Array Technologies, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial information included in Part I, “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q (this “Quarterly Report”), as well as our audited financial statements and notes thereto as of and for the year ended December 31, 2024, and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024 (“2024 Annual Report”). Each of the terms the “Company,” “Array,” “we,” or “us” as used herein refers collectively to Array Technologies, Inc. and its wholly owned subsidiaries, unless otherwise stated. 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 2024 Annual Report, as filed as Exhibit 99.2 to our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on June 24, 2025 (the “June 24, 2025 8-K”), and our other documents on file with the SEC. 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, 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, including the reduction or elimination of certain government incentives, 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 growth or the rate of growth in demand for solar energy projects; factors outside of our control affecting the variability 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; competitive pressures within our industry; 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 and reduce the demand for our products; existing electric utility industry policies and regulations, and any subsequent changes or new related policies and regulations, including as a result of the OBBB (as defined below), which may present technical, regulatory and economic barriers to the purchase and use of solar energy systems and 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 31 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 to a pandemic, the Ukraine-Russia war, attacks on shipping in the Red Sea, conflict in the Middle East, inflation and 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, which could reduce demand for solar energy systems; 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, which may impair our ability to report our financial results accurately; 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; our ability to consummate the APA transaction (as defined below) and to successfully integrate APA (defined below) into our existing operations and realize the anticipated benefits of the acquisition; and other factors described in more detail in the section captioned “Risk Factors” in this Quarterly Report, our 2024 Annual Report, as filed as Exhibit 99.2 to our June 24, 2025 8-K, and our other documents on file with the SEC. Given these uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this report. You should read this report with the understanding that our actual future results may be materially different from what we expect. 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. Overview 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 harsh 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. use trackers. Our flagship tracker, DuraTrack ® , uses a patented design that allows one motor to drive multiple rows of solar panels through articulated driveline joints. To avoid infringing on our U.S. patent, our competitors must use designs that we believe are inherently less efficient and reliable. For example, our largest competitor’s design requires one motor for each row of solar panels. As a result, we believe our products have greater reliability, 32 lower installation costs, reduced maintenance requirements and competitive manufacturing costs. Our core U.S. 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 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, the Array STI H250. 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. Our third tracker product, OmniTrack ® , which was introduced in September 2022, requires significantly less grading and civil works permitting prior to installation in addition to accommodating uneven terrain. 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 six months ended June 30, 2025, we derived 72% and 28% of our revenues from customers in the U.S. and the rest of the world, respectively. As of June 30, 2025, we had shipped approximately 91 gigawatts of trackers to customers worldwide. Equity Purchase Agreement with APA Solar On June 17, 2025, our wholly-owned subsidiary, STINorland USA, Inc. (“STI USA”), entered into a definitive agreement with APA Solar, LLC (“APA”), SunHoldings, LLC ("”SunHoldings”), and the guarantors thereto (such transaction, the “APA Transaction”) to acquire all of the issued and outstanding equity interests of APA, a company that designs, engineers, and manufactures solar racking, mounting and foundation systems. The APA Transaction is expected to close in the third quarter of 2025, subject to certain closing conditions customary for a transaction of this nature. 2.875% Convertible Senior Notes due 2031 On June 27, 2025, we completed a private placement of $345 million in aggregate principal amount of 2.875% Convertible Senior Notes due 2031 (the “2031 Convertible Notes”), resulting in net proceeds of $334.6 million after deducting initial purchasers’ discounts and offering expenses. The 2031 Convertible Notes were issued pursuant to an indenture, dated June 27, 2025, between the Company and U.S. Bank Trust Company, National Association, as trustee. The 2031 Convertible Notes are senior unsecured obligations of the Company and will mature on July 1, 2031, unless earlier converted redeemed or repurchased. Interest is payable semiannually in arrears at a rate of 2.875% per year on January 1 and July 1 of each year, beginning on January 1, 2026. Research and Development 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. We expense these costs as incurred prior to a respective product being ready for commercial production. Total engineering expense was $4.5 million and $4.1 million during the three months ended June 30, 2025 and 2024, respectively, of which $2.5 million and $1.8 million were related to R&D activities performed by the Company during the same periods, respectively. Total engineering expense was $8.9 million and $8.3 million during the six months ended June 30, 2025 and 2024, respectively, of which 33 $4.9 million and $3.7 million were related to R&D activities performed by the Company during the same periods, respectively. 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 and make the timing of revenue difficult to forecast. Our end-users’ ability to install solar energy systems has been affected by a number of factors including: • Weather . 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. • The U.S. interest rate environment . We have had customers delay planned installations or look to renegotiate power purchase agreements to improve project returns based on various rate environments. For example, in anticipation of interest rate reductions and more favorable project financing conditions later in 2024, some customers delayed installations. While the Federal Reserve began lowering interest rates in the second half of 2024, they have remained flat so far in 2025, with varying outlooks on whether additional rate cuts may occur. Customers must weigh this uncertainty in conjunction with other macroeconomic factors when assessing the returns and timing for relevant projects. • Availability of necessary equipment . 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 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 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 be fully phased out 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 . 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. 34 Impact of OBBB While solar power is cost-competitive with conventional forms of generation in many U.S. states even without the ITC, we believe previous step-downs in the ITC in past years have influenced the timing and quantity of some customers’ orders. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBB”), which includes changes to the energy tax credits. Specifically, the solar ITC now terminates for facilities that are placed in service after December 31, 2027, but that termination does not apply if the taxpayer begins construction on the facility before July 4, 2026. In addition, the OBBB imposes new foreign entity of concern limitations on the ITC before it expires, which could impact the ability of solar facilities to claim the ITC. Specifically, taxpayers cannot claim the credit in taxable years beginning after enactment of the OBBB if they are prohibited foreign entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities). The credit is also disallowed for solar facilities that begin construction after December 31, 2025 that receive material assistance from a prohibited foreign entity. On July 7, 2025, President Trump issued an executive order instructing the U.S. Department of Treasury to issue updated guidance, including on commencement of construction, within 45 days. Customers are navigating short-term uncertainty while the new guidance on commencement of construction is unknown. If these financial benefits vary significantly from our investment 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. The OBBB also extended key provisions of the 2017 Tax Cuts and Jobs Act including, but not limited to, federal bonus depreciation and deductions for domestic research and development expenditures. The Company is currently evaluating the income tax impact of OBBB on the Company’s future consolidated financial statements. Section 45X Credit The Section 45X manufacturing production tax credit applies to eligible components, including torque tube and structural fasteners. We have determined that the statutory definitions for these components (which are reiterated in final regulations) apply to our tracker 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. The OBBB did not modify the phase-out of the section 45X credit or the definitions of eligible components relating to solar trackers; however, the OBBB did impose foreign entity of concern limitations on taxpayers claiming the section 45X credit. Specifically, taxpayers cannot claim the credit in taxable years beginning after enactment of the OBBB if they are prohibited foreign entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities). The credit is also disallowed in taxable years beginning after enactment of the OBBB for eligible components that receive material 35 assistance from a prohibited foreign entity. We are currently analyzing the impact of the foreign entity of concern limitations may have for credits claimed in 2026 and future years. Domestic Content Safe Harbor Guidance The IRS issued Notice 2023-38 in May of 2023 setting forth guidance on the domestic content bonus tax credits under the IRA. 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. 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. The OBBB increased the domestic content threshold for solar facilities that begin construction after June 16, 2025, to claim the domestic content bonus credit; however, the OBBB did not otherwise amend the requirements for claiming a domestic content bonus credit or the guidance previously issued by the government. It is possible, however, that the Trump Administration may seek to modify the domestic content guidance that was issued by the Biden Administration. We are currently evaluating the potential impact that the increased domestic content threshold may have on our business. 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 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 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. These measures aim to reduce delays to get the product to project sites on time. There is still uncertainty on how long these disruptions and the severity of their impact on our operations will last, but we continue to monitor the situation and evaluate our procurement and 36 supply chain strategies, as to reduce any negative impact on our business, financial condition, and results of operations. Inflation Inflationary pressures may continue to negatively impact our results of operations in the near-term. To mitigate the inflationary pressures on our business, despite our average selling price (“ASP”) decreasing due to the current deflationary environment for commodities like steel, 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 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 2012. 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. 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 U.S. Department of Commerce (the “USDOC”) and the U.S. International Trade Commission (“USITC”) seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam. On May 20, 2025 the USITC made a final determination that U.S. industry had been materially injured by imports from Malaysia and Vietnam and threatened by imports from Cambodia and Thailand. On June 9, 2025 the USDOC issued AD/CVD orders that took effect on June 16, 2025. The tariff rates under the final determination vary from below 1% to more than 3,400%, depending on the relevant company. On July 17, 2025, the Alliance for American Solar Manufacturing and Trade, which consists of First Solar, Mission Solar Energy, and Qcells, filed another petition with the USDOC and USITC seeking the imposition of AD/CVD tariffs on imports of CSPV cells and modules from India, Indonesia, and Laos. The petition alleges margins of 213.96 percent for India, 89.65 percent for Indonesia, and 245.79 to 249.09 percent for Laos. The final determination by the DOC is expected to be made sometime in fall 2026. 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 investigations, and effective enforcement of the AD/CVD orders could negatively impact our results of operations. U.S. 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, 37 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 a period of 90 days. On July 7, 2025, President Trump extended the initial 90-day period for the 10% baseline rate until August 1, 2025 while also announcing increased tariffs for certain countries. These modifications were announced via an executive order on July 31, 2025 and became effective on August 7, 2025. President Trump also launched a new Section 301 investigation into Brazil’s alleged unreasonable or discriminatory trade practices; initiated a new Section 232 investigation into imports of polysilicon and its derivatives; initiated a new Section 232 investigation into imports of unmanned aircraft systems and their parts and components; and announced a 50% tariff on imports of copper following the conclusion of a Section 232 investigation, effective August 1, 2025. Finally, President Trump has most recently threatened to increase tariffs on imports from Canada to 35% and on imports from Mexico to 30%. Initially, Canada and Mexico were not subject to reciprocal tariffs as they were subject to earlier tariff actions. 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. 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 For non-U.S. 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. For non-U.S. 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 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 MWs 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 and cost per watt (“CPW”). ASP is calculated by dividing total applicable revenues by total applicable MWs, whereas 38 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. Key Components of Our Results of Operations The following discussion describes certain line items in our condensed consolidated statements of operations. Revenue 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. Our contractual delivery period for the tracker system and parts can vary from days to several months. Contracts can range in value from hundreds of thousands to tens of millions of dollars. 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 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. We review and update the contract related estimates on an ongoing basis and recognize adjustments for any project specific facts and circumstances that could impact the measurement of the extent of progress, such as the total costs to complete the contracts, under the cumulative catch-up method. Due to the relatively short duration of our outstanding performance obligations, and our ability to estimate the remaining costs to be incurred, which are substantially all material costs covered under our material supply agreements with our suppliers, we have not recorded any material catch-up adjustments for the periods presented that would have impacted revenues or EPS related to revisions in our measurement of remaining progress of our performance obligations. Cost of Revenue and Gross Profit 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. 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 39 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. Gross profit will also be impacted by tax incentives we can recognize, for example ICMS value added tax benefits in Brazil, which will be fully phased out 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, provision for credit losses, professional fees, and third party services. The majority of our sales during the six months ended June 30, 2025 and 2024, were in the U.S.; however, we also have a sales presence in 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 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 . 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 Amortization of developed technology. Non-Operating Expenses 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 “Senior Secured Credit Facility”), which included a $575 million term loan (the “Term Loan Facility”) and includes a $166 million revolving credit facility (the “Revolving Credit Facility”); the 1.00% Convertible Senior Notes due 2028 (the “2028 Convertible Notes” and, together with the 2031 Convertible Notes, the “Convertible Notes”); the 2031 Convertible Notes; and other debt held by our STI Operations (“Other Debt”). Gain on extinguishment of debts, net consists of the difference between the cash paid and the carrying value of repurchased 2028 Convertible Notes. We are subject to 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. 40 Reportable Segments 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. 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 15 – Segment Reporting in the accompanying notes to the condensed consolidated financial statements. 41 Results of Operations The following table sets forth our consolidated statement of operations (in thousands, except percentages): Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2025 2024 $ % 2025 2024 $ % Revenue $ 362,243 $ 255,766 $ 106,477 42 % $ 664,606 $ 409,169 $ 255,437 62 % Cost of revenue Cost of product and service revenue 261,479 166,173 95,306 57 % 483,775 260,847 222,928 85 % Amortization of developed technology 3,640 3,640 — — % 7,279 7,279 — — % Total cost of revenue 265,119 169,813 95,306 56 % 491,054 268,126 222,928 83 % Gross profit 97,124 85,953 11,171 13 % 173,552 141,043 32,509 23 % Operating expenses General and administrative 44,954 36,971 7,983 22 % 88,899 74,755 14,144 19 % Change in fair value of contingent consideration 150 503 (353) (70) % — (232) 232 100 % Depreciation and amortization 5,644 8,877 (3,233) (36) % 10,993 18,504 (7,511) (41) % Total operating expenses 50,748 46,351 4,397 9 % 99,892 93,027 6,865 7 % Income from operations 46,376 39,602 6,774 17 % 73,660 48,016 25,644 53 % Interest income 3,800 4,782 (982) (21) % 7,119 8,462 (1,343) (16) % Interest expense (8,768) (8,614) (154) (2) % (16,803) (17,554) 751 4 % Foreign currency gain (loss), net 1,343 (468) 1,811 387 % 2,032 (967) 2,999 310 % Gain on extinguishment of debts, net 14,207 — 14,207 100 % 14,207 — 14,207 100 % Other expense, net (79) (1,794) 1,715 96 % (56) (980) 924 94 % Total other income (expense), net 10,503 (6,094) 16,597 272 % 6,499 (11,039) 17,538 159 % Income before income tax expense 56,879 33,508 23,371 70 % 80,159 36,977 43,182 117 % Income tax expense 13,617 7,810 5,807 74 % 20,151 9,114 11,037 121 % Net income $ 43,262 $ 25,698 $ 17,564 68 % $ 60,008 $ 27,863 $ 32,145 115 % 42 The following table provides details on our operating results by reportable segment for the respective periods (in thousands, except percentages): Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2025 2024 $ % 2025 2024 $ % Revenue Array Legacy Operations $ 291,886 $ 185,160 $ 106,726 58 % $ 505,100 $ 299,541 $ 205,559 69 % STI Operations 70,357 70,606 (249) — % 159,506 109,628 49,878 45 % Total $ 362,243 $ 255,766 $ 106,477 42 % $ 664,606 $ 409,169 $ 255,437 62 % Gross profit Array Legacy Operations $ 84,005 $ 77,306 $ 6,699 9 % $ 149,686 $ 126,392 $ 23,294 18 % STI Operations 13,119 8,647 4,472 52 % 23,866 14,651 9,215 63 % Total $ 97,124 $ 85,953 $ 11,171 13 % $ 173,552 $ 141,043 $ 32,509 23 % Comparison of the three and six months ended June 30, 2025 and 2024 Revenue Consolidated revenue increased $106.5 million, or 42%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 58%. Array Legacy Operations revenue increased by $106.7 million, or 58%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by an increase of approximately 81% in volume, partially offset by a decrease of approximately 13% in ASPs, reflecting the commodity price decrease at the time when revenue contracts were executed. Revenue from STI Operations decreased by 0.2 million, or 0.4% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease was primarily driven by a decrease of approximately 8% in volume and an increase of approximately 5% in ASPs, partially offset by a favorable foreign currency impact of approximately 3%. Consolidated revenue increased $255.4 million, or 62%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 69% and STI Operations of 45%. Array Legacy Operations revenue increased by $205.6 million, or 69%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily driven by an increase of approximately 94% in volume, partially offset by a decrease of approximately 13% in ASPs, reflecting the commodity price decrease at the time when revenue contracts were executed. Revenue from STI Operations increased by $49.9 million, or 45% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The increase was primarily driven by an increase of approximately 63% in volume, partially offset by a decrease of approximately 7% in ASPs and an unfavorable foreign currency impact of approximately 4%. 43 Cost of Revenue and Gross Profit Consolidated cost of revenue increased by $95.3 million, or 57%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was in line with higher revenues, partially offset by higher 45X benefits during the quarter. Consolidated gross profit increased by $11.2 million, or 13%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Gross margin decreased to 26.8% for the three months ended June 30, 2025, as compared to 33.6% during the same period in the prior year. Array Legacy Operations gross profit increased by $6.7 million, or 9%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. However, gross margin decreased to 28.8% from 41.8% for the three months ended June 30, 2025 and 2024, respectively. The decrease in gross margin was driven by a 13% decrease in average selling prices, reflecting the commodity price decrease at the time when revenue contracts were executed, and a 7% increase in cost per watt, attributable to higher tariffs and one-time inventory-related charges. STI Operations gross profit increased by $4.5 million, or 52%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Gross margin for STI Operations increased to 18.6% from 12.2% for the three months ended June 30, 2025 and 2024, respectively, driven primarily by a 5% increase in average selling prices and a 3% reduction in cost per watt. Consolidated cost of revenue increased by $222.9 million, or 83%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, in line with higher volume. Consolidated gross profit increased by $32.5 million, or 23%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Gross margin decreased to 26.1% for the six months ended June 30, 2025, as compared to 34.5% during the same period in the prior year. Array Legacy Operations gross profit increased by $23.3 million, or 18%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. However, gross margin decreased to 29.6% from 42.2% for the six months ended June 30, 2025 and 2024, respectively. The decrease in gross margin was driven by a 13% decrease in average selling prices, reflecting the commodity price decrease at the time when revenue contracts were executed, and a 6% increase in cost per watt. In addition, gross margin during the six months ended June 30, 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 $9.2 million, or 63%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. Gross margin for STI Operations increased to 15.0% from 13.4% for the six months ended June 30, 2025 and 2024, respectively, driven primarily by a 7% reduction in ASPs, offset by a 8% reduction in cost per watt. Operating Expenses Consolidated general and administrative expenses for the three and six months ended June 30, 2025 increased by $8.0 million, or 22% and increased by $14.1 million, or 19%, respectively, compared to the three and six months ended June 30, 2024. The increase during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily due to an increase of $5.4 million in personnel-related expenses including favorable one-time adjustments in variable compensation during the three months ended June 30, 2024, $3.1 million in acquisition-related expenses, and decrease of $0.5 million in facility, 44 infrastructure and other costs. The increase during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due an increase of $8.7 million from personnel-related expenses including favorable one-time adjustments in variable compensation during the six months ended June 30, 2024, $3.3 million in acquisition-related expenses, and increase of $2.1 million in facility, infrastructure and other costs. Change in the fair value of contingent consideration for the three and six months ended June 30, 2025 resulted in a loss of $0.4 million and a gain of $0.2 million, respectively, compared to the three and six months ended June 30, 2024, due to the fair value remeasurement of the TRA liability. Consolidated depreciation and amortization expense for the three and six months ended June 30, 2025 decreased by $3.2 million and $7.5 million, or 36% and 41%, respectively, compared to the three and six months ended June 30, 2024. The decrease was primarily due to certain assets acquired becoming fully amortized or fully impaired at December 31, 2024. Other Expense, Net Other expense, net totaled $0.1 million and $1.8 million for the three months ended June 30, 2025 and 2024, respectively, and $0.1 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively. The decrease in both periods was primarily driven by fluctuations in other non-income taxes and miscellaneous income and expense items. Interest Income Consolidated interest income for the three and six months ended June 30, 2025 decreased by $1.0 million, or 21%, and $1.3 million, or 16%, respectively, compared to the three and six months ended June 30, 2024, primarily as a result of lower yields on our cash management program. Interest Expense Consolidated interest expense for the three and six months ended June 30, 2025 increased by $0.2 million, or 2%, and decreased by $0.8 million, or 4%, respectively, compared to the three and six months ended June 30, 2024, primarily due to changes in interest rates on our variable rate obligations. Income Tax Expense Consolidated income tax expense for the three and six months ended June 30, 2025 increased by $5.8 million, or 74%, and $11.0 million, or 121%, respectively, compared to the three and six months ended June 30, 2024. The Company recorded Income tax expense of $13.6 million and $7.8 million for the three months ended June 30, 2025 and 2024, respectively, and $20.2 million and $9.1 million for the six months ended June 30, 2025 and 2024, respectively. Our effective tax rate was 23.9% and 25.1% for the three and six months ended June 30, 2025, respectively, and 23.3% and 24.6% for the three and six months ended June 30, 2024, respectively. The income tax expense for the three and six months ended June 30, 2025 was favorably impacted by additional tax credits recorded during the periods. Additionally, tax expense of $0.1 million and $1.2 million related to equity-based compensation was recorded discretely for the three and six months ended June 30, 2025, respectively. The income tax expense for the three and six months ended June 30, 2024 was impacted by higher profits in non-US jurisdictions. Additionally, tax expense of $0.1 million and $0.5 million related to equity-based compensation was recorded discretely for the three and six months ended June 30, 2024. 45 Liquidity and Capital Resources Cash Flows (in thousands) Six Months Ended June 30, 2025 2024 Net cash provided by operating activities $ 30,782 $ 51,459 Net cash used in investing activities (8,983) (4,488) Net cash used in financing activities (12,776) (4,144) Effect of exchange rate changes on cash and cash equivalents 5,606 (9,587) Net change in cash and cash equivalents $ 14,629 $ 33,240 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 liquidity needs in the next 12 months and beyond. As of June 30, 2025, our cash balance was $377.3 million, of which $33.8 million was held outside the U.S., and our net working capital, including cash and cash equivalents, was $570.1 million. We had $133.7 million available to us under our $166 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. On June 27, 2025, we completed a private placement of $345 million in aggregate principal amount of 2031 Convertible Notes, resulting in net proceeds of $334.6 million after deducting initial purchasers’ discounts and offering expenses. The proceeds were used to repay in full our Term Loan Facility and to repurchase $100.0 million aggregate principal amount of the 2028 Convertible Notes. The repurchased 2028 Convertible Notes had a net carrying value of $98.5 million, inclusive of unamortized debt discount, resulting in a gain on extinguishment of debt of approximately $20.1 million. In connection with the issuance of the 2031 Convertible Notes, we also entered into capped call transactions designed to reduce potential dilution to common stockholders upon conversion of the notes (the “2031 Capped Calls”). These instruments cover approximately 42.5 million shares of common stock, with an initial strike price of $8.12 and a cap price of $12.74 per share, subject to anti-dilution adjustments. These instruments are scheduled to expire on July 1, 2031. The net effect of the 2031 Capped Calls is to raise the conversion price on the 2031 Convertible Notes from $8.12 to $12.74. However, these transactions are separate from the 2031 Convertible Notes and do not affect the terms of the notes or the rights of note holders. We continually monitor and review our liquidity position and funding needs. Our management believes that our ability to generate operating cash flows in the future and available borrowing capacity under our Senior Secured Credit Facility will be sufficient to meet our future liquidity needs. 46 Operating Activities For the six months ended June 30, 2025, cash provided by operating activities was $30.8 million attributable to net income of $60.0 million and $25.1 million of non-cash adjustments, mainly consisting of depreciation and amortization expense and equity-based compensation, partially offset by a net cash outflow of $54.3 million from changes in our operating assets and liabilities. For the six months ended June 30, 2024, cash provided by operating activities was $51.5 million, of which 61.7 million was generated from net income as adjusted for the impact of non-cash expenses, consisting primarily of depreciation and amortization, amortization of developed technology, and equity-based compensation. Investing Activities For the six months ended June 30, 2025 and 2024, net cash used in investing activities was $9.0 million and $4.5 million, respectively, related primarily to the purchase of property, plant and equipment. Financing Activities For the six months ended June 30, 2025, cash used in financing activities was $12.8 million. This was primarily driven by a $233.9 million repayment on our Term Loan Facility, $78.4 million repurchase of 2028 Convertible Notes, and $35.1 million premium paid in connection with the purchase of the 2031 Capped Calls, partially offset by an increase of $334.6 million from net proceeds from the issuance of 2031 Convertible Notes, after deducting initial purchasers’ discounts and offering expenses. For the six months ended June 30, 2024, cash used in financing activities was $4.1 million, driven primarily by a $12.7 million net reduction of Other Debt and $2.2 million in payments on our Term Loan Facility, as well as $1.4 million in TRA payments issued during the six months ended June 30, 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. Other than as set forth below, there were no material changes in our contractual obligations and commitments as of June 30, 2025. Equity Purchase Agreement with APA Solar The APA Transaction is expected to close in the third quarter of 2025, subject to satisfaction of certain closing conditions customary for a transaction of this nature. Under the terms of the equity purchase agreement governing the APA Transaction (the “Purchase Agreement”), our wholly-owned subsidiary, STINorland USA, Inc. (“STI USA”) has agreed to pay a base purchase price of $210,000,000, subject to customary adjustments for cash, net working capital, indebtedness and transaction expenses (the “Purchase Price”). An amount equal to 80% of the Purchase Price will be paid in cash to SunHoldings on the closing date. Subject to the terms and conditions set forth in the Purchase Agreement, an amount equal to 20% of the Purchase Price will be payable to SunHoldings in two equal installments (each, a “Deferred Consideration Installment”) on the first and second anniversaries of the closing date (each, a “Deferred Consideration Anniversary”), subject to certain conditions. Each Deferred Consideration Installment will, at the Company’s election, be paid (i) in cash, (ii) through the issuance of shares of Company common stock, par value $0.001 per share (“common stock”), valued at the closing price on the trading day immediately preceding the applicable Deferred Consideration Anniversary (if any such shares are issued, the “Deferred Consideration Shares”) or (iii) by any combination of the foregoing. 47 In addition, the Purchase Agreement provides for an earnout pursuant to which SunHoldings may be granted additional shares of the Company’s common stock based upon APA’s achievement of certain financial performance targets during the three-year period ending on the last day of the first fiscal quarter of the Company that ends following the third anniversary of the Closing (the “Earnout Consideration”). The maximum number of shares payable as Earnout Consideration will be determined by dividing $40,000,000 by the volume weighted average price of our common stock for the 10 trading days immediately following the Closing. The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90,000,000. The Purchase Agreement provides that, to the extent the issuance of any Earnout Consideration or Deferred Consideration Shares would require stockholder approval under Nasdaq Listing Rule 5635(a), the Company will pay cash in lieu of issuing such shares, unless such stockholder approval has been obtained. The parties’ obligation to complete the APA Transaction is subject to certain closing conditions customary for a transaction of this nature, including, among others: (i) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) absence of any law or order prohibiting the consummation of the APA Transaction or any proceeding by a governmental authority that could reasonably result in an order prohibiting the APA Transaction, (iii) subject to certain materiality thresholds, the accuracy of the representations and warranties made by STI USA, APA and SunHoldings, (iv) material compliance by STI USA, APA and SunHoldings with each of their respective obligations under the Purchase Agreement, and (v) in the case of STI USA, the absence of a material adverse effect on APA. The Purchase Agreement may be terminated by either STI USA or SunHoldings if the closing has not been consummated by October 15, 2025. The Purchase Agreement may also be terminated in certain other circumstances, including (i) by STI USA or APA if there is a final and nonappealable law or order preventing or otherwise making illegal the consummation of the APA Transaction, (ii) by STI USA, subject to certain cure periods, if APA or SunHoldings is in breach of any of its respective representations, warranties, covenants or agreements under the Purchase Agreement that would cause STI USA’s closing conditions with respect to the accuracy of APA’s or SunHoldings’ representations or compliance with covenants not to be satisfied, (iii) by APA, subject to certain cure periods, if STI USA is in breach of any of its respective representations, warranties, covenants or agreements under the Purchase Agreement that would cause APA’s closing conditions with respect to the accuracy of STI USA’s representations or compliance with covenants not to be satisfied, and (iv) by mutual written consent of STI USA and APA. Series A Redeemable Perpetual Preferred Stock On August 10, 2021, we entered into a 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. Debt Obligations For a discussion of our debt obligations see Note 7 – Debt to our condensed consolidated financial statements included in this Quarterly Report. Surety Bonds 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 48 obligations. As of June 30, 2025, we posted surety bonds in the total amount of approximately $248.5 million. These off-balance sheet arrangements do not adversely impact our liquidity or capital resources. Critical Accounting Policies and Significant Management Estimates 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 statements. 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 June 30, 2025. Adoption of New and Recently Issued Accounting Pronouncements Refer to Note 2 – Summary of Significant Accounting Policies to our condensed consolidated financial statements for a discussion of adoption of new and recently issued accounting pronouncements.