in future years beginning in 2029, state tax credits of approximately $ 0.3 million that will expire in future years beginning in 2033, and certain foreign NOLs that are immaterial.

As of December 31, 2022, the Company has federal income tax 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 certain foreign NOLs that are immaterial.

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

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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.

Federal, state and foreign net operating loss would be realized due to type and location of future earnings.

As a result, the Company has a valuation allowance of $ 2.4 million and $ 1.4 million for the years ended December 31, 2023 and 2022.

A valuation allowance of $ 1.8 million was established against certain of STI’s acquired deferred income tax assets.

Array Technologies, Inc.

18 unchanged sentences

At December 31, 2023, management believed that sufficient liquidity was available in the U.S.

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

The Company may 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.

however, any repatriation activities are not expected to result in a significant incremental tax liability to the Company.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar Two), with certain aspects of Pillar Two effective January 1, 2024 and other aspects effective January 1, 2025.

While it is uncertain whether the U.S.

will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar Two.

We currently do not expect Pillar Two to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows.

Additionally, the IRA created a 15% corporate alternative minimum tax on certain large corporations and a 1% excise tax on certain corporate stock repurchases.

These provisions, which became effective for Company beginning on January 1, 2023, did not have a material impact on the Company during the year ended December 31, 2023.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Accrued Expenses and Other

Accrued expenses and other consisted of the following (in thousands):

Unvouchered payables

$ 21,548 $ 11,562

Accrued payroll expenses

15,778 11,488

Accrued interest

Non-income taxes payable

22,602 27,840

Accrued expenses and other

$ 70,211 $ 54,895

Accrued Warranty Reserve

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

2023 2022 2021

Beginning balance $ 5,476 $ 3,192 $ 3,049

5 unchanged sentences

Notes to Consolidated Financial Statements

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

Senior Secured Credit Facility:

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

Term loan facility $ 238,175 $ 312,475

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”).

Total secured credit facility 238,175 312,475

Convertible notes 425,000 425,000

Other debt 39,889 51,951

Total principal 703,064 789,426

Unamortized discount and issuance costs, total ( 20,644 ) ( 30,383 )

Current portion of debt ( 21,472 ) ( 38,691 )

Total long-term debt, net of current portion $ 660,948 $ 720,352

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 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 Third Amendment replaced the former discontinued Senior Secured Credit Facility reference rate of LIBOR, with the comparable active reference rate, SOFR.

The outstanding balance on the Term Loan Facility was $ 238.2 million and $ 312.5 million as of December 31, 2023 and 2022, 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

The Term Loan Facility is presented in the accompanying consolidated balance sheets, net of debt discount and issuance costs of $ 11.3 million and $ 19.1 million at December 31, 2023 and 2022, respectively.

The Company had no outstanding balance under the revolving credit facility as of both December 31, 2023 and 2022, $ 24.8 million and $ 38.8 million in standby letters of credit as of December 31, 2023 and 2022, respectively, and availability of $ 175.2 million and $ 161.2 million as of December 31, 2023 and 2022, respectively.

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.

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 the Company’s election, to either, (x) for SOFR Loans at Adjusted Term SOFR (subject to a floor of 0.50 %) 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 %.

Applicable interest rate at December 31, 2023 and 2022, were 10.15 % and 7.94 %, respectively.

For the years ended December 31, 2023 and 2022, interest expense related to the Term Loan Facility was $ 32.4 million and $ 21.2 million, respectively, of which, $ 24.5 million and $ 17.0 million, respectively, was contractual interest and $ 7.9 million and $ 4.2 million, respectively, was amortization of debt discount and issuance costs.

The discount and issuance costs are amortized over the life of the debt using the effective interest rate method.

Prepayments and Amortization

11 unchanged sentences

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.

The obligations under the Senior Secured Credit Facility are guaranteed by ATI Investment Sub, Inc., a wholly owned subsidiary of the Company, and its wholly owned domestic subsidiaries other than certain immaterial

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.

subsidiaries and other excluded subsidiaries.

(f/k/a Array 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):

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 %.

On December 3, 2021 and December 9, 2021, the Company completed a $ 425 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 %.

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.

For each of the years ended December 31, 2023 and 2022, interest expense related to the Convertible Notes was $ 6.1 million, of which, $ 4.2 million was contractual interest and $ 1.9 million was 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 are senior unsecured obligations of the Company and will 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.

As of December 31, 2023 and 2022, the principal balance of the Convertible Notes was $ 425.0 million with unamortized discount and issuance costs of $ 9.4 million and $ 11.2 million, respectively, for a net carrying amount of $ 415.6 million and $ 413.8 million, respectively.

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

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(1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2022 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price then in effect on each applicable trading day;

(2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $ 1,000 principal amount of Notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate for the Convertible Notes on each such trading

Array Technologies, Inc.

Notes to Consolidated Financial Statements

(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.

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

2 unchanged sentences

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 was initially, and remains currently, 41.9054 shares of the Company’s common stock per $ 1,000 principal amount of the Convertible Notes, which is equivalent to a conversion price of approximately $ 23.86 per share of common stock or 10.1 million shares.

The conversion price of the Convertible Notes represents 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.

2 unchanged sentences

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.

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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, $ 23.86 , and (b) divided by the then-current market price of its common stock.

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.

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Although intended to reduce the net number of shares of common stock issued after a conversion of the Convertible Notes, the Capped Calls were separately negotiated transactions, are not a part of the terms of the Convertible Notes, and do not affect the rights of the holders of the Convertible Notes.

The Capped Calls meet the criteria for equity classification because they are indexed to the Company’s common stock and the Company has discretion to settle the Capped Calls in shares or cash.

As a result, the amount paid for the Capped Calls was recorded as a reduction to additional paid-in capital.

The Capped Calls are excluded from the calculation of diluted net income (loss) per share attributable to common stockholders as their effect is antidilutive.

The Company made a tax election to integrate the Convertible Notes and the Capped Calls.

The accounting impact of this tax election makes the Capped Calls deductible as original issue discount interest for tax purposes over the term of the note, and results in a $ 10.8 million deferred tax asset recorded as an adjustment to additional paid-in capital on the consolidated balance sheets as of December 31, 2022.

In connection with the STI Acquisition, the Company assumed the debt obligations of STI outstanding with various local banking and credit institutions (“Other Debt”).

As of December 31, 2022, the total outstanding balance on these debt obligations was $ 52.0 million, of which, approximately $ 20.3 million is subject to fixed interest rates ranging from 0.55 % to 4.52 %.

The remaining $ 31.7 million is subject to variable interest rates ranging from 1.99 % to 3.96 %.

Total interest expense for Other Debt in 2022 was $ 2.4 million.

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 as a result, established as deferred income tax asset of $ 10.8 million at inception, with an offsetting adjustment to additional paid-in capital on the consolidated balance sheets as of December 31, 2022.

As a result, the amount paid for the Capped Calls was recorded as a reduction to additional paid-in capital.

During the three months ended March 31, 2023, the Company began to account for the Capped Calls as derivative assets, with subsequent changes in fair value being recorded through earnings.

The impact of reversing the mark to market adjustments in the interim periods for the Capped Calls and the Put

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Option referenced in Note 12 – Redeemable Perpetual Preferred Stock , was not material to the condensed consolidated statements of operations for each of the interim periods for 2023.

Other debt consists of the debt obligations of STI (“Other Debt”).

Interest rates on other debt range from 0.55 % to 4.50 % annually.

Of the $ 39.9 million Other debt balance as of December 31, 2023, $ 29.5 million is denominated in Euros and $ 10.4 million is denominated in Brazilian Real.

Aggregate Debt Maturities

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2024 $ 21,472

Thereafter 425,000

Redeemable Perpetual Preferred Stock

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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.

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 $ 776 (the “Prepaid Forward Contract”).

The Company used the net proceeds from the initial Closing 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 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 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.

The Series A Shares are

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

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.

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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.

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 $ 25.3 million and $ 23.2 million for the years ended December 31, 2023 and 2022, respectively.

As a result, the Company reclassified the derivative asset recognized during the interim periods of 2023 as a reduction of equity and also reversed the related fair value adjustments.

The impact of reversing the mark to market adjustments in the interim periods for the Put Option and Capped Calls referenced in Note 11 – Debt , was not material to the condensed consolidated statements of operations for each of the interim periods for 2023.

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.

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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”).

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

As used herein, “Liquidation Preference” means, with respect to 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 year ended December 31, 2023, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 26.4 million.

As of December 31, 2023 total accrued and unpaid dividends were $ 32.8 million.

The Series A Shares have similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock .

As a result, the discount on Series A Shares is considered an unstated dividend cost that is amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount

Array Technologies, Inc.

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.

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.

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

During the six months ended June 30, 2023, the Company paid the Purchasers a per annum cash commitment fee totaling $ 1.5 million on the unpurchased portion of the Put Option.

The Put Option expired effective June 30, 2023.

Ranking and Liquidation Preference

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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.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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

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The Holders of Series A Shares do not otherwise have any voting rights.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Common and Preferred Stock

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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.

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):

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

The following table presents the Company’s disaggregated revenues (in thousands):

Year Ended December 31,

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Total revenue $ 1,576,551 $ 1,637,546 $ 853,318

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):

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Contract assets consisting of unbilled receivables are recorded within accounts receivable, net 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):

2023 2022 2021

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

The changes in contract liabilities (i.e., deferred revenue) relate to advanced orders and

Array Technologies, Inc.

Notes to Consolidated Financial Statements

payments received by the Company.

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):

2 unchanged sentences

During the years ended December 31, 2023 and 2022, the Company converted $ 161.2 million and $ 84.7 million deferred revenue to revenue, respectively, which represented 90 % and 85 % 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.

Bill-and-Hold Arrangements

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, 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.

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

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.

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 year ended December 31, 2023, the Company recognized $ 38.8 million in revenue from three customers for the sale of goods and services that contained bill-and-hold obligations such as storage, handling and other custodial duties.

During the year ended December 31, 2022 and 2021, the Company recognized $ 13.7 million, and $ 168.9 million, respectively, from one customer that also contained bill-and-hold obligations.

Remaining Performance Obligations

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Income (loss) per share $ 0.56 $ ( 0.29 ) $ ( 0.51 )

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 2,362,982 were not included as their effect was anti-dilutive for the year ended December 31, 2023.

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.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes for the years ended December 31, 2023, 2022 and 2021, 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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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”).

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.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

(the “2021 Follow-On Offering”) during the putative class period of October 14, 2020 through May 11, 2021.

An amended class action complaint was filed on December 7, 2021 containing allegations similar to those in the original complaint, and additional allegations regarding misstatements and/or omissions in:

(1) 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 (2) in the Company’s November 5, 2020 and March 9, 2021 earnings calls (“Consolidated Amended Complaint”).

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”).

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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.

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:

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

On July 5, 2023, the Court granted the Company’s motion to dismiss 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 (the “Second Circuit Appeal”).

Opening briefs have been filed in the Second Circuit Appeal and appellant may file a reply brief on or before March 8, 2024.

The stays in both the Consolidated SDNY Derivative Action and the Consolidated Delaware Derivative Action remain in place following the dismissal of the Plymouth Action during the pendency of the Second Circuit Appeal.

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.

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entered into a TRA with the former majority shareholder of the Company.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

valued based on the future expected payments under the agreement.

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

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

1 unchanged sentence

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 TRA is accounted for as contingent consideration and changes in the fair value of the TRA are recognized in earnings.

As of December 31, 2023 and 2022, the fair value of the TRA was $ 10.4 million and $ 8.6 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 .

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the activity related to our estimated TRA obligation (in thousands):

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Balance, December 31, 2022 8,587

Fair value adjustment ( 4,507 )

Payments ( 1,200 )

Fair value adjustment 2,976

Balance, December 31, 2023 $ 10,363

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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 TRA will continue until 2030, or the Company elects early termination under the terms described in the TRA.

The current and noncurrent amounts of the TRA Liability are presented as Current portion of contingent consideration and Contingent consideration, net of current portion, respectively, on the consolidated balance sheets.

The undiscounted future expected payments under the TRA are as follows (in thousands):

Thereafter 5,795

Earn-Out Liability

The Company had a liability to its selling stockholders for contingent consideration consisting of earn-out payments in the form of cash upon the occurrence of certain events, including the sale, transfer, assignment, pledge, encumbrance, distribution or disposition of shares held by the acquirer to a third-party;

initial public

Array Technologies, Inc.

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.

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.

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

December 31, 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.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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.

Other Debt totaling $ 39.9 million, consists of variable rate obligations only.

The carrying value of the $ 39.9 million variable rate obligations approximate fair value due to the variable nature of the interest rates.

Equity-Based Compensation

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

RSU activity under the 2020 Plan was as follows:

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Outstanding non-vested, December 31, 2023 1,670,509 $ 15.44

Array Technologies, Inc.

Notes to Consolidated Financial Statements

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 with a market condition for each grant year:

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

Volatility 90 % 60 %

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Dividend yield — % — %

Array Technologies, Inc.

Notes to Consolidated Financial Statements

PSU activity under the 2020 Plan was as follows:

PSU activity under the 2020 Plan during the years ended December 31, 2023, 2022 and 2021, was as follows:

Number of Shares Weighted Average Grant Date Fair Value

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Shares granted (1)

177,472 $ 28.25

Shares vested — $ —

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Shares granted (1)

466,916 $ 10.88

Shares vested — $ —

1 unchanged sentence

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.

Shares granted (1)

263,594 $ 19.22

Shares vested — $ —

Shares forfeited ( 35,514 ) $ 15.47

Outstanding non-vested, December 31, 2023 692,473 $ 14.54

(1) Number of PSUs granted is based on the attainment level of performance metric(s), by key executive officers and employees of the Company, estimated to be probable at the grant date.

The actual number of shares to be issued will depend on the relative attainment of the performance metrics.

For the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 14.6 million, $ 14.8 million and $ 16.3 million, respectively, in equity-based compensation, which is included in General and administrative expense on the consolidated statements of operations.

At December 31, 2023, the Company had $ 19.8 million of unrecognized compensation costs related to RSUs and PSU, which are expected to be recognized over a weighted average of 1.9 years and 2.1 years, respectively.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Class B Units and Class C Units of Former Parent

12 unchanged sentences

On March 23, 2021, in connection with the closing of the 2021 Follow-On Offering, all of the outstanding Class B and Class C Units of Former Parent were immediately vested per the terms of the equity awards, resulting in the Company accelerating the recognition of equity-based compensation expense of $ 8.9 million for the year ended December 31, 2021.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Employee Stock Purchase Plan

2 unchanged sentences

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.

During the years ended December 31, 2023 and 2022, the Company recorded $ 0.2 million and $ 0.1 million, respectively, in equity-based compensation related to the Employee Stock Purchase Plan.

We have a defined contribution plan (“401(k) Plan”) which allows eligible employees to contribute up to 75 % of their compensation up to the Internal Revenue Service maximum.

3 unchanged sentences

We have made no discretionary contributions to the 401(k) Plan to date.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Effective January 1, 2021, the Company adopted ASC 842 Leases (“ASC 842”) using the modified retrospective approach.

10 unchanged sentences

Total lease liabilities $ 25,219 $ 20,406

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,

2023 2022 2021

Operating lease expense $ 8,188 $ 7,701 $ 6,635

8 unchanged sentences

Total lease liabilities $ 25,219

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Other information pertaining to operating leases consists of the following:

Year Ended December 31,

Weighted average remaining lease-term 4.2 years 3.8 years

2023 2022 2021

Weighted average remaining lease-term 5.7 years 4.2 years 3.8 years

Weighted average discount rate 7.9 % 5.4 % 5.0 %

1 unchanged sentence

Year Ended December 31,

2023 2022 2021

Operating cash flows from operating leases $ 7,911 $ 5,380 $ 6,644

1 unchanged sentence

Lease liabilities arising from obtaining right-of-use assets $ 10,562 $ 12,558 $ 17,363

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.

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

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;

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 (“CODM”) in deciding how to allocate resources and in assessing performance.

The CODM is the Chief Executive Officer of the Company.

Based on the way the CODM allocates resources and assess performance, the Company has concluded that it has two operating and reporting segments;

Array Legacy Operations and STI Operations.

2 unchanged sentences

2023 2022 2021

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

Array Legacy Operations $ 1,172,827 $ 1,267,883 $ 853,318

STI Operations 403,724 369,663 —

Total $ 1,576,551 $ 1,637,546 $ 853,318

Gross Profit:

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.

Array Legacy Operations $ 317,605 $ 153,612 $ 68,301

STI Operations 97,946 59,106 —

Total $ 415,551 $ 212,718 $ 68,301

The total assets of the Array Legacy Operations segment are $ 1,437.6 million or approximately 84 % of total consolidated assets.

The total assets of the STI Operations segment are $ 269.1 million or approximately 16 % of total consolidated assets.

Array Technologies, Inc.

Notes to Consolidated Financial Statements

The following table presents revenues by geographic region, based on the customers project location (in thousands):

5 unchanged sentences

Australia 20,842 9,429 5,509

Rest of the world 68,297 13,889 22,195

Remainder 32,517 68,297 13,889

Total revenue $ 1,576,551 $ 1,637,546 $ 853,318

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):

3 unchanged sentences

Australia 554 1

Rest of the world 1,032 733

Remainder 1,595 1,032

Total property, plant and equipment, net $ 31,886 $ 23,174

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.

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

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

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

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

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

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

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

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

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

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)

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

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

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)

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

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)

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

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)

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

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)

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

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)

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended

March 31, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net loss $ ( 22,054 ) $ ( 3,883 ) $ ( 25,937 )

Change in foreign currency translation adjustments ( 9,011 ) 65,686 56,675

Comprehensive income (loss) $ ( 31,065 ) $ 61,803 $ 30,738

Consolidated Statements of Comprehensive Loss

Three Months Ended

June 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ ( 5,226 ) $ 202 $ ( 5,024 )

Change in foreign currency translation adjustments ( 29,718 ) ( 15,490 ) ( 45,208 )

Comprehensive loss $ ( 34,944 ) $ ( 15,288 ) $ ( 50,232 )

Consolidated Statements of Comprehensive Income

Three Months Ended

September 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ 40,822 $ ( 178 ) $ 40,644

Change in foreign currency translation adjustments ( 34,106 ) 3,299 ( 30,807 )

Comprehensive income $ 6,716 $ 3,121 $ 9,837

Consolidated Statements of Comprehensive Income (Loss)

Six Months Ended

June 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net loss $ ( 27,280 ) $ ( 3,681 ) $ ( 30,961 )

Change in foreign currency translation adjustments ( 38,729 ) 50,196 11,467

Comprehensive income (loss) $ ( 66,009 ) $ 46,515 $ ( 19,494 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Comprehensive Income (Loss)

Nine Months Ended

September 30, 2022

(in thousands)

As Previously Reported Restatement Adjustment As Restated

Net income (loss) $ 13,542 $ ( 3,859 ) $ 9,683

Change in foreign currency translation adjustments ( 72,835 ) 53,495 ( 19,340 )

Comprehensive income (loss) $ ( 59,293 ) $ 49,636 $ ( 9,657 )

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Changes in Redeemable Perpetual Preferred Stock and Stockholders’ Equity (Deficit) - Three Months Ended March 31, 2022

Temporary Equity Permanent Equity

(in thousands, share amounts)

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

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

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

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)

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

Balance at March 31, 2022 — $ — — $ — — $ — $ — $ ( 3,883 ) $ 65,686 $ 61,803

Net income — — — — — — — 202 — 202

Other comprehensive loss — — — — — — — — ( 15,490 ) ( 15,490 )

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Equity-based compensation — — — — 105 — 2,944 — — 2,944

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees — — — — — — ( 380 ) — — ( 380 )

Preferred cumulative dividends plus accretion 13 12,182 — — — — ( 12,182 ) — — ( 12,182 )

Net loss — — — — — — — ( 5,024 ) — ( 5,024 )

Other comprehensive loss — — — — — — — — ( 45,208 ) ( 45,208 )

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

Array Technologies, Inc.

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)

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

Balance at June 30, 2022 — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

Net loss — — — — — — — ( 178 ) — ( 178 )

Other comprehensive loss — — — — — — — — 3,299 3,299

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,859 ) $ 53,495 $ 49,636

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

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

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)

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

Balance, December 31, 2021 — $ — — $ — — $ — $ — $ — $ — $ —

Net loss — — — — — — — ( 3,681 ) — ( 3,681 )

Other comprehensive income — — — — — — — — 50,196 50,196

Total Adjustments — $ — — $ — — $ — $ — $ ( 3,681 ) $ 50,196 $ 46,515

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Equity-based compensation — — — — — — 7,357 — — 7,357

Issuance of Series A Redeemable Perpetual Preferred Stock, net of fees 50 32,724 — — 15,252 15 215,483 — — 215,498

Issuance of common stock, net — — — — — — — — — —

Preferred cumulative dividends plus accretion 13 23,788 — — — — ( 23,788 ) — — ( 23,788 )

Net loss — — — — — — — ( 30,961 ) — ( 30,961 )

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

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

Array Technologies, Inc.

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)

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

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

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

Array Technologies, Inc.

Notes to Consolidated Financial Statements

Consolidated Statements of Cash Flows

Three Months Ended

March 31, 2022

(in thousands)

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

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)

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

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)

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

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

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

What changed 10-K

Item 9A. Controls and Procedures