What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-09 compared with 2023-11-07 · 267 added, 285 removed, 397 unchanged (58% of the section changed)

3 unchanged sentences

(in thousands, except per share and share amounts)

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets

3 unchanged sentences

Inventories 178,695 161,964

Income tax receivables 367 3,532

Prepaid expenses and other 78,884 89,085

4 unchanged sentences

Deferred income tax assets 13,854 15,870

Derivative assets 64,130 —

Other assets 49,726 40,717

16 unchanged sentences

Long-term debt, net of current portion 657,708 660,948

Total liabilities 1,033,297 1,096,233

Array Technologies, Inc.

1 unchanged sentence

(in thousands, except per share and share amounts)

September 30, 2023 December 31, 2022

Total liabilities 1,162,363 1,282,201

March 31, 2024 December 31, 2023

Commitments and contingencies (Note 11)

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

425,956 and 406,389 shares issued as of September 30, 2023 and December 31, 2022, respectively;

liquidation preference of $ 493.1 million and $ 493.1 million at respective dates

Series A Redeemable Perpetual Preferred Stock of $ 0.001 par value;

500,000 authorized;

439,596 and 432,759 shares issued as of March 31, 2024 and December 31, 2023, respectively;

liquidation preference of $ 493.1 million at both dates

364,762 351,260

13 unchanged sentences

(in thousands, except per share amounts)

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

2023 2022 2023 2022

Three Months Ended March 31,

Revenue $ 153,403 $ 376,773

9 unchanged sentences

Total operating expenses 46,676 50,082

Income (loss) from operations 40,205 17,194 183,904 ( 34,482 )

Other (expense) income:

Other (expense), net ( 446 ) ( 1,092 ) ( 127 ) ( 2,295 )

Income from operations 8,414 47,458

Other income, net 814 194

Interest income 3,680 1,231

Legal settlement — 42,750 — 42,750

Foreign currency gain (loss) 207 ( 159 ) 273 1,968

Change in fair value of derivative assets 116 — ( 1,140 ) —

Foreign currency loss ( 499 ) ( 194 )

Interest expense ( 8,940 ) ( 10,731 )

Total other (expense) income ( 9,762 ) 33,446 ( 30,242 ) 20,982

Income (loss) before taxes 30,443 50,640 153,662 ( 13,500 )

Income tax expense (benefit) 7,229 9,996 39,508 ( 23,183 )

Total other expense, net ( 4,945 ) ( 9,500 )

Income before income tax expense 3,469 37,958

Income tax expense 1,304 8,323

Net income 2,165 29,635

Preferred dividends and accretion 13,502 12,484

Net income (loss) to common shareholders $ 10,123 $ 28,387 $ 75,795 $ ( 26,362 )

Income (loss) per common share

Net (loss) income to common shareholders $ ( 11,337 ) $ 17,151

(Loss) income per common share

Basic $ ( 0.07 ) $ 0.11

3 unchanged sentences

Diluted 151,351 151,795

Array Technologies, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except per share amounts)

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

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

2023 2022 2023 2022

Three Months Ended March 31,

Net income $ 2,165 $ 29,635

Change in foreign currency translation adjustments (1)

Foreign currency translation (1)

( 19,242 ) 13,872

Comprehensive income (loss) $ 719 9,837 $ 129,443 $ ( 9,657 )

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

Comprehensive (loss) income $ ( 17,077 ) $ 43,507

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

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Three Months Ended September 30, 2023

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

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

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

Equity-based compensation — — — — 22 — 3,383 — — 3,383

Preferred cumulative dividends plus accretion 7 13,091 — — — — ( 13,091 ) — — ( 13,091 )

Net income — — — — — — — 23,214 — 23,214

Other comprehensive loss — — — — — — — — ( 22,495 ) ( 22,495 )

Balance at September 30, 2023 426 $ 337,929 — $ — 151,071 $ 151 $ 407,916 $ ( 153,316 ) $ 23,714 $ 278,465

Array Technologies, Inc.

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

(in thousands)

Three Months Ended September 30, 2022

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Loss

Total Stockholders’ Equity

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

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 at September 30, 2022 400 $ 287,561 — — 150,334 $ 150 $ 392,862 $ ( 262,219 ) $ ( 19,340 ) $ 111,453

Array Technologies, Inc.

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

(in thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Temporary Equity Permanent Equity

3 unchanged sentences

Equity-based compensation — — — — 485 4,277 — — 4,277

Correction of the Capped Call and Put Option errors (see Note 1) — — — — — — 52,914 — — 52,914

Tax withholding related to vesting of equity-based compensation — — — — — — ( 1,722 ) — — ( 1,722 )

Preferred cumulative dividends plus accretion 7 13,502 — — — — ( 13,502 ) — — ( 13,502 )

Net income — — — — — — — 2,165 — 2,165

Other comprehensive income — — — — — — — — 15,289 15,289

Balance at September 30, 2023 426 $ 337,929 — $ — 151,071 $ 151 $ 407,916 $ ( 153,316 ) $ 23,714 $ 278,465

Foreign currency translation — — — — — — — — ( 19,242 ) ( 19,242 )

Balance at March 31, 2024 439 $ 364,762 — $ — 151,727 $ 151 $ 333,570 $ ( 128,065 ) $ 25,568 $ 231,224

Array Technologies, Inc.

1 unchanged sentence

(in thousands)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Temporary Equity Permanent Equity

4 unchanged sentences

Equity-based compensation — — — — 310 — 3,366 — — 3,366

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 7 12,484 — — — — ( 13,235 ) — — ( 13,235 )

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

Net income — — — — — — — 29,635 — 29,635

Other comprehensive income — — — — — — — — ( 19,340 ) ( 19,340 )

Balance at September 30, 2022 400 $ 287,561 — $ — 150,334 $ 150 $ 392,862 $ ( 262,219 ) $ ( 19,340 ) $ 111,453

Foreign currency translation — — — — — — — — 13,872 13,872

Balance at March 31, 2023 413 $ 312,054 — $ — 150,823 $ 150 $ 373,307 $ ( 237,835 ) $ 22,297 $ 157,919

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

Net income $ 2,165 $ 29,635

Adjustments to net income:

Provision for (recovery of) bad debts ( 117 ) 660

Deferred tax expense (benefit) 284 ( 36,002 )

Adjustments to net (loss) income:

Provision for bad debts 896 233

Deferred tax (benefit) expense ( 13 ) 3,002

Depreciation and amortization 10,125 10,894

2 unchanged sentences

Equity-based compensation 3,926 3,366

Contingent consideration 2,232 ( 5,981 )

Contingent consideration gain ( 735 ) 1,338

Warranty provision ( 1,138 ) 436

Write-down of inventories 600 1,847

Change in fair value of derivative assets 1,140 —

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

5 unchanged sentences

Accrued expenses and other ( 50,569 ) 3,900

Warranty payments — ( 373 )

Income tax payable 935 4,952

4 unchanged sentences

Purchase of property, plant and equipment ( 2,396 ) ( 3,883 )

Acquisition of STI, net of cash acquired — ( 373,816 )

Retirement/disposal of property, plant and equipment 10 —

Net cash used in investing activities ( 2,386 ) ( 3,883 )

Financing activities

Proceeds from Series A issuance — 33,098

Proceeds from common stock issuance — 15,885

Series A equity issuance costs — ( 750 )

Common stock issuance costs — ( 450 )

Dividends on Series A Preferred — ( 18,670 )

Payments on revolving credit facility — ( 116,000 )

Proceeds from revolving credit facility — 116,000

Tax withholding related to vesting of equity-based compensation ( 580 ) —

Proceeds from issuance of other debt 2,283 6,469

Principal payments on term loan facility ( 73,225 ) —

Array Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)

(in thousands)

Nine Months Ended September 30,

Principal payments on other debt ( 3,781 ) ( 17,206 )

Principal payments on term loan facility ( 1,070 ) ( 11,075 )

Contingent consideration payments ( 1,427 ) ( 1,200 )

Net cash provided by (used in) financing activities ( 84,442 ) 33,146

Net cash used in financing activities ( 4,575 ) ( 23,762 )

Effect of exchange rate changes on cash and cash equivalent balances ( 2,001 ) ( 4,316 )

1 unchanged sentence

Cash and cash equivalents, beginning of period 249,080 133,901

Array Technologies, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited) (continued)

(in thousands)

Three Months Ended March 31,

Cash and cash equivalents, end of period $ 287,620 $ 147,756

4 unchanged sentences

Dividends accrued on Series A Preferred $ 6,837 $ 6,350

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

See accompanying Notes to Condensed Consolidated Financial Statements.

5 unchanged sentences

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

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

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

Acquisition of STI Norland

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.

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

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

Out-of-Period Adjustment for the Correction of Errors

During the first quarter of fiscal year 2023, the Company identified certain errors in its previously issued financial statements that have been corrected through a cumulative out-of-period adjustment in the condensed consolidated financial statements as of and for the three months ended March 31, 2023.

The Company has concluded that the errors are not material to the previously issued financial statements and the cumulative out-of-period adjustment for the correction of these errors is not material to the financial statements for the three months ended March 31, 2023.

Below is a summary of each of the errors corrected and a summary of the cumulative impact.

As discussed in Note 10 – Debt of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2023, in November 2021 the Company paid $ 52.9 million to enter into capped call option agreements (the “Capped Calls”) to reduce the potential dilution to holders of the Company’s common stock after a conversion of the Company’s Convertible Notes (as defined below).

The Company originally concluded that the Capped Calls met the criteria for equity classification because the Capped Calls 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 Company originally recorded the amount paid for the Capped Calls as a reduction to additional paid-in capital of $ 52.9 million, offset by $ 12.4 million of income taxes.

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, the Company has concluded that the modification to the volatility inputs precludes the Capped Calls from being

Array Technologies, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

indexed to its own stock because there is the possibility that the Capped Calls will settle at an amount that exceeds fair value and, therefore, prevents the Capped Calls from being classified as equity.

In addition, the Side Letters also provide for certain adjustments to settlement amounts on the basis of holder-specific taxes which are impermissible inputs to the valuation that also prevents the Capped Calls from being indexed to the Company’s own stock, and therefore, prevents the Capped Calls from being classified as equity.

As a result, for the three months ended March 31, 2023, the Company has concluded that the cash paid for the Capped Calls should have been recorded as an asset of $ 52.9 million with the asset being subsequently marked to market at the end of each accounting period.

Additional Closing Purchased Put Option

As discussed in Note 11 – Redeemable Perpetual Preferred Stock, of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2023, in August 2021 the Company entered into a Securities Purchase Agreement (the “SPA”) with certain Purchasers (as defined below), which gives the Company the option to require the Purchasers to purchase up to an additional 150,000 shares of Series A Shares (as defined below) and up to 3,375,000 shares of common stock for $ 148.0 million until June 30, 2023 (the “Put Option”), which has expired.

Upon issuance of the Put Option, the Company recorded a reduction to additional paid-in-capital of approximately $ 12.4 million because the Company originally concluded that the Put Option should be classified as equity.

During the first quarter of 2023, the Company reconsidered the provisions of this option.

Because the Series A Shares underlying the Put Option could potentially require redemption under the Certificate of Designations governing the Series A Shares, the Put Option should not have been equity classified.

As a result, during the three months ended March 31, 2023, the Company has concluded that the value of the Put Option at inception should have been recorded as an asset of $ 12.4 million, with the asset being subsequently marked to market at the end of each accounting period.

Correction of the Capped Calls and Put Option

The adjustments to correct the Capped Calls and the Put Option at January 1, 2023 resulted in an increase in Derivative assets of $ 55.7 million, a decrease in Deferred income tax assets of $ 11.0 million, an increase in additional paid-in-capital of $ 52.9 million, and a decrease in net income of $ 8.1 million.

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

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

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

Summary of Significant Accounting Policies

2 unchanged sentences

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

The unaudited interim financial

statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

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

The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

The results for the three months ended March 31, 2024, are not necessarily indicative of results to be expected for the year ending December 31, 2024, or any other interim periods, or any future year or period.

The balance sheet as of December 31, 2023, included herein was derived from the audited financial statements as of that date.

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

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

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024.

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

1 unchanged sentence

Reclassifications

Software Implementation Costs

In the first quarter of 2024, the Company reclassified amounts recorded for software implementation costs and accumulated depreciation from “Property, plant and equipment, net” to “Intangible assets, net” on the condensed consolidated balance sheets.

The Company believes this presentation correctly reflects the intangible nature of implementation costs.

These reclassifications resulted in $ 7.1 million and $ 4.0 million recorded to Intangible assets, net as of March 31, 2024 and 2023, respectively, with corresponding decreases in the same amounts to Property, plant and equipment, net during the three months ended March 31, 2024 and 2023, respectively.

These reclassifications 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 condensed consolidated statements of operations or condensed consolidated statements of cash flows.

Amortization of Developed Technology

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 condensed consolidated statements of operations.

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

These reclassifications resulted in $ 3.6 million and $ 10.9 million recorded to Amortization of developed technology within Total cost of revenue and a $ 3.6 million and $ 10.9 million decrease to Depreciation and amortization within Total operating expenses during the three and nine months ended September 30, 2022, respectively.

These reclassifications would have resulted in a $ 3.6 million increase to Amortization of developed technology within Total cost of revenue and a corresponding $ 3.6 million decrease to Depreciation and amortization within Total operating expenses during the three months ended March 31, 2023.

These reclassifications 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 condensed consolidated balance sheets or condensed consolidated statements of cash flows.

Beginning in the third quarter of 2023, revenue excludes a $ 20.1 million 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.

This reclassification was determined to be appropriate after we evaluated the expected accounting treatment related to future governmental incentives under the Inflation Reduction Act.

For the nine months ended September 30, 2022, an ICMS benefit of $ 8.2 million was included in revenues.

Brazil Value-Added Tax Benefit

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 three months ended March 31, 2023, the Brazil ICMS value-added tax benefit was $ 3.9 million.

This reclassification 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.

7 unchanged sentences

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

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

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

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

Research and Development

The Company incurs research and development costs during its process of researching and developing new products and significant enhancements to existing products.

Research and development costs consist primarily of personnel-related costs associated with our team of internal engineers, third-party consultants, materials and overhead.

The Company expenses these costs as incurred prior to a respective product being ready for commercial production.

Research and development expense was $ 1.9 million and $ 2.1 million during the three months ended March 31, 2024 and 2023, respectively.

Impact of the Ongoing Russian-Ukraine Conflict

1 unchanged sentence

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 to 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.

Business Combinations

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

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

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives, and market multiples, amongst other items.

Foreign Currency Translation Exposure

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

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

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

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

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

Changes in the exchange rates between the functional

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

Derivative Financial Instruments

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

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

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

As of June 30, 2023, the Put Option has expired and as a result, the fair value of the Put Option is $ 0 .

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 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”.

The Company accounts for these Vendor Rebates as a reduction of the purchase prices of the vendors’ products and therefore a reduction in the cost 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.

As of March 31, 2024, the Company had outstanding Vendor Rebates of $ 57.1 million, of which

$ 45.9 million was included in Prepaid expenses and other and $ 11.2 million was included in Other assets on the condensed consolidated balance sheets.

As of December 31, 2023, the Company had outstanding Vendor Rebates of $ 48.4 million included in Prepaid expenses and other.

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.

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”).

ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts.

The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 , to provide entities with relief during the transition period by deferring the effective date of reference rate reform from December 31, 2022 to December 31, 2024.

ASU 2022-06 is effective upon issuance.

During the three months ended March 31, 2023, the Company adopted ASU 2020-04 and ASU 2022-06.

Simultaneously, the Company elected to apply the debt accounting optional expedient, under which the reporting entity will account for amendments to debt agreements, which sole intent are the replacement of a discontinued reference rate(s), as being not substantial and thus a continuation of the existing contract .

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

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

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

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 does not expect to early adopt this reporting standard and expects no material impacts upon adoption.

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 March 2023, the Company adopted ASU 2020-04 and 2022-06, Reference Rate Reform (Topic 848), and amended an existing debt agreement to replace the London Interbank Offered Rate (“LIBOR”) interest rate provisions with interest rate provisions based on a forward-looking term rate based on the secured overnight funding rate (“SOFR”) (see Note 7 – Debt ).

There were no other changes to the agreement.

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

Immaterial Correction of 2023 Interim Period 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.

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 at March 31, 2023, as a reduction to equity and reversed the related mark to market adjustments recognized during the three months ended March 31, 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 three months ended March 31, 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 three months ended March 31, 2023, individually or in aggregate.

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 the three months ended March 31, 2024:

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 ) $ —

Inventories consisted of the following (in thousands):

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Raw materials $ 46,723 $ 86,614

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Inventories $ 178,695 $ 161,964

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 March 31, 2024, inventory valued using moving average cost and FIFO was $ 141.4 million and $ 37.3 million, respectively.

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

Property, Plant and Equipment, Net

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

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

Estimated Useful Lives (Years) March 31, 2024 December 31, 2023

Land N/A $ 1,645 $ 1,634

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Vehicles 5 618 688

Hardware and software 3 - 5

Assets in progress N/A 6,083 5,142

Hardware 3 - 5

Construction in progress N/A 3,800 6,199

Total 48,476 48,711

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Property, plant and equipment, net $ 26,689 $ 27,893

Depreciation expense was $ 0.9 million and $ 0.7 million for the three months ended September 30, 2023 and 2022, respectively, of which $ 0.4 million was included in cost of revenue in both periods and $ 0.5 million and $ 0.3 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Depreciation expense was $ 2.4 million and $ 1.9 million for the nine months ended September 30, 2023 and 2022, respectively, of which $ 1.0 million and $ 1.2 million, respectively, was included in cost of revenue and $ 1.4 million and $ 0.6 million, respectively, was included in depreciation and amortization on the accompanying condensed consolidated statements of operations.

Depreciation expense was $ 0.9 million and $ 0.6 million for the three months ended March 31, 2024 and 2023, respectively, of which $ 0.5 million and $ 0.3 million, respectively, was included in cost of revenue and $ 0.4 million and $ 0.3 million, respectively, was included in depreciation and amortization on the accompanying condensed consolidated statements of operations.

Goodwill and Other Intangible Assets, Net

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

Changes in the carrying amount of goodwill by operating segment during the three months ended March 31, 2024, consisted of the following (in thousands):

Array Legacy Operations (1)

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

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

Foreign currency translation — ( 10,177 ) ( 10,177 )

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

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

During our most recent evaluation, we concluded there were no indicators of impairment as of March 31, 2024.

Other Intangible Assets, Net

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

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

Estimated Useful Lives (Years) March 31, 2024 December 31, 2023

Developed technology 14 $ 203,800 $ 203,800

Computer software 3 8,733 5,267

Customer relationships 10 329,263 336,134

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Developed technology 112,544 108,905

Computer software 1,657 1,274

Customer relationships 122,144 115,444

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Total other intangible assets, net $ 339,177 $ 354,389

Amortization expense related to intangible assets was $ 12.6 million and $ 24.6 million for the three months ended September 30, 2023 and 2022, respectively, of which $ 3.6 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $ 9.0 million and $ 21.0 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Amortization expense related to intangible assets was $ 38.8 million and $ 73.5 million for the nine months ended September 30, 2023 and 2022, respectively, of which $ 10.9 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $ 27.9 million and $ 62.6 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

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

Amortization expense related to intangible assets was $ 12.9 million and $ 13.9 million for the three months ended March 31, 2024 and 2023, respectively, of which $ 3.6 million was included in amortization of developed technology, a component of cost of revenue, in both periods and $ 9.3 million and $ 10.3 million, respectively, was included in depreciation and amortization, on the accompanying condensed consolidated statements of operations.

Estimated future amortization expense of intangible assets as of March 31, 2024, is as follows (in thousands):

Remainder of 2024 $ 38,748

Thereafter 112,462

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

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

not be recoverable.

As of March 31, 2024, no events or circumstances were noted that would indicate the carrying amount of any of our asset groups may not be recoverable.

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

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

The Company recorded income tax expense of $ 7.2 million and $ 10.0 million for the three months ended September 30, 2023 and 2022, respectively, and an expense of $ 39.5 million and a benefit of $ 23.2 million for the nine months ended September 30, 2023 and 2022, respectively.

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

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

The tax expense for the nine months ended September 30, 2022, was favorably impacted by losses in non-U.S.

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

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

The Company recorded income tax expense of $ 1.3 million and $ 8.3 million for the three months ended March 31, 2024 and 2023, respectively.

The income tax expense for the three months ended March 31, 2024, was impacted by legislation in Brazil which resulted in a local tax incentive no longer being exempt from Federal income tax beginning in 2024.

Additionally, tax expense of $ 0.4 million was recorded discretely during the quarter related to equity-based compensation.

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

jurisdictions, offset by a tax benefit of $ 0.4 million related to excess equity-based compensation recorded discretely during the quarter.

For the three months ended March 31, 2024 and 2023, no reserves for uncertain tax positions have been recorded.

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

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Senior Secured Credit Facility:

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The Credit Agreement was amended on February 23, 2021 (the “First Amendment”), on February 26, 2021 (the “Second Amendment”) and again on March 2, 2023 (the “Third Amendment”).

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

There were no other changes as a result of the Third Amendment.

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had no outstanding balance as of both September 30, 2023 and December 31, 2022, $ 24.9 million and $ 38.8 million in standby letters of credit at September 30, 2023 and December 31, 2022, respectively, and availability of $ 175.1 million and $ 161.2 million at September 30, 2023 and December 31, 2022, respectively.

The Company had no outstanding balance under the Revolving Credit Facility as of both March 31, 2024 and December 31, 2023, $ 21.0 million and $ 24.8 million, respectively, in standby letters of credit, and $ 179.0 million and $ 175.2 million, respectively, available to withdraw.

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

Term Loan Facility

The Term Loan Facility had a balance of $ 239.3 million and $ 312.5 million as of September 30, 2023 and December 31, 2022, respectively.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 12.0 million and $ 19.1 million as of September 30, 2023 and December 31, 2022, respectively.

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 %.

The debt discount and issuance costs are being amortized using the effective interest method and the effective interest rate of the Term Loan Facility as of September 30, 2023, was 9.95 %.

The outstanding balance on the Term Loan Facility was $ 237.1 million and $ 238.2 million as of March 31, 2024 and December 31, 2023, respectively.

The Term Loan Facility is presented in the accompanying condensed consolidated balance sheets, net of debt discount and issuance costs of $ 10.4 million and $ 11.3 million as of March 31, 2024 and December 31, 2023, respectively.

In accordance with the Third Amendment, the Term Loan Facility pays interest at the Company’s election, at either (x) for SOFR Loans at Adjusted Term SOFR (subject to a floor of 0.50 %) plus 3.25 % 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 %.

The debt discount and issuance costs are being amortized using the effective interest method and the effective interest rate of the Term Loan Facility as of March 31, 2024, was 10.21 %.

The Term Loan Facility has an annual excess cash flow calculation, for which the prescribed formula did not result in requiring the Company to make an advance principal payment for the year ended December 31, 2023.

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

As of September 30, 2023 and December 31, 2022, the principal balance of the Convertible Notes was $ 425.0 million with unamortized discount and issuance costs of $ 9.8 million and $ 11.3 million, respectively, for a net carrying amount of $ 415.2 million and $ 413.8 million, respectively.

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

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

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

As of March 31, 2024 and December 31, 2023, the principal balance of the Convertible Notes was $ 425.0 million with unamortized discount and issuance costs of $ 8.9 million and $ 9.4 million, respectively, for a net carrying amount of $ 416.1 million and $ 415.6 million, respectively.

The conversion rate for the Convertible Notes was initially 41.9054 shares of the Company’s common stock per $ 1,000 principal amount of 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 Convertible Notes were not convertible during the three months ended March 31, 2024, and none have been converted to date.

Also, given that the average market price of the Company’s common stock has not exceeded the exercise price since inception, there was no dilutive impact for the three months ended March 31, 2024.

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, $ 23.86 , 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 $ 36.02 per share.

Consequently, if the Convertible Notes are converted, then the number of shares to be issued by the Company would be effectively partially offset by the shares of common stock received by the Company under the Capped Calls as they are exercised.

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See Note 2 – Summary of Significant Accounting Policies for information regarding the accounting for the Capped Calls.

Other debt consists of the debt obligations of STI.

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

Interest rates on other debt range from 0.55 % to 16.35 % annually.

Of the $ 55.3 million other debt balance, approximately $ 45.3 million is denominated in Euros and $ 10.0 million is denominated in Brazilian Real.

Of the $ 37.4 million Other Debt balance, the equivalent of $ 27.4 million is denominated in Euros and $ 10.0 million is denominated in Brazilian Real.

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 Redeemable Perpetual Preferred Stock (the “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 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.

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.

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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 $ 18.8 million and $ 17.2 million for the nine months ended September 30, 2023 and 2022, respectively.

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

Such accretion totaled $ 6.7 million and $ 6.1 million for the three months ended March 31, 2024 and 2023, respectively.

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Shares either in (i) cash at the then-applicable Cash Regular Dividend Rate (as defined below), (ii) through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate of 6.25 % (the “Permitted Accrued Dividends”), or (iii) a combination thereof.

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

During the nine months ended September 30, 2023, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 19.6 million.

As of September 30, 2023, total accrued and unpaid dividends were $ 26.0 million.

During the three months ended March 31, 2024, the Company accrued dividends on the Series A Shares at the Accrued Regular Dividend rate of 6.25 % totaling $ 6.8 million.

As of March 31, 2024, total accrued and unpaid dividends were $ 39.6 million.

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

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

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 Put Option.

During the three 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.

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Over-time revenue $ 124,336 $ 248,219

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

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

September 30, 2023 December 31, 2022

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

March 31, 2024 December 31, 2023

Unbilled receivables $ 112,479 $ 102,603

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Deferred revenue $ 86,558 $ 66,488

During the nine months ended September 30, 2023, the Company converted $ 153.9 million in deferred revenue to revenue, which represented 86 % of the prior year’s deferred revenue balance.

During the three months ended March 31, 2024, the Company converted $ 22.8 million in deferred revenue to revenue, which represented 34.3 % of the prior year’s deferred revenue balance.

Bill-and-Hold Arrangements

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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 .

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

During the three months ended March 31, 2024 and 2023, the Company recognized $ 1.9 million and $ 17.6 million, respectively, in revenue from one customer for the sale of goods and services under bill-and-hold arrangements.

Remaining Performance Obligations

As of September 30, 2023, the Company had $ 336.2 million of remaining performance obligations.

As of March 31, 2024, the Company had $ 396.9 million of remaining performance obligations.

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

Earnings Per Share

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

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

2023 2022 2023 2022

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

Three Months Ended March 31,

Net income $ 2,165 $ 29,635

preferred dividends and accretion 13,502 12,484

Net income (loss) to common shareholders $ 10,123 $ 28,387 $ 75,795 $ ( 26,362 )

Net (loss) income to common shareholders $ ( 11,337 ) $ 17,151

Weighted average shares 151,351 150,607

Income (loss) per share $ 0.07 $ 0.19 $ 0.50 $ ( 0.18 )

(Loss) income per share $ ( 0.07 ) $ 0.11

Effect of restricted stock and performance awards — 1,188

Weighted average shares 151,351 151,795

Income (loss) per share $ 0.07 $ 0.19 $ 0.50 $ ( 0.18 )

Potentially dilutive common shares issuable pursuant to equity-based awards of 108,111 were not included for the nine months ended September 30, 2022, as their potential effect was anti-dilutive given the Company generated a net loss to common shareholders.

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

(Loss) income per share $ ( 0.07 ) $ 0.11

Potentially dilutive common shares issuable pursuant to equity-based awards of 2,736,244 were not included for the three months ended March 31, 2024, as the Company generated a net loss to common shareholders.

Common shares issuable pursuant to equity-based awards of 55,333 were excluded from the Company’s diluted EPS calculation for the three months ended March 31, 2023, as their to their potential impact was anti-dilutive.

There were no potentially dilutive common shares issuable pursuant to the Convertible Notes for both the three months ended March 31, 2024 and 2023, 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”).

On July 15, 2022, the Company settled its claims against Defendants for $ 42.8 million and received payment on August 4, 2022.

On May 14, 2021, a putative class action was filed in the U.S.

District Court for the Southern District of New York (the “Southern District of New York” or the “Court”) against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering (“IPO”), the Company’s December 2020 offering (the “2020 Follow-On Offering”), and the Company’s March 2021 offering (the “2021 Follow-On Offering”) during the putative class period of October 14, 2020 through May 11, 2021.

On June 30, 2021, a second putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11 and 15 of the Securities Exchange Act of 1933 (“Keippel Action”).

The Keippel Action similarly alleged misstatements and/or omissions in certain of the Company’s registration statements and prospectuses related to the Company’s IPO, the Company’s 2020 Follow-On Offering, and the Company’s 2021 Follow-On Offering during the putative class period of October 14, 2020 through May 11, 2021.

On July 6, 2021, the Court entered an order that the Keippel Action was in all material respects substantially similar to the Plymouth Action that both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

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

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

District Court for the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The complaint 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, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

A consolidated amended class action complaint was filed on December 7, 2021, with 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.

On June 30, 2021, a substantially similar 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”), which was consolidated with the Plymouth Action.

All Defendants in the Plymouth Action, including the Company, moved to dismiss the consolidated amended complaint.

On May 19, 2023, the Court granted the Company’s motion to dismiss and, on July 5, 2023, denied a request from the Plymouth Action plaintiffs for leave to amend the consolidated amended complaint and dismissed the Plymouth Action in its entirety with prejudice.

On August 4, 2023, the lead plaintiffs filed a notice of appeal of the Court’s dismissal of the consolidated amended complaint to the U.S.

Court of Appeals for the Second Circuit.

The case has been fully briefed and a decision is expected after oral argument, which has yet to be scheduled.

On July 16, 2021, a verified derivative complaint was filed in the Southern District of New York against certain officers and directors of the Company.

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for misleading proxy statements, (2) breach of fiduciary duty, (3) unjust enrichment, (4) abuse of control, (5) gross mismanagement, (6) corporate waste, (7) aiding and abetting breach of fiduciary duty, and (8) contribution under sections 10(b) and 21D of the Securities Exchange Act of 1934.

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

On July 30, 2021, a second verified derivative complaint was filed in the Southern District of New York against certain officers and directors of the Company.

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for causing the issuance of a

false/misleading proxy statement, (2) breach of fiduciary duty, and (3) aiding and abetting breaches of fiduciary duty.

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

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

On September 21, 2021, the Court in the Plymouth Action appointed a group comprised of institutional investors Plymouth County Retirement Association and Carpenters Pension Trust Fund for Northern California as lead plaintiffs.

On December 7, 2021, an amended class action complaint was filed by lead plaintiffs 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 October 17, 2022, the Company and other defendants in the Plymouth Action filed a joint motion to dismiss (the “Motion to Dismiss”) the Consolidated Amended Complaint.

The lead plaintiff filed a motion opposing the Motion to Dismiss on December 16, 2022, and the Company and other defendants filed a reply in support of the motion to dismiss on January 17, 2023.

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

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

On August 4, 2023, the lead plaintiffs filed a notice of appeal of the Court’s dismissal of the Consolidated Amended Complaint (the “Second Circuit Appeal”).

On September 11, 2023, pursuant to a scheduling request filed by lead plaintiffs, the United States Court of Appeals for the Second Circuit ordered lead plaintiffs to file their opening brief in the Second Circuit Appeal by November 17, 2023.

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

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

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for causing the issuance of a false/misleading proxy statement, (2) breach of fiduciary duty, and (3) aiding and abetting breaches of fiduciary duty.

On August 24, 2021, the Southern District of New York derivative actions were consolidated and the Court appointed co-lead counsel.

The consolidated cases remain stayed pending the outcome of the appeal of the Plymouth Action.

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

(1) breach of fiduciary duty and (2) unjust enrichment.

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

(1) breach of fiduciary duty;

(2) aiding and abetting

breaches of fiduciary duty;

(2) aiding and abetting breaches of fiduciary duty;

(3) waste of corporate assets;

1 unchanged sentence

(5) insider selling;

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

On September 2, 2022, the Second Delaware Derivative Action was consolidated with the First Delaware Derivative Action (the “Consolidated 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.

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.

and (6) aiding and abetting insider selling.

On September 2, 2022, the Chancery Court derivative cases were consolidated and the Court appointed co-lead counsel.

The consolidated cases have been stayed pending the outcome of the appeal of the Plymouth Action.

At this time the Company believes that the likelihood of any material loss related to these matters is remote given the preliminary stage of the claims and strength of the Company’s defenses.

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

The Company has not recorded any material loss contingency in the condensed consolidated balance sheets as of March 31, 2024.

Commercial Supplier Settlement

During March 2024, the Company reached a settlement with one of its vendors, in which the Company received $ 4.0 million in the form of a one-time $ 2.6 million cash payment due immediately, and $ 1.4 million in credits with the vendor which can be applied by the Company to future orders from the respective vendor.

If the Company does not utilize all of the credits by January 2026, it will receive a one-time cash payment from the vendor for the remaining unused credit balance.

As of March 31, 2024, the Company recognized $ 4.0 million in Prepaid and other expenses, net on the condensed consolidated balance sheet and for the three months ended March 31, 2024, a $ 4.0 million reduction to Cost of revenue on the condensed consolidated statement of operations.

The Company is party to various other legal proceedings, claims, governmental and/or regulatory inspections, inquiries and investigations arising out of the ordinary course of its business.

The Company believes that, there are no other proceedings or claims pending against it, the ultimate resolution of which could have a material adverse effect on its financial condition or results of operations.

In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under ASC 450, Contingencies (ASC 450).

Legal costs are expensed as incurred.

It is possible that future results for any particular quarter or annual period may be materially affected by changes in our assumption or the effectiveness of the Company’s strategies relating to these proceedings.

Contingent Consideration

6 unchanged sentences

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

As of September 30, 2023 and December 31, 2022, the fair value of the TRA was $ 9.6 million and $ 8.6 million, respectively.

As of March 31, 2024 and December 31, 2023, the fair value of the TRA was $ 8.2 million and $ 10.4 million, respectively.

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

5 unchanged sentences

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Beginning balance $ 10,363 $ 8,587

3 unchanged sentences

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

As of September 30, 2023, the Company posted surety bonds in the total amount of $ 217.6 million.

As of March 31, 2024, the Company posted surety bonds in the total amount of $ 173.5 million.

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

2 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Carrying Value Fair Value Carrying Value Fair Value

1 unchanged sentence

The fair value of the Convertible Notes is estimated using Level 2 inputs, as they are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers.

The following table summarizes the activity related to the Capped Calls (in thousands):

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

2023 2022 2023 2022

Beginning balance $ 64,014 $ — $ — $ —

Change in fair value gain and loss

116 — ( 1,140 ) —

Change due to correction of errors (see Note 1) — — 65,270 —

Ending balance $ 64,130 $ — $ 64,130 $ —

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

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

The fair value of the 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 the condensed consolidated balance sheets approximate fair value due to the variable nature of the interest rates.

Other Debt totaling $ 55.3 million, consists of $ 40.0 million variable rate obligations and $ 15.3 million fixed rate obligations.

Of the $ 15.3 million fixed rate obligations, $ 3.3 million mature in 2023 and $ 11.9 million mature in 2024.

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

The carrying value of the $ 40.0 million variable rate obligations approximate fair value due to the variable nature of the interest rates.

Other Debt with an aggregate carrying value of $ 37.4 million, consists only of variable rate obligations.

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

Equity-Based Compensation

5 unchanged sentences

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

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

RSU activity under the 2020 Plan during the three months ended March 31, 2024, was as follows:

Number of Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Shares forfeited ( 56,653 ) 16.09

Outstanding non-vested, September 30, 2023 1,847,712 $ 15.73

Outstanding non-vested, March 31, 2024 2,156,479 $ 13.77

Performance Stock Units

4 unchanged sentences

Treasury Constant Maturity rates.

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

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

Volatility — % 90 %

1 unchanged sentence

Dividend yield — % — %

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

(1) No PSUs were issued during the three months ended March 31, 2024.

PSU activity under the 2020 Plan during the three months ended March 31, 2024, was as follows:

Number of Shares Weighted Average Grant Date Fair Value

3 unchanged sentences

Shares forfeited ( 112,708 ) 21.61

Outstanding non-vested, September 30, 2023 694,811 $ 14.56

For the three months ended September 30, 2023 and 2022, the Company recognized $ 3.4 million and $ 4.2 million, respectively, in equity-based compensation expense.

For the nine months ended September 30, 2023 and 2022, the Company recognized $ 11.9 million and $ 11.7 million, respectively, in equity-based compensation.

At September 30, 2023, the Company had $ 24.7 million of unrecognized compensation costs related to RSUs and PSUs, which are expected to be recognized over approximately 2.0 years and 2.2 years, respectively.

Outstanding non-vested, March 31, 2024 579,765 $ 14.09

For three months ended March 31, 2024 and 2023, the Company recognized $ 4.0 million and $ 3.3 million, respectively, in equity-based compensation costs.

At March 31, 2024, the Company had $ 28.2 million of unrecognized compensation costs related to RSUs and PSUs, which are expected to be recognized over 2.4 and 1.8 years, respectively.

14 Segment Reporting

4 unchanged sentences

Array Legacy Operations and STI Operations.

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

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

2023 2022 2023 2022

The following table provides a reconciliation of certain financial information for the Company’s reportable segments to information presented in its condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

Array Legacy Operations $ 114,381 $ 305,204

1 unchanged sentence

Total $ 153,403 $ 376,773

Gross Profit:

Array Legacy Operations $ 49,086 $ 79,835

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements