What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-07 · 179 added, 200 removed, 172 unchanged (69% of the section changed)

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In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections captioned “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report, our Quarterly Report on Form 10-Q for the three months ended June 30, 2024 and our 2023 Annual Report.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management.

Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing and investment plans, competitive position, industry and regulatory environment, including potential regulatory reform related to energy credits, uncertainty relating the implementation of tariffs and changes in trade policy, ability to provide 100% domestic content trackers, expectations regarding the macroeconomic environment and geopolitical developments, including the effects of tariffs, potential growth opportunities and the effects of competition.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” “designed to” or similar expressions and the negatives of those terms.

Our actual results and the timing of events could materially differ from those anticipated in such forward-looking statements as a result of certain risks, uncertainties and other factors, including without limitation:

changes in the cost and availability of raw materials as a result of tariffs and other geopolitical uncertainty, changes in growth or rate of growth in demand for solar energy projects;

competitive pressures within our industry;

factors affecting viability and demand for solar energy, 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 solar energy production systems, which makes it difficult to predict our future prospects;

competition from conventional and renewable energy sources;

a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment;

a drop in the price of electricity derived from the utility grid or from alternative energy sources;

fluctuations in our results of operations across fiscal periods, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations;

any increase in interest rates, or a reduction in the availability of tax equity or project debt capital in the global financial markets, which could make it difficult for customers to finance the cost of a solar energy system;

existing electric utility industry policies and regulations, and any subsequent changes or new related policies and regulations, 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, which could disrupt our supply chain, including as a result of the imposition of new and/or additional duties, tariffs and other charges or restrictions on imports and exports;

changes in the global trade environment, including the imposition of import tariffs or other import restrictions;

geopolitical, macroeconomic and other market conditions unrelated to our operating performance including but not limited interest rates;

our ability to convert our orders in backlog into revenue;

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;

failure to, or incurrence of significant costs in order to, obtain, maintain, protect, defend or enforce, our intellectual property and other proprietary right;

delays in construction projects and any failure to manage our inventory;

significant changes in the cost of raw materials;

disruptions to transportation and logistics, including increases in shipping costs;

defects or performance problems in our products, which could result in loss of customers, reputational damage and decreased revenue;

delays, disruptions or quality control problems in our product development operations;

our ability to retain our key personnel or failure to attract additional qualified personnel;

additional business, financial, regulatory and competitive risks due to our continued planned expansion into new markets;

cybersecurity or other data incidents, including unauthorized disclosure of personal or sensitive data or theft of confidential information;

a failure to maintain an effective system of integrated internal controls over financial reporting;

our substantial indebtedness, risks related to actual or threatened public health epidemics, pandemics, outbreaks or crises;

changes to laws and regulations, including changes to tax laws and regulations, that are applied adversely to us or our customers, including our ability to optimize those changes brought about by the passage of the Inflation Reduction Act (“IRA”) or any repeal thereof;

and the other risks and uncertainties described in more detail in the section captioned “Risk Factors” in this Quarterly Report and our 2024 Annual Report.

Given these uncertainties, you should not place undue reliance on forward-looking statements.

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You should read this report with the understanding that our actual future results may be materially different from what we expect.

Important factors that could cause actual results to differ materially from our expectations include factors in “Summary Risk Factors” and the “Risk Factors” sections of our 2023 Annual Report and the “Risk Factors” section of this Quarterly Report.

Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

We are one of the leading global manufacturer and supplier 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 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.

We are a leading global provider of solar tracking technology to utility-scale and distributed generation customers, who construct, develop and operate solar PV sites.

With solutions engineered to withstand the harshest weather conditions, Array’s high-quality solar trackers, software platforms and field services combine to maximize energy production and deliver value to our customers for the entire lifecycle of a project.

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 typically generate more energy and deliver a lower Levelized Cost of Energy 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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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.

With our acquisition of Soluciones Técnicas Integrales Norland, S.L.U.

and its subsidiaries (collectively, “STI”) in January 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 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.

To offer a comprehensive set of solutions to the growing market, in September of

2022, we also introduced a third tracker product, OmniTrack, which requires 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.

Our corporate headquarters are located in Albuquerque, New Mexico.

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, 2024, we derived 70% and 30% of our revenues from customers in the U.S.

During the three months ended March 31, 2025, we derived 65% and 35% of our revenues from customers in the U.S.

and the rest of the world, respectively.

As of September 30, 2024, we had shipped approximately 79.9 gigawatts of trackers to customers worldwide.

Our corporate headquarters are located in Albuquerque, New Mexico.

As of September 30, 2024, we had 961 full-time employees.

As of March 31, 2025, we had shipped approximately 87 gigawatts of trackers to customers worldwide.

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.

We incur research and development (“R&D”) costs during our 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 $4.4 million and $4.1 million during the three months ended September 30, 2024 and 2023, respectively, of which $1.6 million and $2.0 million were related to R&D activities performed by the Company during the same period, respectively.

Total engineering expense was $12.7 million and $12.3 million during the nine months ended September 30, 2024 and 2023, respectively, of which $5.3 million and $6.4 million were related to R&D activities performed by the Company during the same period, respectively.

Acquisition of STI Norland

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 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 2023 Interim Periods

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 .

We expense these costs as incurred prior to a respective product being ready for commercial production.

Total engineering expense was $4.4 million and $4.3 million during the three months ended March 31, 2025 and 2024, respectively, of which $2.4 million and $1.9 million were related to R&D activities performed by the Company during the same periods, respectively.

Factors Affecting Results of Operations

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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, Europe and in Brazil.

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

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

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

The effects of the Federal Reserve’s decision to lower the target interest rate by 0.5% and the timing of any positive impact the lower rate may have on project timing remains uncertain.

While the Federal Reserve made the decision to lower the target interest rate by 0.5% in October 2024, the timing of any positive impact the lower rate may have on project timing remains uncertain, particularly in light of the Federal Reserve’s decision not to lower the target interest rate further in January 2025.

• Availability of necessary equipment .

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

We have a broad portfolio of customer relationships including presence with most Tier 1 utilities in the U.S.

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.

As the supply of renewables projects has increased, severe shortages and long lead-times in the supply of switches, transformers and high voltage 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.

• Macroeconomic factors.

There has been a rapid depreciation of the Brazilian Real in conjunction with existing pricing pressures on energy in the Brazilian market.

Due to these dynamics, the economic cases for the power purchase agreements, or PPAs, for many solar projects have become less attractive for our customers.

Many of the developers of these projects are now signaling delays as they renegotiate the pricing of these PPAs.

Due to these dynamics, the economic cases for the power purchase agreements, or PPAs, for many solar projects have become less

attractive for our customers.

Many of the developers in Brazil of these projects continue to signal delays as they renegotiate the pricing of these PPAs.

In addition, our results will also be impacted by tax incentives we can recognize, for example the Brazil value-added tax benefit, Imposto sobre Circulação de Mercadorias e Servicos (“ICMS”), which will discontinue in 2033.

As a result, we are focused on reducing costs and better aligning our organization, including the size thereof, in Brazil with the current market conditions.

It is uncertain what impact new or existing tariffs, trade restrictions or retaliatory actions may have on us, the solar industry and our customers.

An escalation in trade tensions or the implementation of broader tariffs, trade restrictions or retaliatory measures on our products or components originating from countries outside the U.S.

could adversely impact our ability to source necessary components, manufacture products at competitive cost, or sell our products at prices customers are willing to pay.

Any such developments could materially and adversely affect our business operations, results of operations and cash flows.

• Local permitting .

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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, as of September 30, 2024 we do not anticipate the ITC rate to impact our seasonality during that timeframe.

After a period of uncertainty, on October 24, 2024 Treasury and the IRS issued final regulations for the 45X manufacturing credit benefits that largely confirmed our previous understanding around the eligibility of our torque tube and structural fasteners.

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 and structural fasteners.

We continue to pursue additional agreements for splitting 45X benefits with suppliers for parts we do not manufacture internally.

Accordingly, as of March 31, 2025 we do not anticipate the ITC rate to impact our seasonality during that timeframe.

If these financial benefits vary significantly from our assumptions or if the program gets changed or repealed during the current legislative cycle, our business, financial condition, and results of operations could be adversely affected.

Section 45X Credit

After a period of uncertainty, on October 24, 2024, U.S.

Department of Treasury and the IRS issued final regulations on the section 45X manufacturing tax credit that largely adopted the statutory definitions of torque tube and structural fasteners, which we have determined apply to our components.

Beginning in late 2023 and continuing through 2024 and into 2025, we have successfully negotiated, and we continue to successfully negotiate, agreements with key suppliers around sharing the economic benefits of section 45X credits associated with torque tube and structural fasteners.

We continue to pursue additional agreements for splitting the economic benefits of section 45X with suppliers for parts we do not manufacture internally.

In addition, during the second quarter of 2024, we concluded that certain parts manufactured by the Company qualify for the section 45X advanced production credits.

Refer to Note 2 – Summary of Significant Accounting Policies in the accompanying notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion on how we account for these incentives and amounts recognized for the periods presented.

If these financial benefits vary significantly from our assumptions, our business, financial condition, and results of operations could be adversely affected.

Domestic Content Safe Harbor Guidance

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Uncertainties still exist under this guidance, like whose costs would be used (the manufacturer’s cost, a vendor’s cost to acquire, etc.) and how to define manufactured product components associated with trackers.

In May of 2024, the IRS issued Notice 2024-41 setting forth further guidance on the domestic content bonus tax credits, including a safe harbor method for calculating domestic content percentages.

Notice 2024-41 and the elective safe harbor described therein has clarified some pre-existing uncertainty in the industry from Notice 2023-38, but it has also introduced uncertainty of its own regarding issues such as what qualifies as a “fastener.” These uncertainties have and could continue to cause our customers to delay projects as they navigate the existing guidance in qualifying for the tax credit and possibly wait for further clarity.

In May of 2024, the IRS issued Notice 2024-41 setting forth further guidance on the domestic content bonus tax credits, including a safe harbor method for calculating domestic content

On January 16, 2025, the IRS released Notice 2025-08, modifying Notice 2023-38 and Notice 2024-41 as well as introducing an updated elective safe harbor method for use in lieu of provisions of the adjusted percentage rule provided in Notice 2023-38 for calculating the domestic content bonus credit amounts applicable for certain qualified facilities and energy projects.

Notice 2024-41 and Notice 2025-08 and the updated definitions described therein have clarified some pre-existing uncertainty in the industry, but they have also introduced uncertainties of their own.

These uncertainties have and could continue to cause our customers to delay projects as they navigate the existing guidance in qualifying for the tax credit and possibly wait for further clarity.

If these financial benefits vary significantly from our assumptions, our business, financial condition, and results of operations could be adversely affected.

Structured Cost Management

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

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.

Impact of the Ongoing Russian-Ukraine War

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

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

Impact of Attacks on Shipping in the Red Sea

Impact of Disruption of Key Shipping Lanes

The disruption of container shipping traffic through the Red Sea has created port congestion, especially in Asia, affecting transit times, capacity, and shipping costs for routes connecting the rest of the world with Asia.

Many shipping companies have paused shipments through the Suez Canal and the Red Sea causing rerouting of commercial vessels.

To address the challenges arising from prolonged transit times, we have increased our local sourcing efforts where feasible within certain regions.

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Impact of AD/CVD Petitions and Determinations

The United States currently imposes antidumping and countervailing duties (“AD/CVD”) on certain imported crystalline silicon PV(“CSPV”) cells and modules from China and Taiwan.

Such AD/CVD can change over time pursuant to annual reviews conducted by the U.S.

Department of Commerce (“USDOC”).

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

On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee, an ad hoc coalition of domestic producers of CSPV 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.

The USITC made a preliminary affirmative determination on June 7, 2024, and the USDOC made its preliminary affirmative determination on October 1, 2024.

The preliminary tariff rates varying from below 1% to almost 300%, depending on the relevant company.

On August 18, 2023, the U.S.

Department of Commerce issued final affirmative determinations of circumvention with respect to certain crystalline solar photovoltaic (“CSPV”) cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam using parts and components from China.

As a result, certain CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam are now subject to antidumping and countervailing duty (“AD/CVD”) orders on CSPV cells and modules from China that have been in place since

Subject to certain certification and utilization conditions, imports of CSPV cells and modules covered by the circumvention determinations that entered the U.S.

during the two-year period prior to June 6, 2024 were not subject to AD/CVD cash deposit or duty requirements.

Imports of CSPV cells and modules from the four Southeast Asian countries covered by the circumvention determination that entered the U.S.

on or after June 6, 2024 are subject to AD/CVD cash deposit requirements of the China AD/CVD orders and, possibly, final AD/CVD duty liability.

Cash deposit rates for CSPV modules covered by the China AD/CVD orders vary significantly depending on the producer and exporter of the modules and may amount to over 250% of the entered value of the imported merchandise.

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

We have seen a number of projects in our order book delayed as a result of the USDOC investigation, and effective enforcement of the AD/CVD orders could negatively impact our 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.

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.

In September 2024, the USDOC released its final determination from their investigations against aluminum extrusions from multiple countries.

On October 30, 2024, the USITC voted to find no injury in its pending AD/CVD investigation, meaning that the USDOC’s AD/CVD orders will not go into effect.

The coalition of petitioners may still appeal the USITC’s decision, and we will continue to monitor developments in the appeal process.

If the USITC’s decision is overturned on appeal, 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 has 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.

Trade Policy and Executive Orders

On February 1, 2025, President Trump issued executive orders directing the U.S.

to impose new tariffs on imports from Canada, Mexico, and China, to take effect on February 4, 2025, and on February 3, 2025, President Trump announced his intention to pause these tariffs on Canada and Mexico for a one-month period.

The tariffs impose an additional 25% ad valorem rate of duty on all imports from Canada and Mexico (other than imports of Canadian energy resources exports, which are subject to a 10% ad valorem rate of duty) and an additional 10% ad valorem rate of duty on all imports from China.

On March 3, 2025, the announced 25% tariff on Canadian and Mexican goods took effect and the tariff on Chinese goods was doubled to 20%.

On March 12, 2025 tariffs on steel and aluminum increased from 25% to 50% on all steel and aluminum coming from Canada.

On April 2, 2025, President Trump introduced tariffs on most countries of a baseline rate of 10%, and individualized rates on some countries of up to 50%.

On April 9, 2025, President Trump increased tariffs for Chinese goods to 125% and subsequently to 145%, while the tariffs announced on April 2, 2025, for all other countries, were reduced to a baseline rate of 10% for the next 90 days.

We are currently evaluating the potential impact of the imposition of the announced tariffs, and any additional or retaliatory tariffs, to our business and financial condition.

While we do not believe that the tariffs announced by the U.S.

in 2025 will have a material adverse effect upon our results of operations, financial condition, or liquidity, the actual impact of the new tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the target countries may take and any mitigating actions that may become available.

Foreign Currency Translation

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In managing our business and assessing financial performance, we supplement the information provided by the financial statements with other operating metrics.

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 is megawatts (“MWs”) shipped and specifically the change in MW shipped from period to period.

These operating metrics are utilized by our management

to evaluate our business, measure our performance, identify trends affecting our business, and formulate projections.

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

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Key Components of Our Results of Operations

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

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

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

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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, commodity prices 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.

A majority of our revenue is recognized over time as work progresses, and for single performance obligations, we use an input measure, the cost-to-cost method, to determine progress.

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Cost of Revenue and Gross Profit

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.

Cost of product and service revenue consists primarily of product costs, including raw materials, purchased components, net of any incentives or rebates earned from our suppliers, 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.

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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 product and service revenue 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.

Gross profit will also be impacted by tax incentives we can recognize, for example ICMS value added tax benefits in Brazil, which will discontinue in 2033.

Operating Expenses

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 nine months ended September 30, 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.

The majority of our sales during the three months ended March 31, 2025 and 2024, were in the U.S.;

however, we also have a sales presence in the U.S., Spain, Brazil, South Africa and Australia.

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.

Contingent consideration consists of the changes in fair value of the TRA entered into with a former indirect stockholder, concurrent with the acquisition of Array Technologies Patent Holdings Co., LLC by ATI Investment Parent, LLC.

The TRA liability was recorded at fair value as of July 8, 2016 and subsequent changes in the fair value are recognized in earnings.

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

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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.

Subsequent to the acquisition of STI, we began reporting our results of operations in two segments;

the Array Legacy Operations segment and the acquired STI Operations segment.

The segment amounts included in this Item 2.

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The following table sets forth our consolidated statement of operations (in thousands, except percentages):

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

Three Months Ended March 31, Increase/(Decrease)

2025 2024 $ %

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Depreciation and amortization 5,349 9,627 (4,278) (44) %

Goodwill impairment 162,000 — (162,000) (100) % 162,000 — 162,000 (100) %

Total operating expenses 49,144 46,676 2,468 5 %

(Loss) income from operations

(132,675) 40,205 (172,880) (430) % (84,659) 183,904 (268,563) (146) %

Other loss, net (682) (446) (236) 53 % (1,662) (127) (1,535) 1209 %

Income from operations 27,284 8,414 18,870 224 %

Other expense, net 23 814 (791) (97) %

Interest income 3,319 3,680 (361) (10) %

Foreign currency (loss) gain, net (106) 207 (313) (151) % (1,073) 273 (1,346) (493) %

Foreign currency gain (loss), net 689 (499) 1,188 238 %

Interest expense (8,035) (8,940) 905 10 %

Total other expense, net (4,004) (4,945) 941 19 %

(Loss) income before income tax expense

(137,504) 30,327 (167,831) (553) % (100,527) 154,802 (255,329) (165) %

Income before income tax expense 23,280 3,469 19,811 571 %

Income tax expense 6,534 1,304 5,230 401 %

Net (loss) income

$ (141,354) $ 23,098 $ (164,452) (712) % $ (113,491) $ 117,898 $ (231,389) (196) %

Net income $ 16,746 $ 2,165 $ 14,581 673 %

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

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

Three Months Ended March 31, Increase/(Decrease)

2025 2024 $ %

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Total $ 76,428 $ 55,090 $ 21,338 39 %

Comparison of the three and nine months ended September 30, 2024 and 2023

Consolidated revenue decreased $119.0 million, or 34%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily driven by lower revenue from Array Legacy Operations of 35% and STI Operations of 33%.

Array Legacy Operations revenue decreased by $84.6 million, or 35%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily driven by a decrease of approximately 35% in volume.

Revenue from STI Operations decreased by $34.4 million, or 33% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

The decrease was primarily driven by a decrease of approximately 13% in volume, a decrease of approximately 12% in average selling prices and a foreign currency impact of approximately 7%.

Consolidated revenue decreased $594.4 million, or 48%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by lower revenue from Array Legacy Operations of 49% and STI Operations of 47%.

Array Legacy Operations revenue decreased by $435.5 million, or 49%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by a decrease of approximately 46% in volume and a decrease of approximately 5% in average selling prices.

Revenue from STI Operations decreased by $158.8 million, or 47% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

The decrease was primarily driven by a decrease of approximately 31% in volume, a decrease of approximately 19% in average selling prices and a foreign currency impact of approximately 3%.

Comparison of the three months ended March 31, 2025 and 2024

Consolidated revenue increased $149.0 million, or 97%, for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily driven by higher revenue from Array Legacy Operations of 86% and STI Operations of 128%.

Array Legacy Operations revenue increased by $98.8 million, or 86%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 primarily driven by an increase of approximately 116% in volume, partially offset by a decrease of approximately 14% in average selling prices.

Revenue from STI Operations increased by $50.1 million, or 128% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The increase was primarily driven by an increase of approximately 212% in volume, partially offset by a decrease of approximately 17% in average selling prices and an unfavorable foreign currency impact of approximately 10%.

Cost of Revenue and Gross Profit

Consolidated cost of revenue decreased by $110.0 million, or 42%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, in line with lower revenue, combined with lower input costs per watt, resulting from supply chain and engineering cost control initiatives and the realization of 45X benefits associated with torque tubes and structural fasteners.

Consolidated gross profit decreased by $9.1 million, or 10%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Gross Margin increased to 34% for the three months ended September 30, 2024, as compared to 25% during the same period in the prior year.

Array Legacy Operations gross profit increased by $7.5 million, or 13%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Gross margin increased to 41% from 24% for the three months ended September 30, 2024 and 2023, respectively.

The increase in gross margin was driven by the realization of 45X benefits associated with torque tubes and structural fasteners during the quarter.

STI Operations gross profit decreased by $16.6 million, or 57%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Gross margin for STI Operations decreased to 18% from 28% for the three months ended September 30, 2024 and 2023, respectively, driven primarily by a decline in average selling prices of approximately 12%, partially offset by lower commodity prices.

Consolidated cost of revenue decreased by $482.4 million, or 53%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, in line with lower revenues and the realization of 45X benefits associated with torque tubes and structural fasteners.

Consolidated gross profit decreased by $112.0 million, or 34%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Gross margin increased to 34% for the nine months ended September 30, 2024, as compared to 27% during the same period in the prior year.

Array Legacy Operations gross profit decreased by $48.9 million, or 20%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Gross margin at Array Legacy Operations increased to 42% from 27% for the nine months ended September 30, 2024 and 2023, respectively.

The increase in gross margin was driven by the realization of 45X benefits associated with torque tubes and structural fasteners.

In addition, the Company also recognized a one-time $4.0 million settlement with one of our vendors during the first quarter of 2024, which was recorded as a reduction of cost of product and service revenue.

STI Operations gross profit decreased by $63.1 million, or 70%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.

Gross margin for STI Operations decreased to 15% from 27% for the nine months ended September 30, 2024 and 2023, respectively, in line with lower revenue and a decrease in average selling prices of 19%, partially offset by lower commodity prices.

Consolidated cost of revenue increased by $127.6 million, or 130%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, in line with higher revenues, partially offset by lower input cost per watt resulting from the realization of 45X benefits by Array Legacy Operations and from supply chain efficiencies.

Consolidated gross profit increased by $21.3 million, or 39%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Gross Margin decreased to 25.3% for the three months ended March 31, 2025, as compared to 35.9% during the same period in the prior year.

Array Legacy Operations gross profit increased by $16.6 million, or 34%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Gross margin decreased to 31% from 43% for the three months ended March 31, 2025 and 2024, respectively.

The decrease in gross margin was driven by a 14% decrease in average selling prices and a 2% reduction in margin from lower 45x benefits.

In addition, gross margin during the three months ended March 31, 2024, included a one-time benefit of $4.0 million

related to a settlement with a supplier, which was recorded as a reduction to cost of product and service revenue.

STI Operations gross profit increased by $4.7 million, or 79%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Gross margin for STI Operations decreased to 12% from 15% for the three months ended March 31, 2025 and 2024, respectively, driven primarily by a 17% reduction in average selling prices, partially offset by a 14% reduction in cost per watt.

Operating Expenses

Consolidated general and administrative expenses for the three and nine months ended September 30, 2024 increased by $2.7 million, or 7%, and decreased by $0.9 million, or 1%, respectively, compared to the three and nine months ended September 30, 2023.

The increase during the third quarter of 2024 was primarily due to an increase of $2.0 million in legal and other professional fees, an increase of $1.6 million in an allowance

for credit risk related to one customer in Brazil, partially offset by lower personnel expenses as a result of lower stock-based compensation expense and lower headcount.

General and administrative expenses decreased during the nine months ended September 30, 2024 due to $4.4 million of lower personnel expenses as a result lower stock-based compensation expense and lower headcount, partially offset by an increase of $3.4 million in an allowance for credit risk related to a limited number of customers in Brazil.

Change in the fair value of contingent consideration for the three and nine months ended September 30, 2024 resulted in a loss of $39 thousand and a gain of $0.3 million, respectively, compared to the three and nine months ended September 30, 2023.

Consolidated depreciation and amortization expense for the three and nine months ended September 30, 2024 decreased by $0.7 million, or 7%, and $2.0 million, or 7%, respectively, compared to the three and nine months ended September 30, 2023.

The decrease was primarily due to certain assets acquired becoming fully amortized.

During the three months ended September 30, 2024, the Company identified certain indicators of impairment, which resulted in an impairment of goodwill of $162.0 million.

See Note 5 – Goodwill and Other Intangibles for additional information.

Consolidated general and administrative expenses for the three months ended March 31, 2025 increased by $6.2 million, or 16%, compared to the three months ended March 31, 2024.

The increase was primarily due to an increase of $3.2 million in personnel expenses, a $1.7 million allowance for credit risk related to one customer and an increase in facility, infrastructure and other costs of $1.3 million.

Change in the fair value of contingent consideration for the three months ended March 31, 2025 resulted in a gain of $0.6 million, compared to the three months ended March 31, 2024, due to the fair value remeasurement of the TRA liability.

Consolidated depreciation and amortization expense for the three months ended March 31, 2025 decreased by $4.3 million, or 44%, compared to the three months ended March 31, 2024.

The decrease was primarily due to certain assets acquired becoming fully amortized or fully impaired at December 31, 2024.

Other (Expense) Income, Net

Other expense for the three months ended March 31, 2025 and 2024 totaled $23 thousand and $0.8 million, respectively, and consisted primarily of other non-income taxes and miscellaneous income/expense.

Interest Income

Consolidated interest income for the three and nine months ended September 30, 2024 increased by $0.8 million, or 23%, and $6.6 million, or 107%, respectively, compared to the three and nine months ended September 30, 2023, primarily as a result of higher cash on hand and higher yields on our cash management program.

Consolidated interest income for the three months ended March 31, 2025 decreased by $0.4 million, or 10%, compared to the three months ended March 31, 2024, primarily as a result of lower yields on our cash management program.

Interest Expense

Consolidated interest expense for the three and nine months ended September 30, 2024 increased by $4.8 million, or 37%, and $9.6 million, or 27%, respectively, compared to the three and nine months ended September 30, 2023, primarily due to the impact of the $74.3 million of principal pay downs on our Term Loan Facility during 2023.

These pay downs were the result of focused efforts to decrease our outstanding debt balance with free cash flows from operations.

Income Tax Expense

Consolidated income tax expense for the three and nine months ended September 30, 2024 decreased by $3.4 million, or 47%, and $23.9 million, or 65%, respectively, compared to the three and nine months ended September 30, 2023.

The Company recorded income tax expense of $3.9 million and $13.0 million, respectively, for the three and nine months ended September 30, 2024, compared to income tax expense of $7.2 million and $36.9 million, respectively, for the three and nine months ended September 30, 2023.

Our effective tax rate was (2.8)% and (12.9)% for the three and nine months ended September 30, 2024, respectively, and 23.8% for both the three and nine months ended September 30, 2023.

No tax benefit was recorded from the goodwill impairment recorded for the three months ended September 30, 2024 as the goodwill is non-deductible for income tax purposes.

Our effective tax rate, excluding the impact of the goodwill impairment was 15.7% and 21.1% for the three and nine months ended September 30, 2024.

The tax expense for the three months ended September 30, 2024, was favorably impacted by lower profits in non-

US jurisdictions and additional tax credits recorded during the period.

This is partially offset by legislative changes in Brazil where a local tax incentive is no longer exempt from federal income tax beginning in 2024.

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

jurisdictions.

The Company recorded income tax expense of $13.0 million for the nine months ended September 30, 2024, compared to an expense of $36.9 million for the nine months ended September 30, 2023.

Income tax expense for the nine months ended September 30, 2024 was favorably impacted by lower profits in non-US jurisdictions and additional tax credits recorded during the period.

This was partially offset by legislative changes in Brazil where a local tax incentive is no longer exempt from federal income tax beginning in 2024.

Consolidated interest expense for the three months ended March 31, 2025 decreased by $0.9 million, or 10%, compared to the three months ended March 31, 2024, primarily due to lower interest rates on our variable rate obligations.

Income Tax Expense (Benefit)

Consolidated income tax expense for the three months ended March 31, 2025 increased by $5.2 million, or 401%, compared to the three months ended March 31, 2024.

The Company recorded income tax expense of $6.5 million and $1.3 million for the three months ended March 31, 2025 and 2024, respectively.

Our effective tax rate was 28.1% and 37.6% for the three months ended March 31, 2025 and 2024, respectively.

Tax expense for the three months ended March 31, 2025, was favorably impacted by lower profits in non-US jurisdictions and additional tax credits recorded during the period.

Additionally, tax expense of $1.0 million related to equity-based compensation, was recorded discretely.

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

jurisdictions, offset by a tax benefit of $1.2 million related to equity-based compensation, recorded discretely.

Tax expense for the three months ended March 31, 2024 was unfavorably impacted by higher income reported in non-U.S.

jurisdictions and tax expense of $0.4 million related to equity-based compensation recorded discretely.

Liquidity and Capital Resources

Divestiture of Investment in Equity Securities

In June 2024, we divested 100% of our equity investment in preferred stock of a private company we purchased in 2021.

We received $12.0 million in proceeds for the divestiture in July 2024.

No gain or loss resulted from this transaction.

Cash Flows (in thousands)

Nine Months Ended September 30,

Net cash provided by operating activities

Three Months Ended March 31,

Net cash (used in) provided by operating activities

$ (13,059) $ 47,502

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Net change in cash and cash equivalents $ (14,648) $ 38,540

We have historically financed our operations primarily with the proceeds from contributions, operating cash flows and short and long-term borrowings.

Historically, we have financed our operations with the proceeds from operating cash flows, capital contributions and short and long-term borrowings.

Our ability to generate positive cash flow from operations is dependent on the strength of our gross margins as well as our ability to quickly turn our working capital.

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, 2024, our cash balance was $332.4 million, of which $24.1 million was held outside the U.S., and net working capital was $527.4 million.

Based on our past performance and current expectations, we believe that operating cash flows will be sufficient to meet our liquidity needs in the next 12 months and beyond.

As of March 31, 2025, our cash balance was $348.3 million, of which $31.5 million was held outside the U.S., and our net working capital was $567.8 million.

We had outstanding borrowings of $232.8 million under our $575 million Term Loan Facility and $161.3 million available to us under our $200 million Revolving Credit Facility.

On May 1, 2025, Array Tech, Inc.

and ATI Investment Sub, Inc., both wholly owned subsidiaries of the Company, entered into the Fourth Amendment to the Credit Agreement.

The Fourth Amendment, among other things, (i) refinanced the Revolving Credit Facility with new revolving commitments and loans thereunder and (ii) revised the Consolidated First Lien Secured Leverage Ratio as applicable under Section 7.09 (Financial Covenant) of the Credit Agreement from 7.10:1.00 to 5.50:1.00.

As amended by the Fourth Amendment, the Revolving Credit Facility has total commitments of $166 million and a maturity date of October 14, 2028;

provided that if on July 15, 2027, the date that is P91D days prior to the stated maturity of the Term Loan Facility, all or any portion of the Term Loan Facility is outstanding, the Revolving Credit Facility will mature on such date.

The Company continually monitors and reviews its liquidity position and funding needs.

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Operating Activities

For the nine months ended September 30, 2024, cash provided by operating activities was $96.4 million attributable to a net loss of $113.5 million and a net cash outflow of $1.9 million from changes in our operating

assets and liabilities, offset by non-cash adjustments of 211.8 million, mainly consisting of goodwill impairment charges, depreciation and amortization expense and equity-based compensation.

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 during the period.

For the three months ended March 31, 2025, cash used in operating activities was $13.1 million attributable to net income of $16.7 million and $19.0 million of non-cash adjustments, mainly consisting of depreciation and amortization expense and equity-based compensation, partially offset by a net cash outflow of $48.8 million from changes in our operating assets and liabilities.

For the three months ended March 31, 2024, cash provided by operating activities was $47.5 million, attributable to net income of $2.2 million, $18.9 million of non-cash adjustments, mainly consisting of depreciation expense and equity-based compensation and a cash inflow of $26.5 million from changes in our operations assets and liabilities.

Investing Activities

For the nine months ended September 30, 2024, net cash provided by investing activities was $6.4 million, of which $12.0 million was related to sale of an equity investment in a private company, partially of by $5.6 million of purchases of property, plant and equipment, net of dispositions.

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.

Cash used in investing activities for both the three months ended March 31, 2025 and 2024 was $2.4 million and related primarily to the purchase of property, plant and equipment.

Financing Activities

For the nine months ended September 30, 2024, net cash used in financing activities was $12.2 million, driven primarily by a $24.9 million net reduction of other debt and $3.2 million in payments on our Term Loan Facility, as well as $1.4 million in TRA payments issued during the nine months ended September 30, 2024.

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

Cash used in financing activities for the three months ended March 31, 2025 was $1.7 million, driven primarily by a $1.1 million payment on our Term Loan Facility and $1.2 million in TRA payments issued during the three months ended March 31, 2025, partially offset a net increase in other debt of $0.6 million.

Cash used in financing activities for the three months ended March 31, 2024 was $4.6 million, driven primarily by a $1.1 million payment on our Term Loan Facility, a net reduction of other debt of $1.5 million, as well as $1.4 million in TRA payments issued during the three months ended March 31, 2024.

Contractual Obligations and Commitments

Information regarding our debt obligations, lease commitments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on form 10-K.

There were no material changes in our contractual obligations and commitments as of March 31, 2025.

Series A Redeemable Perpetual Preferred Stock

On August 10, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain investors (the “Purchasers”).

Pursuant to the Securities Purchase Agreement, on August 11, 2021, we issued and sold to the Purchaser 350,000 shares of a newly designated Series A Redeemable Perpetual Preferred Stock, par value $0.001 per share (the “Series A Shares”), having the powers, designations, preferences, and other rights set forth in the Certificate of Designations, and 7,098,765 shares of our common stock, par value $0.001 per share, for an aggregate purchase price of $346.0 million.

Further, pursuant to the Securities Purchase Agreement, and subject to the terms and conditions set forth therein, as amended, we have issued and sold to the Purchasers 776,235 shares of common stock for an aggregate purchase price of $776.

In January 2022, we issued 50,000 of Series A Shares, and 1,125,000 shares of our common stock in the Additional Closing for an aggregate purchase price of $49.4 million.

On August 10, 2021, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which we issued 400,000 shares of its Series A Redeemable Perpetual Preferred Stock (the “Series A Shares”) and 9,000,000 shares of our common stock for an aggregate purchase price of approximately $395.4 million.

For more information related to the Series A Shares, see Note 8 – Redeemable Perpetual Preferred Stock , to the accompanying condensed consolidated financial statements.

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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, 2024, we posted surety bonds in the total amount of approximately $198.2 million.

As of March 31, 2025, we posted surety bonds in the total amount of approximately $269.9 million.

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

Critical Accounting Policies and Significant Management Estimates

Our goodwill represents the excess of the purchase price of business combinations over the fair value of the net assets acquired.

Goodwill impairment testing requires significant judgment and management estimates, including, but not limited to, the determination of (i) the number of reporting units, (ii) the goodwill and other assets and liabilities to be allocated to the reporting units and (iii) the fair values of the reporting units.

The estimates and assumptions described above, along with other factors such as discount rates, will significantly affect the outcome of the impairment tests and the amounts of any resulting impairment losses.

We may use either a qualitative or quantitative approach when testing a reporting unit’s goodwill for impairment on an annual basis during the fourth quarter of each year, and between annual tests whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If we use a qualitative approach and determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we would then perform the first step of the goodwill impairment test, which would consist primarily of a discounted cash flow (“DCF”) analysis using the income approach, with the resulting value compared to GPC marketplace EBITDA multiples to corroborate the fair value of the reporting unit.

During the quarter ended September 30, 2024, the Company experienced a sustained decline in its stock price, which hit a 52-week low during the quarter, resulting in a decrease in market capitalization.

In addition, the Company updated its long-term projections for the Company’s reporting units and evaluated the execution risk associated with the Company’s projections.

As a result, the Company identified indicators of impairment related to the Company’s reporting units.

Management, with the assistance of a third-party valuation specialist, performed an interim quantitative goodwill impairment test of the Legacy Array Operations and STI Operations reporting units as of September 30, 2024.

As a result of this test, the Company recorded an impairment of goodwill of $162.0 million related to the STI Operations reporting unit.

The estimated fair value of the Array Legacy Operations reporting unit was significantly higher than the carrying balance of the reporting unit.

Subsequent to recording the impairment of goodwill, the Company reconciled the overall market capitalization of the Company, within a reasonable range, to the sum of the estimated fair values of both of the Company’s reporting units.

The significant assumptions used in determining the fair value of the Company’s reporting units primarily relate to the revenue growth rate, the forecasted EBITDA margin, and the selected discount rate used in the discounted cash flow model under the income approach.

Under the GPC method, the selection of EBITDA multiples to be used requires significant judgement.

To the extent that the discount rate used in determining the present value of our cash flows increases, if we do not meet the cash flow projections for the reporting unit, or GPC multiples in the future decrease, additional impairment charges may be recorded in the future.

In addition, a further decrease in the Company’s common stock share price and market capitalization over a sustained period of time could be an indication that there has been a further decrease in the fair value of the Company’s reporting units.

The most significant assumption used in determining the estimated fair value of STI Operations is the discount rate assumption.

A 100-basis point increase in the discount rate would potentially result in an incremental

goodwill impairment of $40 million.

A 100-basis point decrease in the discount rate would result in a reduction in the goodwill impairment of $48 million.

For a further discussion of our critical accounting estimates, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024.

There have been no material changes to the critical accounting estimates disclosed in such Annual Report on Form 10-K other than what has been disclosed above.

In preparing our condensed consolidated financial statements in conformity with U.S.

GAAP, we make estimates and assumptions that affect the amounts of reported assets, liabilities, revenues, and expenses, as well as the disclosure of contingent liabilities.

Some of our accounting policies require the application of significant judgment in the selection of the appropriate assumptions for making these estimates.

By their nature, these judgments are subject to an inherent degree of uncertainty.

We base our judgments and estimates on our historical experience, our forecasts, and other available information as appropriate.

We believe the judgments and estimates involved in accrued solar module collection and recycling, product warranties, and government grants have the greatest potential impact on our condensed consolidated financial

The actual results experienced by us may differ materially and adversely from our estimates.

To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

For a description of the accounting policies that require the most significant judgment and estimates in the preparation of our condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes to our accounting policies during the three months ended March 31, 2025.

Adoption of New and Recently Issued Accounting Pronouncements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis