What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-07 · 205 added, 206 removed, 137 unchanged (75% of the section changed)

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• if demand for solar energy projects does not continue to grow or grows at a slower rate than we anticipate, our business will suffer;

• the viability and demand for solar energy are impacted by many factors outside of our control, which makes it difficult to predict our future prospects;

• the viability and demand for solar energy are impacted by many factors outside of our control, including but not limited to, the retail price of electricity, availability of in-demand components like high voltage

breakers, various policies related to the permitting and interconnection costs of solar plants, and the availability of incentives for solar energy and products, which makes it difficult to predict our future prospects;

• competitive pressures within our industry may harm our business, revenues, growth rates and market share;

• a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment, could harm our business and negatively impact revenue, results of operations and cash flow;

• a failure to retain key personnel or a failure to attract additional qualified personnel may affect our ability to achieve our anticipated level of growth and adversely affect our business;

• a drop in the price of electricity derived from the utility grid or from alternative energy sources may harm our business, financial condition, results of operations and prospects;

• we have and may continue to face challenges in our ability to consolidate the financial reporting of our acquired foreign subsidiaries;

• defects or performance problems in our products could result in loss of customers, reputational damage and decreased revenue, and we may face warranty, indemnity and product liability claims arising from defective products;

• we may experience delays, disruptions or quality control problems in our product development operations;

• a failure to maintain effective internal controls over financial reporting may negatively affect our ability to timely report our financial condition or results of operations, which may adversely affect our business;

• a further increase in interest rates, or a reduction in the availability of tax equity or project debt capital in the global financial markets could make it difficult for customers to finance the cost of a solar energy system and could reduce the demand for our products;

• changes to tax laws and regulations that are applied adversely to us or our customers could materially adversely affect our business, financial condition, results of operations and prospects;

• existing electric utility industry policies and regulations, and any subsequent changes, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems, which may significantly reduce demand for our products or harm our ability to compete;

• electric utility industry policies and regulations, and any subsequent changes, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems, which may significantly reduce demand for our products or harm our ability to compete;

• the interruption of the flow of materials from international vendors could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges or restrictions on imports and exports;

• geopolitical, macroeconomic and other market conditions unrelated to our operating performance including the COVID-19 pandemic, the military conflict in Ukraine and Russia, the Israel-Hamas war, attacks on shipping in the Red Sea and rising inflation and interest rates;

• changes in the global trade environment, including the imposition of import tariffs or other import restrictions, could adversely affect the amount or timing of our revenues, results of operations or cash flows;

• economic, political and market conditions, including the Russian-Ukraine conflict, uncertain credit and global financial markets resulting from increasing inflation and interest rates along with recent bank failures, and the COVID-19 pandemic, have had and could continue to have an adverse effect on our business, results of operations and financial condition, including our revenue growth and profitability, which in turn could adversely affect our stock price;

• the reduction, elimination or expiration of government incentives for, or regulations mandating the use of, renewable energy and solar energy specifically could reduce demand for solar energy systems and harm our business;

• we may not be able to convert our orders in backlog into revenue;

• our results of operations fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations;

• the reduction, elimination or expiration, or our failure to optimize the benefits of government incentives for, or regulations mandating the use of, renewable energy and solar energy, particularly in relation to our competitors, could reduce demand for solar energy systems and harm our business;

• if we fail to, or incur significant costs in order to obtain, maintain, protect, defend or enforce, our intellectual property and other proprietary rights, our business and results of operations could be materially harmed;

• significant changes in the cost of raw materials could adversely affect our financial performance;

• we may be unable to remediate our material weaknesses in a timely manner or at all;

• our substantial indebtedness could adversely affect our financial condition;

• the implementation of the Inflation Reduction Act may not deliver as much growth as we are anticipating, and we may not be able to maximize its benefits;

• defects or performance problems in our products could result in loss of customers, reputational damage and decreased revenue, and we may experience delays, disruptions or quality control problems in our product development operations;

• if we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our business could suffer;

• our continued planned expansion into new markets could subject us to additional business, financial, regulatory and competitive risks;

• cybersecurity or other data incidents, including unauthorized disclosure of personal or sensitive data or theft of confidential information could harm our business;

• internal control deficiencies have been identified that constituted material weaknesses in our internal control over financial reporting.

If we fail to implement and maintain effective internal controls over financial reporting, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business

• our substantial indebtedness could adversely affect our financial condition;

• we face risks related to actual or threatened public health epidemics, pandemics, outbreaks or crises, such as the COVID-19 pandemic, which could have a material and adverse effect on our business, results of operations and financial condition;

• changes to tax laws and regulations that are applied adversely to us or our customers could materially adversely affect our business, financial condition, results of operations and prospects, including our ability to optimize those changes brought about by the passage of the Inflation Reduction Act.

We are one of the world’s largest manufacturers of ground-mounting tracking systems used in solar energy projects at utility scale.

Our principal products are a portfolio of integrated solar tracking systems comprised of steel supports, electric motors, gearboxes and electronic controllers commonly referred to as a single-axis “tracker.” Trackers move solar panels throughout the day to maintain an optimal orientation to the sun, which significantly increases their energy production.

Solar energy projects that use trackers generate more energy and deliver a lower Levelized Cost of Energy than projects that use “fixed tilt” mounting systems, which do not move.

Solar energy projects that use trackers typically generate more energy and deliver a lower Levelized Cost of Energy (“LCOE”) than projects that use “fixed tilt” mounting systems, which do not move.

The vast majority of ground mounted solar systems in the U.S.

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Our core U.S.

patent on a linked-row, rotating gear drive system does not expire until February 5, 2030.

With our acquisition of STI in January 2022, we added a dual-row tracker design to our product portfolio.

patent is on a linked-row, single-driving apparatus that rotates a plurality of tracker rows connected by an articulating drive shaft.

This patent does not expire until February 5, 2030.

With our acquisition of STI in January of 2022, we added a dual-row tracker design to our product portfolio.

This tracker uses one motor to drive two connected rows and is ideally suited for sites with irregular and highly angled boundaries or fragmented project areas.

To offer a comprehensive set of solutions to the growing market, in September 2022, we also introduced a third tracker product requiring significantly less grading and civil works permitting prior to installation in addition to accommodating uneven terrain.

This suite of products extends our target applications and ability to deliver the best utility-scale solar tracker solutions to the market.

To offer a comprehensive set of solutions to the growing market, in September of 2022, we also introduced a third tracker product requiring significantly less grading and civil works permitting prior to installation in addition to accommodating uneven terrain.

This suite of

products extends our target applications and ability to deliver the best utility-scale solar tracker solutions to the market.

We sell our products to engineering, procurement and construction firms (“EPCs”) that build solar energy projects and to large solar developers, independent power producers and utilities, often under master supply agreements or multi-year procurement contracts.

During the nine months ended September 30, 2023, we derived 72% and 28% of our revenues from customers in the United States and the rest of the world, respectively.

As of September 30, 2023, we had shipped more than 70.0 gigawatts of trackers to customers worldwide, including STI.

During the three months ended March 31, 2024, we derived 73% and 27% of our revenues from customers in the U.S.

and the rest of the world, respectively.

As of March 31, 2024, we had shipped more than 74.8 gigawatts of trackers to customers worldwide.

Our corporate headquarters are located in Albuquerque, New Mexico.

As of September 30, 2023, we had 1,058 full-time employees.

As of March 31, 2024, we had 975 full-time employees.

Research and Development

The Company incurs research and development (“R&D”) costs during its process of researching and developing new products and significant enhancements to existing products.

R&D costs are a subset of our total engineering spend and 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.

Total engineering expense was $4.3 million and $3.9 million during the three months ended March 31, 2024 and 2023, respectively, of which $1.9 million and $2.1 million were related to R&D activities performed by the Company during the three months ended March 31, 2024 and 2023, respectively.

Acquisition of STI Norland

On January 11, 2022, the Company completed its acquisition of STI for purchase consideration of $410.5 million in cash and 13,894,800 shares of the Company’s common stock.

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

STI generates revenue through the design, manufacture and sale of its utility-scale solar tracker systems to customers in global markets that include Spain, Brazil, U.S.

On January 11, 2022, we completed our acquisition of STI, which resulted in the Company owning 100% of the equity interests in STI.

Similar to Array Legacy operations, STI generates revenue through the design, manufacture and sale of its utility-scale solar tracker systems to customers in global markets that include Spain, Brazil, the U.S.

and South Africa.

The integration of STI provides us the opportunity to accelerate our international expansion and better address rising global demand for utility-scale solar projects, particularly in developing countries in South America and Africa.

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 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.

A summary of these corrections and a summary of the cumulative impact is provided in Note 1 – Organization, Business and Out-of-Period Adjustments in Part I of this Quarterly Report.

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

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

Impact of Potential Solar Module Supply Chain Disruptions

On April 1, 2022, the U.S.

Department of Commerce (“USDOC”) initiated anti-circumvention inquiries of the U.S.

Solar 1 Orders covering merchandise from Vietnam, Malaysia, Thailand, and Cambodia pursuant to Section 781 of the Tariff Act of 1930.

The USDOC issued preliminary determinations in these inquiries on December 1, 2022, affirmatively finding that certain photovoltaic solar cells and modules produced in Vietnam, Malaysia, Thailand, and Cambodia using parts and components from China from certain producers and/or exporters, are circumventing the Solar 1 Orders and therefore should be subject to the antidumping and countervailing duty liabilities arising from those orders.

As a result of the USDOC’s investigation, we saw a number of projects in our order book initially delayed;

however, on June 6, 2022, President Biden issued an emergency declaration delaying the imposition of any cash deposit or duty payment obligations on merchandise subject to these inquiries until the earlier of (i) the expiration of the order on June 6, 2024, or (ii) termination of the emergency declaration by the President.

Merchandise from the four subject countries covered under the scope of these inquiries should therefore not be subject to any antidumping or countervailing duty liabilities under the Solar 1 Orders until the termination of the emergency declaration as long as the importer(s) and exporter(s) follow proper certification procedures that will be implemented by the USDOC.

On May 3, 2023, however, the U.S.

Senate voted to repeal President Biden’s emergency declaration.

On May 16, President Biden announced that he had vetoed the U.S.

Senate’s actions, and the emergency declaration will remain in place until June of 2024.

On August 18, 2023, the USDOC announced the final determinations in the circumvention inquiries of solar cells and modules from China.

The USDOC found that certain Chinese producers were shipping solar products through Cambodia, Malaysia, Thailand, and/or Vietnam for minor processing in an attempt to circumvent

antidumping and countervailing duties.

The final determination affirms the USDOC’s preliminary findings in most respects;

however, pursuant to President Biden’s June 6, 2022 emergency declaration, duties will not be collected on any solar module and cell imports from these four countries until June 2024.

The repeal of the President’s emergency declaration, and any affirmative determinations made once the suspension is lifted in any event, would have an adverse effect on the global solar energy marketplace, and as such, an adverse effect on our business, financial condition, and results of operations.

The integration of STI has allowed us to accelerate our international expansion and better address rising global demand for utility-scale solar projects, particularly in developing countries in Latin America and Africa.

Reversal of Out-of-Period Adjustment Recorded during the three months ended March 31, 2023

Capped Calls and Put Option

During the three months ended December 31, 2023, the Company consulted with the staff of the Office of the Chief Accountant of the SEC, and after consultation with the staff, the Company concluded that the change from its historical accounting treatment for its Capped Calls and its Put Option that were made during the three months ended March 31, 2023, was not required.

As a result, the Company has chosen to revert to its historical accounting and reverse the initial cumulative catch-up recorded during the three months ended March 31, 2023.

as well as any subsequent fair value adjusting entries recorded during the interim periods in 2023.

See Note 2 – Summary of Significant Accounting Policies .

Factors Affecting Results of Operations

Project Timing

Because we recognize revenue on projects as legal title to equipment is transferred from us to the customer, any delays in large projects from one quarter to another for any reason may cause our results of operations for a particular period to fall below expectations.

Our end-users’ ability to install solar energy systems has been affected by a number of factors including:

Inclement weather can affect our customers’ ability to install their systems, particularly in the northeastern United States and in Europe.

In addition, weather delays can adversely affect our logistics and operations by causing delays in the shipping and delivery of our materials.

• The interest rate environment .

As interest rates have risen, we have seen customers looking to renegotiate power purchase agreements to improve project returns.

Any unexpected or protracted negotiation can cause installation delays and delay our ability to recognize revenue relating to the relevant projects.

In addition, we have had customers delay planned installations in anticipation of interest reductions and more favorable project financing conditions later in 2024.

• Availability of necessary equipment .

We have a broad portfolio of customer relationships including presence with every Tier 1 utility in the United States.

Each utility has unique specifications for access to its grid, which is generally not consistent across the industry.

As the supply of renewables projects has increased, severe shortages and long lead-times in the supply of switches, transformers and HV breakers used in the interconnection of utility scale solar power plants to the grid, has affected the timing and completion of these projects, including for some of our customers.

• Local permitting .

If our customers cannot receive permitting for their projects, they are unable to begin and ultimately complete them in a timely manner.

A dramatic increase in solar and battery storage sites has increased the average permitting time in many geographies in which our customers operate.

Impact of IRA

While solar power is cost-competitive with conventional forms of generation in many U.S.

states even without the ITC, we believe step-downs in the ITC have influenced the timing and quantity of some customers’ orders.

With the passage of the Inflation Reduction Act (“IRA”) in August 2022, the ITC was raised to 30% with no step downs before 2032.

Accordingly, we do not anticipate the ITC rate to impact our seasonality during that timeframe.

After a period of uncertainty, in December the IRS published proposed regulations on 45X manufacturing credit benefits that largely confirmed our previous understanding around the eligibility of our torque tube.

Beginning in late 2023 and continuing into 2024, we have and continue to successfully negotiate agreements with key suppliers around 45X manufacturing credit benefits associated with the torque tube.

The 45X proposed regulations published in December did not further clarify what would be considered a structural fastener;

however, we do continue to expect that there will be additional credits we can monetize for a number of our components under the existing law and proposed regulations.

We are actively working on multiple initiatives to obtain additional clarity regarding the eligibility and in parallel are negotiating the split of the 45X benefits with our suppliers for parts we do not manufacture internally.

Structured Cost Management

We actively manage the risk from certain types of customer contracts, including, for example, multi-year contracts that require fixed pricing or pricing tied to certain commodity indices.

Depending on the totality of the circumstances and our ability to mitigate risk, we may or may not pursue such contractual arrangements.

Where we decline, this may have the effect of driving certain customers or projects to our competitors.

We believe this is the right way to manage a high-quality portfolio and drive consistent margins over time.

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 2023, which has led many shipping companies to pause 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 as to reduce any negative impact on our business, financial condition and results of operations.

Inflationary pressures may continue to impact, at least in the near-term, and may continue to negatively impact our results of operations.

To mitigate the inflationary pressures on our business, despite our ASPs decreasing, we have continued to accelerate our productivity initiatives, expanded our supplier base, and continued to execute on our overhead cost containment practices.

Impact of AD/CVD Petitions and Determinations

In June 2022, the U.S.

President authorized the U.S.

Secretary of Commerce to provide a 24-month AD/CVD tariff exemption for imported solar modules from certain Southeast Asian countries.

The USDOC previously issued regulations implementing the AD/CVD moratorium in the event that it found circumvention with respect to such Southeast Asian countries.

In August 2023, the USDOC issued final affirmative circumvention rulings, finding that solar modules completed in Cambodia, Malaysia, Thailand, and Vietnam using parts and components produced in China circumvent pre-existing AD/CVD orders on China.

At this time, it is expected that duties will apply to such solar modules unless they are imported, used, and installed by June 2024.

While we do not sell solar modules, the degree of our exposure is dependent on, among other things, the impact of the investigation on the projects that are also intended to use our products, with such impact being largely out of our control.

To date, we have seen a number of projects in our order book delayed as a result of the USDOC investigation;

however, the ultimate severity or duration of the expected solar panel supply chain disruption or its effects on our clients’ solar project development and construction activities remains uncertain.

More broadly, legislation has been proposed that would make it easier for domestic companies to obtain affirmative determinations in antidumping and countervailing duties investigations.

We have seen a number of projects in our order book delayed as a result of the USDOC investigation.

The repeal of the 24-month exemption, and any affirmative determinations made once the exemption expires in any event, would have an adverse effect on our business, financial condition, and results of operations.

More broadly, legislation has been proposed that would make it easier for domestic companies to obtain affirmative determinations in antidumping and countervailing duty investigations.

The proposed USICA/America COMPETES Act, if enacted, could result in future successful petitions that limit imports from Asia and other regions.

Solar panel imports to the U.S.

may also be impacted by the Uyghur Forced Labor Prevention Act (“UFLPA”) that was signed into law by President Biden on December 23, 2021.

According to U.S.

Customs and Border Protection, “it establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and that such goods, wares, articles, and merchandise are not entitled to entry to the U.S.

The presumption applies unless the Commissioner of U.S.

Customs and Border Protection determines that the importer of record has complied with specified conditions and, by clear and convincing evidence, that the goods, wares, articles, or merchandise were not produced using forced labor.” There continues to be uncertainty in the market around achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors.

This has created a significant compliance burden and constrained solar panel imports.

We cannot currently predict what, if any, impact the UFLPA will have on the overall future supply of solar panels into the U.S.

and the related timing and cost of our clients’ solar project, development and construction activities.

While we do not import or sell solar panels, project delays caused by solar panel constraints may negatively impact our product delivery schedules and future sales, and therefore our business, financial condition, and results of operations.

Antidumping and Countervailing Duty Petitions on Aluminum Extrusions

On October 4, 2023, domestic producers filed petitions with the USDOC International Trade Commission, seeking antidumping duties on imports of aluminum extrusions from Colombia, the Dominican Republic, Ecuador, India, Indonesia, Italy, Malaysia, Mexico, China, South Korea, Taiwan, Thailand, Turkey, the United Arab Emirates (UAE) and Vietnam, and countervailing duties on such imports from China, Indonesia, Mexico and Turkey.

The merchandise subject to this investigation is aluminum extrusions, regardless of form, finishing or fabrication, whether assembled with other parts or unassembled, whether coated, painted, anodized or thermally improved.

On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee, an ad hoc coalition of domestic producers of crystalline silicon photovoltaic (CSPV) solar cells and modules, filed a petition with the USDOC and the U.S.

International Trade Commission (the “USITC”) seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam.

If the USDOC or USITC make preliminary affirmative determinations, could have an adverse effect on our business, financial condition, and results of operations.

Additionally, in October 2023, a coalition of U.S.

aluminum extruders and a labor union filed AD/CVD cases on aluminum extrusions from fifteen countries.

The USDOC has initiated investigations based on the petitions.

Certain components in our trackers, including certain clamps, U-joints, and bearing housings are made using extruded aluminum.

It is anticipated that the USDOC will set preliminary countervailing duty rates in March of 2024 and preliminary antidumping rates in May of 2024, with the potential to cover materials imported from December 2023 and February 2024 onward, respectively.

We cannot currently predict what, if any, impact the USDOC’s investigation will have on the overall future supply of these components.

We continue to monitor developments in the investigation and work to mitigate its impact on our

supply chain, but if we are unable to do so, these antidumping and countervailing duties could negatively impact our business, financial condition, and results of operations.

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 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.

Our operating results could be adversely impacted if the USDOC imposes duties on such imports.

We continue to monitor developments in the above petition and investigation processes and work to

mitigate their impact on our supply chain, but if we are unable to do so, the imposition of AD/CVD orders could negatively impact our business, financial condition, and results of operations.

The possibility of additional tariffs and duties in the future like those described above have created uncertainty in the industry.

If the price of solar systems in the U.S.

increases, the use of solar systems could become less economically feasible and could reduce our gross margins or reduce the demand of solar systems manufactured and sold, which in turn may decrease demand for our products.

Additionally, existing or future tariffs may negatively affect key customers, suppliers, and manufacturing partners.

Such outcomes could adversely affect the amount or timing of our revenues, results of operations or cash flows, and continuing uncertainty could cause sales volatility, price fluctuations or supply shortages or cause our customers to advance or delay their purchase of our products.

It is difficult to predict what further trade-related actions governments may take, which may include additional or increased tariffs and trade restrictions, and we may be unable to quickly and effectively react to such actions.

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.

subsidiaries that operate in 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.

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.

Performance Measures

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These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business, and formulate projections.

The primary operating metric we use to evaluate our sales performance and to track market acceptance of our products from year to year is megawatts (“MWs”) shipped generally and the change in MW shipped from period to period specifically.

MWs are measured for each individual project and calculated based on the expected output of that project once installed and fully operational.

The primary operating metric we use to evaluate our sales performance and to track market acceptance of our products is megawatts (“MWs”) shipped and specifically the change in MW shipped from period to period.

MWs are measured for each individual project and are calculated based on the respective project’s expected megawatt output once installed and fully operational.

We also utilize metrics related to price and cost of goods sold per MW, including average selling price (“ASP”) and cost per watt (“CPW”).

ASP is calculated by dividing total applicable revenues by total applicable MWs, while CPW is calculated by dividing total applicable costs of goods sold by total applicable MWs.

ASP is calculated by dividing total applicable revenues by total applicable MWs, whereas CPW is calculated by dividing total applicable costs of goods sold by total applicable MWs.

These metrics enable us to evaluate trends in pricing, manufacturing cost, and customer profitability.

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The following discussion describes certain line items in our consolidated statements of operations.

Our operating segments generate revenue from the sale of solar tracking systems, parts and services.

Our customers include EPCs, utilities, large solar developers and independent power producers.

We generate revenue from the sale of solar tracking systems, parts, software, and services.

Our customers include EPCs, utilities, solar developers, and independent power producers.

For each individual solar project, we enter into a contract with our customers covering the price, specifications, delivery dates, and warranty for the products being purchased, among other things.

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Our revenue is affected by changes in the volume and ASPs of solar tracking systems purchased by our customers.

The quarterly volume and ASP of our systems is driven by the supply of, and demand for, our products, changes in product mix between module type and wattage, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.

Our revenue growth is dependent on continued growth in the amount of solar energy projects installed each year as well as our ability to increase our share of demand in each of the geographies where we compete, expanding our global footprint to new evolving markets, growing our production and supply chain capabilities to meet demand, and continuing to develop and introduce new and innovative products that address the changing technology and performance requirements of our customers.

The quarterly volume and ASP of our systems is driven by the supply of, and demand for, our products, changes in project mix between module type and wattage, geographic mix of our customers, strength of competitors’ product offerings, and availability of government incentives to the end-users of our products.

Our revenue growth is dependent on continued growth in the size and number of solar energy projects installed each year, as well as our ability to maintain market share in each geography where we compete, expand our global footprint to new and evolving markets, grow our production capabilities to satisfy demand, and continue to develop and introduce new innovative products that integrate emerging technologies and the performance requirements of our customers.

Cost of Revenue and Gross Profit

Cost of revenue for both segments consists primarily of product costs, including purchased components, as well as costs related to shipping, tariffs, customer support, product warranty, personnel and depreciation of test and manufacturing equipment.

Personnel costs in cost of revenue includes both direct labor costs as well as costs attributable to any individuals whose activities relate to the transformation of raw materials or component parts into finished goods or the transportation of materials to the customer.

Some of these costs, primarily personnel and depreciation of test and manufacturing equipment, are not directly affected by sales volume.

Our product costs are affected by the underlying cost of raw materials, including steel and aluminum;

component costs, including electric motors and gearboxes;

technological innovation;

economies of scale resulting in lower component costs and improvements in production processes and automation.

We do not currently hedge against changes in the price of raw materials.

In addition, cost of revenue includes amortization of developed technology.

Gross profit may vary from quarter to quarter and is primarily affected by our ASPs, product costs, product mix, customer mix, geographical mix, shipping method, warranty costs and seasonality.

Cost of revenue consists primarily of product costs, including raw materials, purchased components, salaries, wages and benefits of manufacturing personnel, freight, tariffs, customer support, product warranty, amortization of developed technology, and depreciation of manufacturing and testing equipment.

Our product costs are affected by (i) the underlying cost of raw materials, including steel and aluminum, (ii) component costs, including electric motors and gearboxes, (iii) technological innovation, and (iv) economies of scale and improvements in production processes and automation.

We may experience disruptions to our supply chain and increased material and freight costs like those experienced in 2021 and 2022 during the COVID-19 pandemic.

When possible, we modify our production schedules and processes to mitigate the impact of these disruptions and cost increases on our margins.

We do not currently hedge against changes in the price of our raw materials.

Gross profit may vary from quarter to quarter and is primarily affected by our volume, ASPs, product costs, project mix, customer mix, geographical mix, commodity prices, logistics rates, warranty costs, and seasonality.

Inflation Reduction Act 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.

We have, 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 our purchases, in the form of “Vendor Rebates”.

We account 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 we recognize such rebates as a reduction of cost of revenues on the condensed 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.

Operating Expenses

General and administrative expenses

General and administrative expenses consist primarily of salaries, benefits and equity-based compensation related to our executive, sales, engineering, finance, human resources, information technology and legal personnel, as well as travel, facility costs, marketing, bad debt provision and professional fees.

Further, as a relatively new public company, we may incur additional audit, accounting, tax, legal and other costs related to compliance with applicable securities laws and other regulations, as well as additional insurance, investor relations and other costs associated with being a public company.

Contingent Consideration

Contingent consideration consists of the changes in fair value of the Taxes Receivable Agreement (“TRA”) entered into with Ron P.

Corio, a former indirect stockholder, concurrent with the Acquisition of Array Technologies Patent Holdings Co., LLC by our Former Parent, ATI Investment Parent, LLC.

The TRA liability is recorded at fair value and changes in the fair value are recognized in earnings.

The TRA will generally provide for the payment by our operating company, Array Tech, Inc.

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

Corio for certain federal, state, local and non-U.S.

tax benefits deemed realized in post-closing taxable periods by Array Tech, Inc.

from the use of certain deductions generated by the increase in the tax value of the developed technology.

Estimating fair value of the TRA is by nature imprecise.

The significant fair value inputs used to estimate the future expected TRA payments to Mr.

Corio 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.

Depreciation and Amortization

Depreciation in our operating expense consists of costs associated with property, plant and equipment (“PP&E”) not used in manufacturing of our products.

We expect that as we continue to grow both our revenue and our general and administrative personnel, we will require some additional PP&E to support this growth resulting in additional depreciation expense.

Amortization of intangibles consists of customer relationships, contractual backlog, and the STI trade name amortized over their expected period of use.

General and administrative expense consists primarily of salaries, benefits, and equity-based compensation related to our executive, sales, engineering, finance, human resources, information technology, and legal personnel, as well as travel, facility costs, marketing, bad debt provision, and professional fees.

The majority of our sales in the first quarter of 2024 and 2023, were in the U.S.;

however, in January 2022, we expanded our international operations with the STI Acquisition.

We currently have a sales presence in the U.S., Spain, Brazil, South Africa, Australia, and the U.K.

We intend to continue to expand our sales presence and marketing efforts to additional countries.

Contingent consideration consists of the changes in fair value of the tax receivable agreement (“TRA”) entered into with a former indirect stockholder, concurrent with the acquisition of Patent LLC by Former Parent.

The TRA liability was recorded at fair value as of July 8, 2016 (the “Patent Acquisition Date”) and subsequent changes in the fair value are recognized in earnings.

For discussion and analysis of the TRA see Note 11 – Commitments and Contingencies .

Depreciation consists of costs associated with property, plant and equipment not used in manufacturing of our products.

We expect that as we continue to grow both our revenue and our general and administrative personnel, we may require some additional property, plant and equipment to support this growth resulting in additional depreciation expense.

Amortization consists of the expense recognized over the expected period of use of our customer relationships, contractual backlog, and STI trade name intangible assets.

Amortization related to certain acquired intangible assets is recorded as Total cost of revenue under the caption "Amortization of developed technology".

Non-Operating Expenses

Interest Expense

Interest expense consists of interest and other charges paid in connection with (i) our $575 million senior secured 7-year term loan facility (the “Term Loan Facility”), (ii) our $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”), (iii) our 1.00% Convertible Senior Notes due 2028 (the “Convertible Notes”), and (iv) the Other Debt we assumed in connection with the STI Acquisition.

Income Tax Expense

Interest income consists of interest earned on our cash and cash equivalents balance.

Interest expense consists of interest and other charges paid in connection with our Senior Secured Credit Facility, the Convertible Notes, and Other Debt held by our STI Operations.

We are subject to U.S.

federal and state and non-U.S.

federal, state and non-U.S.

income taxes.

As we expand into additional foreign markets, we may be subject to additional foreign tax.

Reportable Segments

Subsequent to the acquisition of STI, the Company began reporting its results of operations in two segments;

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

The segment amounts included in this Item 2.

Management’s Discussion and Analysis are presented on a basis consistent with our internal management reporting.

Additional information on our reportable segments is contained in Note 14 – Segment Reporting in the accompanying notes to the condensed consolidated financial statements.

Results of Operations

The following table sets forth our consolidated statement of operations (dollars in thousands):

Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)

Three Months Ended March 31, Increase/(Decrease)

2024 2023 $ %

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Total operating expenses 46,676 50,082 (3,406) (7) %

Income (loss) from operations 40,205 17,194 23,011 134 % 183,904 (34,482) 218,386 633 %

Other (expense) income:

Other (expense), net (446) (1,092) 646 59 % (127) (2,295) 2,168 (94) %

Income from operations 8,414 47,458 (39,044) (82) %

Other income, net 814 194 620 320 %

Interest income 3,680 1,231 2,449 199 %

Legal settlement — 42,750 (42,750) (100) % — 42,750 (42,750) (100) %

Foreign currency gain (loss) 207 (159) 366 230 % 273 1,968 (1,695) (86) %

Change in fair value of derivative assets 116 — 116 100 % (1,140) — (1,140) (100) %

Foreign currency loss (499) (194) 305 157 %

Interest expense (8,940) (10,731) (1,791) (17) %

Total other (expense) income (9,762) 33,446 (43,208) (129) % (30,242) 20,982 (51,224) (244) %

Income (loss) before taxes 30,443 50,640 (20,197) (40) % 153,662 (13,500) 167,162 1238 %

Income tax expense (benefit) 7,229 9,996 (2,767) (28) % 39,508 (23,183) 62,691 270 %

Total other expense, net (4,945) (9,500) (4,555) (48) %

Income before income tax expense 3,469 37,958 (34,489) (91) %

Income tax expense 1,304 8,323 (7,019) (84) %

Net income $ 2,165 $ 29,635 $ (27,470) (93) %

The following table provides details on our operating results by reportable segment for the respective periods (dollars in thousands):

Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)

Three Months Ended March 31, Increase/(Decrease)

2024 2023 $ %

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STI Operations 39,022 71,569 (32,547) (45) %

Total Revenue $ 350,438 $ 515,024 $ (164,586) (32) % $ 1,234,936 $ 1,235,475 $ (539) — %

Total $ 153,403 $ 376,773 $ (223,370) (59) %

Array Legacy Operations $ 49,086 $ 79,835 $ (30,749) (39) %

STI Operations 6,004 17,705 (11,701) (66) %

Total Gross Profit $ 87,379 $ 76,583 $ 10,796 14 % $ 331,322 $ 135,838 $ 195,484 144 %

Comparison of the three months ended September 30, 2023 and 2022

Consolidated revenue decreased $164.6 million, or 32%, driven primarily by a decrease in both Array Legacy Operations of 39% and STI Operations of 8%.

The decrease in revenue in Array Legacy Operations was driven by a 33% reduction in the number of MWs shipped due to project delays from our customers, as well as a 9% reduction in ASP due to lower input costs for materials and logistics.

The decrease in revenue in STI Operations was driven by a decrease in the number of megawatts shipped, most notably in the Brazil region, which offset lower ASP due to a smaller percentage of construction services being offered.

Total $ 55,090 $ 97,540 $ (42,450) (44) %

Comparison of the three months ended March 31, 2024 and 2023

Consolidated revenue decreased, $223.4 million, or 59%, driven by a decrease at STI Operations of $32.5 million and a decrease at Array Legacy Operations of $190.8 million.

The $32.5 million, or 45%, revenue decrease at STI Operations was driven by a volume decrease of 41% and an ASP decrease on lower input costs of 4%.

The $190.8 million, or 63%, revenue decrease at Array Legacy Operations was driven by a volume decrease of 60% and an ASP decrease on lower input costs of 2%.

Cost of Revenue and Gross Profit

Consolidated cost of revenue decreased by $175.4 million, or 40%, driven primarily by a reduction in revenue combined with lower input costs.

Consolidated gross profit increased by $10.8 million, or 14%.

As a percentage of revenue, consolidated gross profit increased to 25% for the three months ended September 30, 2023, as compared to 15% during the same period in the prior year.

Both operating segments had increases in gross profit as a percent of revenue.

Consolidated cost of revenue decreased by $180.9 million, or 65%, driven primarily by the reduction in volume combined with a decrease in input costs.

Consolidated gross profit decreased by $42.5 million, or 44%.

As a percentage of revenue, consolidated gross profit increased to 36% for the three months ended March 31, 2024, as compared to 26% during the same period in the prior year.

The increase in gross profit as a percent of revenue was driven by structural cost enhancements and the realization of 45X benefits associated with our torque tube.

The Company also recognized a one-time $4.0 million settlement with one of its vendors during the first quarter as a reduction of Cost of revenue.

Array Legacy Operations gross profit decreased by $30.7 million, or 39%.

As a percentage of revenue, gross profit increased to 24% from 15% for the three months ended September 30, 2023 and 2022, respectively.

The increase in gross profit as a percent of revenue was driven by an improvement in pass through pricing to customers, in addition to cost savings due to improved raw materials pricing and lower logistics rates, as well as a higher proportion of higher margin non-tracker revenue.

STI Operations gross profit increased by $12.8 million, or 79%.

As a percentage of revenue, gross profit for STI Operations increased to 28% from 14% for the three months ended September 30, 2023 and 2022, respectively, driven primarily by improved pass through pricing, cost savings opportunities on raw materials and a reduced impact of lower margin construction related services provided.

As a percentage of revenue, gross profit at Array Legacy Operations increased to 43% from 26% for the three months ended March 31, 2024 and 2023, respectively.

The increase in gross profit as a percent of revenue was driven by structural cost enhancements and the realization of 45X benefits associated with our torque tube.

The Company also recognized a one-time $4.0 million settlement with one of its vendors during the first quarter as a reduction of Cost of revenue.

STI Operations gross profit decreased by $11.7 million, or 66%.

As a percentage of revenue, gross profit for STI Operations decreased to 15% from 25% for the three months ended March 31, 2024 and 2023, respectively, driven primarily by changes in statutory reductions from incentive tax credits in Brazil, as well as expedite fees we incurred to meet customer delivery schedules.

Operating Expenses

General and Administrative

Consolidated general and administrative expenses decreased by $0.4 million, or 1%.

In the third quarter of 2022, the Company incurred $4.9 million in professional fees related to the STI acquisition for which there were no comparable expenses in the current year.

Excluding those fees, expense was up primarily due to an increase in payroll and related costs, driven by an increase in headcount.

Contingent Consideration

Consolidated contingent consideration expense increased by $0.8 million, or 133%, as a result of the increased valuation of the TRA liability.

Depreciation and Amortization

Consolidated depreciation and amortization decreased by $11.7 million or 55%, due to the decrease in the amortization of intangibles of $12.0 million, as the backlog purchased as part of the STI Acquisition had a one-year life and was fully amortized in the first quarter of 2023.

The decrease was was primarily due to lower professional and consulting fees primarily driven by our initiative to internalize activities that were historically outsourced in an effort to reduce fees.

Change in the fair value of contingent consideration resulted in a gain of $0.7 million, for the three months ended March 31, 2024, due to the fair value remeasurement of the TRA liability, primarily driven by an increase in the discount rate used in the valuation.

Consolidated depreciation and amortization expense decreased by $1.0 million, or 9%, due to the decrease in the amortization of intangibles of $1.0 million, driven by a subset of intangible assets acquired in January 2022, becoming fully amortized during the first quarter of 2023.

Interest Income

Consolidated interest income increased by $2.4 million, or 199%, as compared to the prior year, due to higher

cash on hand during the first quarter of 2024, coupled with higher interest rates.

Interest Expense

Consolidated interest expense increased by $4.2 million, or 48%, primarily due to increased variable interest rates charged on our Term Loan Facility as well as the acceleration of $2.5 million of non-cash interest expense related to an unscheduled principal payment made against the outstanding Term Loan balance.

We expect interest expense to be higher for the remainder of 2023 compared to 2022 as a result of continued higher variable interest rates.

Income Tax Expense (Benefit)

Consolidated interest expense decreased by $1.8 million, or 17%, primarily due to $74.3 million of principal pay downs on our Term Loan during 2023, as a result of focused efforts to decrease our outstanding debt balance with free cash flows from operations.

Income Tax Expense

Consolidated income tax decreased by $7.0 million, or 84%.

The Company recorded income tax expense of $7.2 million for the three months ended September 30, 2023, compared to income tax expense of $10.0 million for the three months ended September 30, 2022.

Our effective tax rate was 23.7% for the three months ended September 30, 2023, and 19.7% for the three months ended September 30, 2022.

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

jurisdictions which have higher tax rates than the U.S.

and non-deductible expenses.

The tax expense for the three months ended September 30, 2022, which includes $8.7 million related to the legal settlement discretely recorded in the period, 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.

Consolidated net income decreased by $17.4 million, or 43%, driven by a $164.6 million decrease in consolidated revenue and the nonrecurrence in the current year of a $42.8 million legal settlement gain recognized by Array Legacy Operations during the three months ended September 30, 2022.

Comparison of the nine months ended September 30, 2023 and 2022

Consolidated revenue was flat year over year, driven by an increase in STI Operations of $102.4 million, offset by a decrease in Array Legacy Operations of $103.0 million.

The $102.4 million, or 43%, revenue increase in STI Operations was driven by an increase in the number of megawatts shipped, most notably in the Brazil region, which offset lower ASP due to a smaller percentage of construction services being offered.

The $103.0 million, or 10%, revenue decrease in Array Legacy Operations was driven by a decrease in the number of megawatts shipped, due primarily to project delays from our customers.

Cost of Revenue and Gross Profit

Consolidated cost of revenue decreased by $196.0 million, or 18%, driven primarily by a reduction in revenue combined with a decrease in input costs.

Consolidated gross profit increased by $195.5 million, or 144%.

As a percentage of revenue, consolidated gross profit increased to 27% for the nine months ended September 30, 2023, as compared to 11% during the same period in the prior year.

The increase in gross profit dollars was driven by cost savings opportunities and lower overall costs in logistics and raw materials, a higher proportion of higher margin non-tracker revenue and a decrease in lower margin construction related services.

Array Legacy Operations gross profit increased by $132.9 million, or 123%.

As a percentage of revenue, gross profit at Array Legacy Operations increased to 27% from 11% for the nine months ended September 30, 2023 and 2022, respectively.

The increase in gross profit as a percent of revenue was driven by an improvement in pass through pricing to customers, in addition to cost savings opportunities in logistics and raw materials, as well as a higher proportion of higher margin non-tracker revenue.

STI Operations gross profit increased by $62.6 million, or 226%.

As a percentage of revenue, gross profit for STI Operations increased to 27% from 12% for the nine months ended September 30, 2023 and 2022, respectively, driven primarily by improved pass through pricing and a reduced impact of lower margin construction related services provided.

Operating Expenses:

General and Administrative

Consolidated general and administrative expenses increased by $2.8 million, or 2%.

The increase was driven by higher payroll and related expenses incurred to increase headcount in support of our growth and innovation strategy.

These increases were partially offset by no acquisition related expenses in 2023 compared to expenses related to the STI Acquisition in 2022.

Contingent Consideration

Consolidated contingent consideration expense increased by $8.2 million, or 137% as a result of the increased valuation of the TRA liability, which was driven by a decrease in the credit spread used in the valuation, consistent with the overall downward trend of credit spreads subsequent to 2022.

Depreciation and Amortization

Consolidated depreciation and amortization decreased by $33.9 million, or 54%, due to the decrease in the amortization of intangibles of $34.7 million, as the backlog purchased as part of the STI Acquisition had a one-year life and was fully amortized as of the first quarter of 2023.

Interest Expense

Consolidated interest expense increased by $11.6 million, or 49%, primarily due to increased variable interest rates charged on our Term Loan Facility as well as the acceleration of $3.6 million of non-cash interest expense related to unscheduled principal payments made against the outstanding Term Loan balance.

Income Tax Expense (Benefit)

Consolidated income tax increased by $62.7 million, or 270%.

The Company recorded income tax expense of $39.5 million for the nine months ended September 30, 2023, compared to a benefit of $23.2 million for the nine months ended September 30, 2022.

Our effective tax rate was 25.7% and 171.7% for the nine months ended September 30, 2023 and 2022, respectively.

The 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, partially offset by benefits related to excess stock compensation deductions recorded discretely during the period.

The tax benefit for the nine months ended September 30, 2022, which includes $8.7 million related to the legal settlement discretely recorded in the period, 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.

Consolidated net income increased by $104.5 million, or 1,079%, driven by a 144% increase in consolidated gross profit margin and a $22.9 million reduction in operating expenses, partially offset by a $62.7 million increase in income tax expense and the nonrecurrence in the current year of a $42.8 million legal settlement gain recognized by Array Legacy Operations during the three months ended September 30, 2022.

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

Our effective tax rate was 37.6% and 21.9% 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 deductions recorded discretely during the quarter.

Liquidity and Capital Resources

Cash Flows (in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by operating activities

1 unchanged sentence

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

Net cash (used in) provided by 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 equivalents (2,001) (4,316)

3 unchanged sentences

Based on our past performance and current expectations, we believe that operating cash flows will be sufficient to meet our future cash needs.

As of September 30, 2023, our cash balance was $174.0 million, of which $62.5 million was held outside the U.S., and net working capital was $462.6 million.

As of March 31, 2024, our cash balance was $287.6 million, of which $69.2 million was held outside the U.S., and net working capital was $490.8 million.

We had outstanding borrowings of $237.1 million under our $575 million Term Loan Facility and $179.0 million available to us under our $200 million Revolving Credit Facility.

2 unchanged sentences

Operating Activities

For the nine months ended September 30, 2023, cash provided by operating activities was $138.0 million, of which $184.8 million was generated from net income as adjusted for the impact of non-cash expenses, consisting primarily of depreciation and amortization, equity-based compensation, amortization of developed technology, and amortization of debt discount and issuance costs.

Increases in accrued expenses and other of $18.5 million, accounts payable of $14.4 million, and inventory of $12.6 million, were partially offset by decreases in deferred revenue of $78.2 million and accounts receivable of $6.4 million.

For the nine months ended September 30, 2022, cash provided by operating activities was $44.0 million,

primarily due to an increase in net income and the Company being awarded and paid a settlement from

Nextracker LLC, for $42.8 million for the Nextracker Litigation.

In addition, accounts payable and accruals

increased cash by $42.2 million and $41.3 million, respectively, driven by higher expenses associated with

higher sales, offset by a use from accounts receivable of $139.0 million driven primarily by higher sales.

For the three months ended March 31, 2024, cash provided by operating activities was $47.5 million, of which $21.0 million was generated from net income as adjusted for the impact of non-cash expenses, consisting primarily of depreciation and amortization, equity-based compensation, and amortization of developed technology.

For the three months ended March 31, 2023, cash provided by operating activities was $45.8 million, of which $57.2 million was generated from net income as adjusted for the impact of non-cash expenses, consisting primarily of depreciation and amortization, deferred tax expense and equity-based compensation.

Investing Activities

For the nine months ended September 30, 2023, net cash used in investing activities was $11.6 million, all of which was related to the purchase of property, plant and equipment.

For the nine months ended September 30, 2022, net cash used in investing activities was $380.5 million, primarily due to cash used in the STI Acquisition.

For the three months ended March 31, 2024, net cash used in investing activities was $2.4 million, all of which was related to the purchase of property, plant and equipment, net of dispositions.

For the three months ended March 31, 2023, net cash used in investing activities was $3.9 million, all of which was related to the purchase of property, plant and equipment.

Financing Activities

For the nine months ended September 30, 2023, net cash provided by financing activities was $84.4 million, driven primarily by $73.2 million in payments on our Term Loan and a $8.5 million net reduction of other debt.

For the nine months ended September 30, 2022, net cash provided by financing activities was $33.1 million, of which $48.4 million related to proceeds from the Additional Closing in January 2022 offset by a dividend payment of $18.4 million on the Series A preferred stock.

For the three months ended March 31, 2024, net cash used in financing activities was $4.6 million, driven primarily by a $3.8 million net reduction of other debt and $1.1 million in payments on our Term Loan, as well as a $1.4 million TRA payment issued during the first quarter of 2024.

For the three months ended March 31, 2023, net cash used in financing activities was $23.8 million, driven primarily by $11.1 million in payments on our Term Loan and a $10.7 million net reduction of other debt.

Series A Redeemable Perpetual Preferred Stock

7 unchanged sentences

We are required to provide surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee our performance in accordance with contractual or legal obligations.

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

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

These off-balance sheet arrangements do not adversely impact our liquidity or capital resources.

5 unchanged sentences

However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates.

To the extent that there are material differences between

these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We consider an accounting policy to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the condensed consolidated financial statements.

8 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 2. Management’s Discussion and Analysis