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, 2025, 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, 2025 (“2025 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 2025 Annual Report, and our other documents on file with the U.S. Securities and Exchange Commission (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, technology or product developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, including potential regulatory reform related to energy credits, uncertainty relating to 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 and changes in trade policy, 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,” “positioned,” “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 One Big Beautiful Bill Act (“OBBB”), 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;
41
changes in the global trade environment, including the continuation or 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 Russia-Ukraine war, attacks on shipping in the Red Sea and Strait of Hormuz, conflict in the Middle East (including, but not limited to, the war in Iran), changing trade policies, 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 rights; 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; the development, deployment and commercialization of new products, including DuraTrack D2STM, OmniTrack 2.0, the 60 degree variant of DuraTrack, and our ARRAY AtlasTM suite of foundation-to-tracker solutions; 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 and the use of artificial intelligence by cyber threat actors; 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; our ability to complete the acquisition of Affordable Wire Management, LLC (“AWM”) on the anticipated terms and timetable, including the possibility that closing conditions may not be satisfied or waived; our ability to successfully integrate APA Solar, LLC (“APA”) and AWM into our existing operations, realize the anticipated benefits or synergies of the acquisitions of APA and AWM and achieve strategic and other objectives relating to the acquisitions; risks related to any unforeseen liabilities of AWM; and other factors listed and described in more detail in the section captioned “Risk Factors” in this Quarterly Report, our 2025 Annual Report, 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 and fixed-tilt systems 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, fixed-tilt systems, software platforms, foundation solutions, and field services combine to optimize 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 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.
42
Hybrid sites utilizing trackers and fixed-tilt can be utilized to optimize productivity based on the topography, geography, and environment. 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, 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 multiple 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.
With the APA Acquisition (as defined below) in August 2025, we added a portfolio of fixed-tilt and foundation solutions, including the APA Titan and APA Titan Duo™ racking systems and the APA A-Frame™ Interface foundation. These products deliver adaptable designs for utility-scale projects, offering flexibility for challenging terrain, high snow loads, and large-format modules while streamlining installation and reducing material costs.
In May 2026, we introduced DuraTrack D2S™, which is our next-generation dual-row tracker designed for key international markets, which combines patented passive wind stow technology, the terrain adaptability of OmniTrack®, and optimized control through SmarTrack® into a single flexible platform. In July 2026, we introduced Atlas™, a new suite of foundation-to-tracker solutions designed exclusively for ARRAY trackers and APA foundations to enhance their technical interoperability.
Our corporate headquarters are located in Albuquerque, New Mexico. We sell our products to solar developers, independent power producers, utilities, and engineering, procurement and construction companies (“EPCs”) that build solar energy projects, often under master supply agreements or multi-year procurement contracts. During the six months ended June 30, 2026, we derived 94% and 6% of our revenues from customers in the U.S. and the rest of the world, respectively. From the founding of Array through June 30, 2026, we have shipped approximately 102 gigawatts of trackers to customers worldwide.
Acquisition of APA Solar
On August 14, 2025 (the “Closing Date”), the Company, through its indirect wholly owned subsidiary STINorland USA, Inc., a California corporation (“APA Buyer”), completed the acquisition of 100% of the issued and outstanding equity interests of APA (such acquisition, the “APA Acquisition”), pursuant to the terms of the equity purchase agreement, dated as of June 17, 2025, by and among the Company, APA Buyer, APA, SunHoldings, LLC, an Ohio limited liability company (“APA Seller”) and the guarantors party thereto (as amended, the “APA Purchase Agreement”). The cash paid as of the Closing Date was $159.9 million, net of $10.1 million in preliminary and customary purchase price adjustments, which includes $6.2 million to retire debt. For U.S. GAAP purposes, the aggregate cash consideration paid was approximately $166.1 million, subject to final post-closing adjustment. We expect to finalize customary post-closing adjustments by August 2026. The APA Purchase Agreement also includes an earnout provision estimated to have a fair value of approximately $19.3 million as of the Closing Date (the “Earnout Consideration”), which is included in the
43
purchase consideration, under which the APA Seller may receive shares of Company common stock, or equivalent cash value at the Company’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending on September 30, 2028. As a result, the purchase consideration for the APA Acquisition totaled approximately $185.4 million. Subject to the terms and conditions set forth in the APA Purchase Agreement, the Company has also agreed to pay aggregate deferred purchase price consideration of approximately $40.0 million payable in three installments over a two-year period based on service within five business days after the first and second anniversaries from the Closing Date and as set forth in Note 3 - Acquisition (the “Deferred Consideration”). Each of the Earnout Consideration and Deferred Consideration are described in more detail below. The Company is currently finalizing the valuation of the acquired assets and liabilities and assessing the related accounting impacts.
The amounts recorded as of June 30, 2026 are preliminary, as the Company is finalizing working capital, post-closing, and other customary adjustments. These preliminary estimates are subject to change within the measurement period (defined as the twelve months following the Closing Date) and related accounting adjustments may be materially different, as the Company obtains additional information on these matters and as additional information is made known during the post-acquisition measurement period. As a result of further refining its estimates and assumptions since the date of the acquisition, the Company recorded measurement period adjustments to the initial opening balance sheet. There were no measurement period adjustments materially impacting earnings that would have been recorded in previous reporting periods if the adjustments had been recognized as of the acquisition date.
In connection with the APA Acquisition, the Company has lease agreements for offices, manufacturing facilities and warehouses located in Ohio and Connecticut. Of these lease agreements, four are with related parties owned by certain members of APA's management team.
Expenses related to these operating lease agreements are allocated based on usage to Cost of product and service revenue or General and administrative expenses in the consolidated statements of operations. Total costs related to these operating lease agreements were $0.7 million and $1.4 million for the three and six months ended June 30, 2026, respectively.
APA designs, engineers, and manufactures solar racking, mounting and foundation systems. Integrating such systems into our business model through the acquisition of APA expands our product portfolio to better serve the evolving needs of the solar industry and our customers.
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.
Proposed Business Combination
On July 16, 2026, the Company and STINorland USA, Inc., a California corporation and an indirect wholly-owned subsidiary of the Company (the “AWM Buyer”), entered into an equity purchase agreement (the “AWM Purchase Agreement”) with Affordable Wire Management, LLC, a Delaware limited liability company (“AWM”),
44
DS Equity Holdings LLC, a Delaware limited liability company, Scott R. Rand and Daniel R. Smith, pursuant to which the AWM Buyer will acquire all of the issued and outstanding equity interests of AWM, a company that designs, manufactures, markets and sells wire management products for the utility scale photovoltaic or battery storage system industries (the “AWM Transaction”).
Under the terms of the AWM Purchase Agreement, the AWM Buyer has agreed to pay a base purchase price of $153.0 million, plus performance-based earn-out payments of up to $40.0 million and up to $10.0 million of deferred payments to Scott R. Rand and Daniel R. Smith contingent on their continued employment.
The AWM Transaction is expected to close in the third quarter of 2026, subject to receiving any required regulatory approvals and the satisfaction of other customary closing conditions.
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 consist primarily of personnel-related costs associated with our internal engineers, third-party consultants, materials and overhead. We expense these costs as incurred prior to a respective product being ready for commercial production. R&D expense was $5.0 million and $2.5 million during the three months ended June 30, 2026 and 2025, respectively, and $8.0 million and $4.9 million during the six months ended June 30, 2026 and 2025, 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 can be 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 (“PPAs”) to improve project returns based on various rate environments. While the Federal Reserve began lowering interest rates in the second half of 2024, the timing and impact of subsequent rate adjustments during 2025 and 2026 continued to create additional considerations for our customers, and there are 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 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, 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 historically affected the timing and completion of these projects, including for some of our customers.
•Macroeconomic factors. There had been a rapid depreciation of the Brazilian Real in prior periods; however, in 2026 there has been significant appreciation of the Brazilian Real compared to the U.S. Dollar. Exchange rate volatility can have a significant impact on the economic cases for the PPAs for many solar projects. In addition, our results will also be impacted by tax incentives we can recognize,
45
for example the Brazil value-added tax benefit, Imposto sobre Circulação de Mercadorias e Servicos, 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 permits for their projects, they are unable to begin and ultimately complete them in a timely manner. A dramatic increase in solar and battery storage sites has increased the average permitting time in many geographies in which our customers operate.
Impact of OBBB
While solar power is cost-competitive with conventional forms of generation in many U.S. states even without the Federal Investment Tax Credit (“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 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 February 13, 2026, guidance from the U.S. Department of the Treasury (“Treasury”) was released clarifying methods for calculating material assistance from a prohibited foreign entity and requesting comments.
On August 15, 2025, Treasury and the Internal Revenue Service (the “IRS”) issued Notice 2025-42 which eliminates the 5% safe harbor for utility-scale solar projects and only allows the physical work test to determine when a project begins construction. If solar developers are unable to satisfy the physical work test, our business, financial condition, and results of operations could be adversely affected.
The Company expects certain tax provisions of the OBBB, including the reinstatement of 100% bonus depreciation for qualified property and the immediate expensing of U.S.-based R&D activities, to reduce our 2026 taxable income. These accelerated deductions are expected to lower current‑year cash taxes and improve near-term operating cash flows. The favorable impact primarily represents a timing difference. As assets subject to bonus depreciation become fully depreciated and as expensed R&D activities normalize, we expect cash taxes to increase in future periods. The Company continues to evaluate additional guidance expected to be issued by Treasury related to the OBBB.
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. We have successfully negotiated, and we continue to successfully negotiate, agreements with key suppliers around sharing the economic benefits of
46
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 assistance from a prohibited foreign entity. On February 13, 2026, Treasury guidance was released that further clarified methods for calculating material assistance, and included a request for comments by March 30, 2026. We anticipate forthcoming Treasury proposed rules will further clarify the potential impact that 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 2023 setting forth guidance on the domestic content bonus tax credits under the IRA. Uncertainties existed 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 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, which modified Notice 2023-38 and Notice 2024-41, as well as introduced 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 clarified certain pre-existing uncertainty in the industry, but also introduced new uncertainties. 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. As domestic content guidance is not a final rule, it could be further modified by the Trump Administration.
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.
47
Impact of the Ongoing Russian-Ukraine War
The ongoing Russia-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 to reduce any negative impact on our business, financial condition, and results of operations.
Impact of the Iran War
In March 2026, the United States and Israel initiated military actions against targets in Iran. In response, Iran retaliated with a series of attacks on key infrastructure in neighboring countries across the Middle East. Further, Iran has committed to utilizing military intervention to close the Strait of Hormuz, which impacts a significant portion of global oil and natural gas supply. An escalation by the United States, Israel, Iran, or other countries, and any retaliatory measures by the United States, Israel, Iran, or other countries, as applicable, in response, such as broader attacks on regional infrastructure, may impact costs, reduce our sales and earnings, or otherwise have an adverse effect on our operations. For example, the disruption of the global oil supply through the Strait of Hormuz and the conflict between the United States and Iran have driven up commodity prices and increased inflationary pressures, potentially affecting our transportation, manufacturing, distribution and other costs. Furthermore, these events may also cause shipping delays, rerouted freight, port congestion, or higher logistics and insurance costs, which could disrupt the movement of, limit the availability of, or increase the cost of sourcing raw materials. We do not know the ultimate severity or duration of the conflict, but we are monitoring developments with respect to the ongoing military conflict with Iran including the impact on global commodity prices and potential shipping and logistics disruptions.
Impact of Disruption of Key Shipping Lanes
We have seen disruptions of container shipping traffic through the Red Sea create port congestion, especially in Asia, and cause many shipping companies to pause shipments through the Suez Canal and the Red Sea as a result of attacks against commercial vessels in the area, affecting transit times, capacity, and shipping costs for routes connecting the rest of the world with Asia. To address the persisting 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 disruptions and the severity of their impact on our operations may last, but we continue to monitor such situations and evaluate our procurement and supply chain strategies, to reduce any negative impact on our business, financial condition, and results of operations.
Inflation
Inflationary pressure may continue to negatively impact our results of operations in the near-term. To mitigate these pressures on our business, and the volatility in steel and aluminum prices, we have continued to accelerate our productivity initiatives, expand our supplier base, and execute on our overhead cost-containment practices.
Impact of AD/CVD Petitions and Determinations
On July 17, 2025, the Alliance for American Solar Manufacturing and Trade, a coalition of U.S.-based solar manufacturers, filed a petition with the U.S. Department of Commerce (“USDOC”) and U.S. International Trade Commission (“USITC”) seeking the imposition of antidumping and countervailing duty (“AD/CVD”) tariffs on imports of crystalline solar photovoltaic (“CSPV”) cells and modules from India, Indonesia, and Laos. In February 2026, USDOC issued preliminary affirmative CVD determinations and in April 2026, USDOC
48
announced preliminary AD determinations. When combined, total preliminary AD/CVD rates now stand at approximately 234% for India, 121% to 178% for Indonesia, and 103% for Laos. Final USDOC determinations are expected in September 2026.
On May 12, 2026, a group of U.S. solar manufacturers filed a petition with USDOC for an anti-circumvention investigation regarding cells and modules from Ethiopia. On June 18, 2026, a group of U.S. solar manufacturers filed a petition with USDOC for an anti-circumvention investigation regarding imports of CSPV cells from Korea.
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. Successive rounds of AD/CVD and anti-circumvention actions have the potential to constrain the supply of solar cells and modules available to U.S. project developers, contribute to rising module prices, and create an increasingly complex procurement environment for our customers. To the extent that trade actions lead to project delays, cancellations, or reductions in the pace of U.S. solar installations, demand for our tracker systems could be adversely impacted.
Section 232 Polysilicon Investigation
On July 1, 2025, USDOC initiated an investigation under Section 232 of the Trade Expansion Act of 1962 into the effects on national security of imports of polysilicon and its derivatives. USDOC's report has been transmitted to the President, and a determination as to whether to impose tariffs, quotas, or other import restrictions remains pending.
While we do not manufacture or sell polysilicon, wafers, cells, or modules, the scope of any action taken could affect the cost and availability of solar components used on projects that are also intended to use our products. Any such action would be layered on top of existing AD/CVD orders, Section 301 tariffs, and pending anti-circumvention proceedings, further increasing the cost and complexity of procurement for U.S. project developers. To the extent that these measures lead to project delays, cancellations, or reductions in the pace of U.S. solar installations, demand for our tracker systems could be adversely impacted.
U.S. Trade Policy and Executive Orders
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act ("IEEPA") does not authorize the President to impose tariffs. The Court only ruled on IEEPA tariffs and did not invalidate or address tariffs imposed under other statutory authorities. Following the ruling, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection (“CBP”) to formalize a process for refunds. On April 20, 2026, CBP launched an online portal (“CAPE”) that can be used to submit IEEPA tariff refund requests and began issuing refunds in mid-May. All requests will be reviewed by CBP to determine validity prior to the issuance of refunds. Although, CAPE is now available for most entries and refunds are issuing, CBP and the Department of Justice appealed the Court of International Trade’s order as applied to a subset of entries. That appeal is currently pending. As the situation continues to develop, we will continue to monitor developments regarding any remaining unrefunded entries.
After the Supreme Court’s ruling, the Trump Administration implemented various tariffs, invoking other statutory authorities. On February 20, 2026, President Trump imposed a 10% ad valorem import surcharge under Section 122 of the Trade Act of 1974 that became effective on February 24, 2026. That tariff was limited by statute to 150 days and expired on July 24, 2026. After an accelerated investigation under Section 301 of the Trade Act of 1974, targeting forced labor practices across dozens of economies, the U.S. Trade Representative (“USTR”) announced new Section 301 tariffs targeting forced labor practices of 10% or 12.5% on the majority
49
of imports from 59 countries and the European Union, effective July 24, 2026. Other Section 301 investigations that could lead to further tariffs remain ongoing.
Separately, on April 2, 2026, the President issued a proclamation significantly restructuring how Section 232 tariffs on steel, aluminum, and copper products are assessed. Effective April 6, 2026, the prior methodology, through which Section 232 duties on derivative articles were calculated based on the value of the metal content within a product, was replaced with a framework in which duties apply to the full customs value of the imported article. Under the new structure, articles made entirely or predominantly of steel, aluminum, or copper, with limited exceptions, are subject to a 50% duty on their full customs value, while derivative articles with significant metal content are subject to a 25% duty on their full customs value. Products in which the applicable metal content constitutes less than 15% of the aggregate weight of the imported product are no longer subject to Section 232 duties.
We are continuing to evaluate the potential impact of the imposition of the announced tariffs, the new classification and duty treatment scheme, and any additional or retaliatory tariffs, to our business and financial condition. While we do not believe that the tariffs announced by the United States in 2025 and through the date of filing this Quarterly Report on Form 10-Q in 2026 will have a material adverse effect upon our results of operations, financial condition, or liquidity, the actual impact of 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.
Section 337 Investigation
On March 25, 2026, the USITC instituted a Section 337 investigation following a complaint by First Solar, Inc. alleging that imports of tunnel oxide passivated contact ("TOPCon") solar cells, modules, and panels infringe a U.S. patent. The complainant has requested a general exclusion order, which, if granted, could direct U.S. Customs and Border Protection to block imports of any TOPCon products found to infringe the asserted patent. An initial determination date is set for July 15, 2027.
TOPCon represents a significant share of the modules being procured by U.S. project developers. Should the USITC ultimately issue a general exclusion order, a substantial portion of the module supply available to the U.S. market could be impacted. Any sustained disruption to module availability as a result of this case could adversely affect our business, financial condition, and results of operations.
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
50
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 (“ASP”) and cost per watt (“CPW”). ASP is calculated by dividing total applicable revenues by total applicable MWs, whereas CPW is calculated by dividing total applicable costs of goods sold by total applicable MWs. These metrics enable us to evaluate trends in pricing, manufacturing cost, and customer profitability.
Key Components of Our Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of operations.
Revenue
We primarily generate revenue from the sale of solar tracking systems, fixed tilt systems, foundation solutions, 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 earnings per share 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 backlog, and depreciation of manufacturing and testing equipment. Our product costs are
51
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. When possible, we modify our production schedules and processes to mitigate the impact of these disruptions and cost increases on our margins. We do not currently hedge against changes in the price of our raw materials.
Gross profit may vary from quarter to quarter and is primarily affected by our volume, ASPs, product costs, project mix, customer mix, geographical mix, commodity prices, logistics rates, warranty costs, and seasonality.
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, 2026 and 2025, were in the United States; however, we also have a sales presence in Spain, Brazil, 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, as well as the Earnout Consideration associated with the APA Purchase Agreement. The TRA liability and Earnout Consideration were recorded at fair value and subsequent changes in the fair values are recognized in earnings. See Note 12 – Commitments and Contingencies for discussion and analysis of the TRA and Earnout Consideration.
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, Trade name, and Computer software and other intangible assets. Amortization related to certain acquired intangible assets is recorded as Total cost of revenue under Amortization of developed technology and backlog.
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 $370.0 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 and the fully repaid Term Loan Facility. We repurchased $100 million aggregate principal amount of the 2028 Convertible Notes and repaid the Term Loan Facility during the second quarter of 2025.
52
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.
Reportable Segments
We report 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 16 – Segment Reporting in the accompanying notes to the condensed consolidated financial statements.
Results of Operations
The following table sets forth our consolidated statement of operations (in thousands, except percentages):
Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)
2026 2025 $ % 2026 2025 $ %
Revenue $ 342,065 $ 362,243 $ (20,178) (6) % $ 565,477 $ 664,606 $ (99,129) (15) %
Cost of revenue
Cost of product and service revenue 236,846 261,479 (24,633) (9) % 391,640 483,775 (92,135) (19) %
Amortization of developed technology and backlog 5,615 3,640 1,975 54 % 11,229 7,279 3,950 54 %
Total cost of revenue 242,461 265,119 (22,658) (9) % 402,869 491,054 (88,185) (18) %
Gross profit 99,604 97,124 2,480 3 % 162,608 173,552 (10,944) (6) %
Operating expenses
General and administrative 54,325 44,954 9,371 21 % 104,729 88,899 15,830 18 %
Change in fair value of contingent consideration 2,441 150 2,291 1527 % (145) — (145) 100 %
Depreciation and amortization 8,073 5,644 2,429 43 % 16,150 10,993 5,157 47 %
Total operating expenses 64,839 50,748 14,091 28 % 120,734 99,892 20,842 21 %
Income from operations 34,765 46,376 (11,611) (25) % 41,874 73,660 (31,786) (43) %
Interest income 2,402 3,800 (1,398) (37) % 4,789 7,119 (2,330) (33) %
Interest expense (5,786) (8,768) 2,982 (34) % (11,349) (16,803) 5,454 (32) %
53
Foreign currency gain, net 529 1,343 (814) (61) % 690 2,032 (1,342) (66) %
Gain on extinguishment of debts, net — 14,207 (14,207) (100) % — 14,207 (14,207) (100) %
Other expense, net (187) (79) (108) 137 % (156) (56) (100) 179 %
Total other (expense) income, net (3,042) 10,503 (13,545) (129) % (6,026) 6,499 (12,525) (193) %
Income before income tax expense 31,723 56,879 (25,156) (44) % 35,848 80,159 (44,311) (55) %
Income tax expense 7,377 13,617 (6,240) (46) % 9,505 20,151 (10,646) (53) %
Net income $ 24,346 $ 43,262 $ (18,916) (44) % $ 26,343 $ 60,008 $ (33,665) (56) %
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)
2026 2025 $ % 2026 2025 $ %
Revenue
Array Legacy Operations $ 320,308 $ 291,886 $ 28,422 10 % $ 537,689 $ 505,100 $ 32,589 6 %
STI Operations 21,757 70,357 (48,600) (69) % 27,788 159,506 (131,718) (83) %
Total $ 342,065 $ 362,243 $ (20,178) (6) % $ 565,477 $ 664,606 $ (99,129) (15) %
Gross profit (loss)
Array Legacy Operations $ 98,485 $ 84,005 $ 14,480 17 % $ 163,742 $ 149,686 $ 14,056 9 %
STI Operations 1,119 13,119 (12,000) (91) % (1,134) 23,866 (25,000) (105) %
Total $ 99,604 $ 97,124 $ 2,480 3 % $ 162,608 $ 173,552 $ (10,944) (6) %
Comparison of the three and six months ended June 30, 2026 and 2025
Revenue
Consolidated revenue decreased by $20.2 million, or 6%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, primarily driven by decreased revenue from STI Operations of 69%, partially offset by increased revenue from Array Legacy Operations of 10%.
Revenue from Array Legacy Operations, inclusive of incremental contributions from APA, increased by $28.4 million, or 10%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily driven by an increase of approximately 25% in ASPs, partially offset by a 12% decrease in volume.
54
Revenue from STI Operations decreased by $48.6 million, or 69% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily driven by a decrease of approximately 60% in volume and a decrease of approximately 26% in ASPs.
Consolidated revenue decreased $99.1 million, or 15%, for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily driven by decreased revenue from STI Operations of 83%, partially offset by increased revenue from Array Legacy Operations of 6%.
Revenue from Array Legacy Operations, inclusive of incremental contributions from APA, increased by $32.6 million, or 6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily driven by an increase of approximately 15% in ASPs, partially offset by a 7% reduction in volume.
Revenue from STI Operations decreased by $131.7 million, or 83% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily driven by a decrease of approximately 82% in volume, as well as an approximately 4% reduction in ASPs.
Cost of Revenue and Gross Profit
Consolidated cost of revenue decreased by $22.7 million, or 9%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, in line with lower volume.
Consolidated gross profit increased by $2.5 million, or 3%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Gross margin increased to 29.1% for the three months ended June 30, 2026, as compared to 26.8% during the same period in the prior year.
Array Legacy Operations gross profit, inclusive of incremental contributions from APA, increased by $14.5 million, or 17%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, while gross margin increased to 30.7% from 28.8% for the three months ended June 30, 2026 and 2025, respectively. The increase in gross margin was driven by a 25% increase in ASPs, partially offset by a 21% increase in CPW.
STI Operations gross profit decreased by $12.0 million, or 91%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Gross margin for STI Operations decreased to 5.1% from 18.6% for the three months ended June 30, 2026 and 2025, respectively, driven by a 26% decrease in ASPs, partially offset by a 11% decrease in CPW.
Consolidated cost of revenue decreased by $88.2 million, or 18%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, in line with lower volume.
Consolidated gross profit decreased by $10.9 million, or 6%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Gross margin increased to 28.8% for the six months ended June 30, 2026, as compared to 26.1% during the same period in the prior year.
Array Legacy Operations gross profit, inclusive of incremental contributions from APA, increased by $14.1 million, or 9%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, while gross margin increased to 30.5% from 29.6% for the six months ended June 30, 2026 and 2025, respectively. The increase in gross margin was driven by a 15% increase in ASPs, partially offset by a 14% increase in CPW.
55
STI Operations gross profit decreased by $25.0 million, or 105%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Gross margin for STI Operations decreased to (4.1)% from 15.0% for the six months ended June 30, 2026 and 2025, respectively, driven primarily by a 4% decrease in ASPs combined with a 20% increase in CPW.
Operating Expenses
Consolidated general and administrative expenses, inclusive of APA, increased by $9.4 million, or 21%, and $15.8 million, or 18%, for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively. The increase during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to an increase of $9.3 million from personnel-related expenses. The increase during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due primarily to an increase of $16.9 million from personnel-related expenses and service-related expenses of $2.8 million, partially offset by reductions primarily related to bad debt expense of $1.9 million and legal and professional expenses of $1.6 million.
Change in the fair value of contingent consideration, inclusive of APA, resulted in a loss of $2.3 million and a gain of $0.1 million for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively. The incremental loss recognized during the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily driven by an increase of $2.0 million in the fair value of the earnout liability, which impacts only the three months ended June 30, 2026 due to its recognition in the third quarter of 2025, along with fair value remeasurements of the TRA liability. The incremental gain during the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was driven by a decrease of $0.7 million in the fair value of the earnout liability during the six months ended June 30, 2026, along with fair value measurements of the TRA liability.
Consolidated depreciation and amortization expense, inclusive of APA, increased by $2.4 million, or 43%, and $5.2 million, or 47% for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively. The increase was primarily due to $2.4 million and $4.7 million of incremental depreciation and amortization contributed by APA for the three and six months ended June 30, 2026, respectively.
Other Expense, Net
Other expense, net was immaterial for the three and six months ended June 30, 2026 and 2025. Other expense, net primarily consists of miscellaneous income and expense items.
Interest Income
Consolidated interest income decreased by $1.4 million, or 37%, and $2.3 million, or 33%, for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively, primarily as a result of lower cash balance and associated lower yield on our cash management program.
Interest Expense
Consolidated interest expense decreased by $3.0 million, or 34%, and $5.5 million, or 32%, for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively, primarily due to refinancing with lower interest debt.
56
Income Tax Expense
Consolidated income tax expense decreased by $6.2 million, or 46%, and $10.6 million, or 53%, for the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025, respectively. The Company recorded Income tax expense of $7.4 million and $9.5 million for the three and six months ended June 30, 2026, respectively, and $13.6 million and $20.2 million for the three and six months ended June 30, 2025, respectively. Our effective tax rate was 23.3% and 26.5% for the three and six months ended June 30, 2026, respectively, and 23.9% and 25.1% for the three and six months ended June 30, 2025, respectively.
The income tax expense for the three and six months ended June 30, 2026 was impacted favorably by a higher mix of U.S. profits and tax credits recorded during the periods. Discrete tax items for the three and six months ended June 30, 2026 were $0.5 million and $1.8 million, respectively.
The income tax expense for the three and six months ended June 30, 2025 was impacted by higher profits in non-US jurisdictions. 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.
Liquidity and Capital Resources
Cash Flows (in thousands)
Six Months Ended June 30,
2026 2025
Net cash provided by operating activities $ 91,858 $ 30,782
Net cash used in investing activities (15,144) (8,983)
Net cash used in financing activities (17,129) (12,776)
Effect of exchange rate changes on cash and cash equivalent balances 1,733 5,606
Net change in cash and cash equivalents and restricted cash $ 61,318 $ 14,629
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, 2026, our cash balance was $307.3 million, of which $25.8 million was held outside the United States, and our net working capital, including cash and cash equivalents, was $486.0 million. We had $332.9 million available to us under our $370.0 million Revolving Credit Facility.
During the second quarter of 2026, the Company repaid in full the remaining balances in Other Debt. As a result, Other Debt was fully extinguished and no longer outstanding as of June 30, 2026.
On February 18, 2026, Array Tech, Inc., the Company’s operating subsidiary, (the “Borrower”) entered into an amendment to the credit agreement (as amended, the “Credit Agreement”) governing the Company’s senior secured credit facility (the “Fifth Amendment”), by and among the Borrower, the Company’s wholly-owned subsidiary ATI Investment Sub, Inc., as guarantor (“Holdings”), Goldman Sachs Bank USA, as administrative agent and collateral agent, and the Lenders (as defined in the Fifth Amendment). The Fifth Amendment: (i) increases the revolving credit facility commitments under the Fourth Amendment from $166 million to $370.0 million; (ii) extends the maturity of the revolving credit facility from October 14, 2028 to February 18,
57
2031; (iii) removes the credit spread adjustment with respect to Term SOFR (as defined in the Credit Agreement); and (iv) expands the number of currencies under which the Borrower can request revolving credit loans and letters of credit.
Convertible Notes
On December 3, 2021 and December 9, 2021, the Company completed a $425.0 million private offering ($375.0 million and $50.0 million, respectively), of 2028 Convertible Notes, resulting in net proceeds of $413.3 million ($364.7 million and $48.6 million, respectively), after deducting the original issue discount of 2.75% but before deducting initial purchasers’ discounts and offering expenses. The 2028 Convertible Notes were issued pursuant to an indenture, dated December 3, 2021, between the Company and U.S. Bank National Association, as trustee. The 2028 Convertible Notes are senior unsecured obligations of the Company and will mature on December 1, 2028, unless earlier converted, redeemed, or repurchased. Interest is payable semiannually in arrears at a rate of 1.00% per year on June 1 and December 1 of each year, beginning on June 1, 2022.
On June 27, 2025, the Company issued aggregate principal amount of $345.0 million of 2031 Convertible Notes in a private placement. The Company used approximately $78.4 million of the proceeds from the 2031 Convertible Notes to repurchase $100.0 million aggregate principal amount of the 2028 Convertible Notes. The Company incurred $10.4 million of initial purchasers’ discounts and offering expenses, resulting in net proceeds of $334.6 million. As of June 30, 2026, there was $321.5 million and $336.3 million outstanding on the 2028 Convertible Notes and 2031 Convertible Notes, respectively, net of unamortized issuance costs.
The 2028 Convertible Notes and 2031 Convertible Notes are senior unsecured obligations of the Company and will mature on December 1, 2028, and July 1, 2031, respectively, unless earlier converted redeemed or repurchased. Interest on the 2028 Convertible Notes is payable semiannually in arrears at a rate of 1.00% per year on June 1 and December 1 of each year, beginning on June 1, 2022. Interest on the 2031 Convertible Notes 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.
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.
Operating Activities
For the six months ended June 30, 2026, cash provided by operating activities was $91.9 million, attributable to net income of $26.3 million and $47.5 million of non-cash adjustments, mainly consisting of depreciation and amortization expense, equity-based compensation, and $18.0 million from changes in our operating assets and liabilities.
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.
Investing Activities
For the six months ended June 30, 2026 and 2025, net cash used in investing activities was $15.1 million and $9.0 million, respectively, due to the purchase of property, plant and equipment.
58
Financing Activities
For the six months ended June 30, 2026, cash used in financing activities was $17.1 million. This was primarily driven by a $51.0 million repayment of Other Debt and $2.6 million in TRA payments issued, partially offset by $38.3 million of proceeds from the issuance of Other Debt.
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.
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 2025 Annual Report. Other than as set forth below, there were no material changes in our contractual obligations and commitments as of June 30, 2026.
APA Acquisition Earnout Consideration and Deferred Consideration
As discussed in Note 3 – Acquisition in the accompanying notes to the consolidated financial statements, the APA Purchase Agreement includes provisions providing for the Earnout Consideration and the payment of the Deferred Consideration of approximately $40.0 million. Each of the Deferred Consideration and the Earnout Consideration are described in more detail below.
Earnout Consideration
The APA Purchase Agreement includes an earnout provision pursuant to which APA Seller may be granted shares of the Company’s common stock, or equivalent cash value at the Company’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending September 30, 2028. The maximum number of shares payable as Earnout Consideration is 4,686,530 shares of common stock, which was determined by dividing $40 million by the volume weighted average price of the Company’s common stock for the 10 trading days immediately following the Closing Date. 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 million. The APA 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 principal APA Seller continues to assume the managerial responsibilities of APA. For a discussion of the accounting of the Earnout Consideration, see “–Business Combinations” below.
Deferred Consideration
The Deferred Consideration which will be payable to APA Seller in three installments (each, a “Deferred Consideration Installment”): (i) within five business days after the first anniversary of the Closing Date, an amount equal to 50% of the Deferred Consideration; (ii) on December 31, 2026, an amount equal to (A) 50% of the Deferred Consideration multiplied by (B) the proportion of the two-year period from the Closing Date to the second anniversary of the Closing Date that has elapsed as of December 31, 2026; and (iii) within five business days after the second anniversary of the Closing Date, an amount equal to the remaining balance of the Deferred Consideration. As more fully described in the APA Purchase Agreement, the Deferred Consideration Installments are subject to reduction if certain equity holders of APA Seller cease to be
59
employees of the Company under certain circumstances. Each Deferred Consideration Installment will, at the Company’s election, be paid; (x) in cash; (y) through the issuance of shares of Company common stock, par value $0.001 per share, 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 (z) by any combination of the foregoing. As the Deferred Consideration Installments are tied to future service to the Company, they are considered compensatory and not included in purchase consideration.
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 our 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.
On or prior to August 10, 2026, the fifth anniversary of the Closing, we may pay dividends on the Series A Shares either in: (i) cash at the then-applicable Cash Regular Dividend Rate; (ii) through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate of 6.25%; or (iii) a combination thereof. Following August 10, 2026, dividends are payable only in cash. To the extent we do not declare and pay such dividends in cash following August 10, 2026, the dividends accrue to the Liquidation Preference at the then-applicable Cash Regular Dividend Rate plus 200 basis points.
For more information related to the Series A Shares, see Note 9 – Redeemable Perpetual Preferred Stock, to the accompanying condensed consolidated financial statements.
Debt Obligations
For a discussion of our debt obligations see Note 8 – 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 obligations. As of June 30, 2026, we posted surety bonds in the total amount of approximately $238.7 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
60
judgment and estimates in the preparation of our condensed consolidated financial statements, refer to our 2025 Annual Report.
Business Combinations
We completed the APA Acquisition in 2025 for initial cash consideration of $166.1 million, plus up to approximately $19.3 million in earnout consideration and approximately $40.0 million in deferred purchase price consideration. In accordance with Accounting Standards Codification (“ASC”) Topic 805 Business Combinations, total consideration was first allocated to the fair value of assets acquired and liabilities assumed, with the excess being recorded as Goodwill. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Intangible assets have been recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity. Determining these fair values required us to make significant estimates and assumptions, particularly with respect to acquired intangible assets. The determination of fair value required considerable judgment and was sensitive to changes in underlying assumptions, estimates and market factors. The preliminary fair value of the identifiable intangible assets has been estimated using the Multi-Period Excess Earnings Method (Customer relationships and Backlog), Relief from Royalty Method (Trade name), and Replacement Cost Method (Developed technology and Computer software and other). The significant fair value inputs used to estimate the fair value of the identifiable intangible assets include a discount rate and revenue and expense projections.
Earnout Consideration
As discussed, the APA Purchase Agreement includes a provision for the Earnout Consideration. The Earnout Consideration is accounted for as contingent consideration, and the fair value is estimated each reporting period. As of June 30, 2026, the Earnout Consideration was estimated to have a fair value of $18.4 million using a Monte-Carlo simulation method. Changes in fair value of the contingent liability are recognized in Changes in fair value of contingent consideration in the accompanying consolidated statements of operations. Estimating the amount of payments that may be made under the Earnout Consideration is by nature imprecise. The significant fair value inputs used to estimate the future expected Earnout Consideration payments to APA Seller include a discount rate, earnings forecasts, and actual and estimated future volatility in the Company’s stock price.
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.