GlobeNewswire Inc | Nov 11, 2021 04:02PM EST

November 11, 2021

Third Quarter 2021 Financial Highlights

-- Revenue of $192.1 million -- Net loss to common stockholders of $31.0 million -- Adjusted EBITDA loss of $0.5 million(1) -- Adjusted basic and diluted net loss per share of $0.07(1) -- Executed contracts and awarded orders at September 30, 2021 totaling $1 billion, a new record

(1) A reconciliation of the GAAP to the most comparable Non-GAAP results is included below.

ALBUQUERQUE, N.M., Nov. 11, 2021 (GLOBE NEWSWIRE) -- Array Technologies, Inc. (Nasdaq: ARRY), one of the worlds largest providers of utility-scale solar tracking technology, today announced financial results for its third quarter ended September 30, 2021.

In the third quarter, we grew revenues 38%, generated over $315 million of new orders - the second highest level of quarterly bookings in our history - and ended the quarter with more than $1 billion in executed contracts and awarded orders, which is a new record for our company. Our results in the quarter demonstrate that the changes we made to our quoting and procurement processes have not impacted demand for our products or inhibited our ability to deliver for our customers. More importantly, we believe the third quarter represents the trough for our margins as it was the last quarter where the majority of our shipments were priced using our historical quoting and procurement processes. We expect that our gross margins should improve steadily over the next several quarters as new, higher margin orders constitute a larger and larger proportion of our shipments and legacy, lower price orders constitute a smaller and smaller proportion of our shipments. said Jim Fusaro, Chief Executive Officer of Array Technologies.

Mr. Fusaro continued, We have worked diligently to adapt our business to the inflation, supply chain and logistics challenges facing our industry. We saw, and continue to see, the current environment as an opportunity to gain market share. We are seizing on that opportunity in two ways. First, we are leveraging the strength of the supply chain we have built over the past several months to win customers away from our competitors. Customers are coming to us because, in some cases, we are the only supplier that can reliably deliver product on time and at the promised price as well as source up to 90% of our bill of materials from U.S.-based suppliersa capability that could give us a tremendous competitive advantage if the proposed domestic content requirements of the current Build Back Better Act are enacted into law. Second, we are aggressively pursuing opportunities for strategic acquisitions, the first of which we announced today our acquisition of STI Norland. STI accelerates our international expansion and will be significantly be accretive to our margins and earnings per share, added Mr. Fusaro.

Mr. Fusaro concluded, I am incredibly excited about the road ahead for Array. We have successfully adapted our business model to the current environment and demonstrated that we can generate bookings in-line with our historical gross margins. The domestic supply chain we have built is helping us to take market share and positions us to be an even bigger winner as U.S. content evolves into a competitive differentiator and with our acquisition of STI Norland we now are equally well positioned to accelerate our international growth. We are building a great company and I am more confident than ever that we will emerge from the current environment even stronger than we were before.

Third Quarter 2021 Financial Results

Revenues increased 38% to $192.1 million compared to $139.5 million for the prior-year period, primarily driven by continued strong demand for our products as well as favorable comparisons to the third quarter of last year which had lower shipments as a result of the pull forward of orders into the first quarter of 2020 related to the ITC step down.

Gross profit decreased 65% to $9.3 million compared to $26.7 million in the prior year period, driven primarily by higher raw material input and logistics costs. Gross margin decreased to 4.8% from 19.2% driven by higher raw material and freight costs, partially offset by greater absorption of fixed costs as a result of higher sales volumes compared to the prior year period.

Operating expenses decreased to $25.4 million compared to $31.8 million during the same period in the prior year, primarily due to lower contingent consideration expense of $12.7 million. This decrease was partially offset by higher costs associated with being a public company and increased payroll related costs due to higher headcount.

Net loss to common stockholders was $31.0 million compared to a net loss of $7.2 million during the same period in the prior year, and basic and diluted loss per share were $0.24 compared to basic and diluted loss per share of $0.06 during the same period in the prior year.

Adjusted EBITDA decreased to a loss of $0.5 million, compared to $16.6 million for the prior-year period.

Adjusted net loss was $9.8 million compared to adjusted net income of $12.4 million during the same period in the prior year and adjusted basic and diluted adjusted net loss per share was $0.07 compared to adjusted net income per share of $0.10 during the same period in the prior year.

Executed Contracts and Awarded Orders

Total executed contracts and awarded orders at September 30, 2021 were $1,005 million, representing an increase of 35% from the same date last year and represents a new record for the company.

Third Quarter 2021 Highlights and Recent Developments

-- Awarded more than $315 million in new projects during the third quarter, the second highest quarterly bookings in the companys history -- Entered into a multi-year supply agreement with POSCO for steel, further diversifying our supply chain -- Appointed Ken Stacherski, who previously served as our SVP of Operations, as our Chief Operations Officer -- Entered into an agreement to acquire STI Norland, a leading provider of PV mounting systems in Europe and Latin America, significantly expanding our international footprint and adding a lower-priced product offering ideally suited for emerging markets

Full Year 2021 Outlook

We are making good progress working off our legacy, lower priced backlog and we believe the hangover effect on our margins from those orders will dissipate by the first quarter of 2022. We believe our full year 2021 results will be within the range of the guidance we have provided, but likely at the lower end given continued constraints on freight availability which could impact our ability to ship product in the fourth quarter. Any shipments that are delayed from the fourth quarter will result in higher revenues in the first quarter of 2022 said Nipul Patel, Chief Financial Officer of Array Technologies.

Conference Call InformationArray management will host a conference call today at 5:00 p.m. Eastern Time, to discuss the Companys financial results. The conference call can be accessed live over the phone by dialing (877) 451-6152 (domestic) or (201) 389-0879 (international). A telephonic replay will be available approximately two hours after the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 13721670. The replay will be available until 11:59 p.m. (ET) on November 25, 2021.

Interested investors and other parties can listen to a webcast of the live conference call by logging onto the Investor Relations section of the Company's website at http://ir.arraytechinc.com. The online replay will be available for 30 days on the same website immediately following the call.

To learn more about Array Technologies, please visit the company's website at http://ir.arraytechinc.com.

About Array Technologies, Inc.Array Technologies (NASDAQ: ARRY) is a leading American company and global provider of utility-scale solar tracker technology. Engineered to withstand the harshest conditions on the planet, Arrays high-quality solar trackers and sophisticated software maximize energy production, accelerating the adoption of cost-effective and sustainable energy. Founded and headquartered in the United States, Array relies on its diversified global supply chain and customer-centric approach to deliver, commission and support solar energy developments around the world, lighting the way to a brighter, smarter future for clean energy. For more news and information on Array, please visit arraytechinc.com.

Investor Relations Contact: Array Technologies, Inc.Investor Relations 505-437-0010investors@arraytechinc.com

Forward-Looking Statements This press release contains forward-looking statements that are based on our managements beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our projected future results of operations, business strategies, our planned acquisition of STI Norland and industry and regulatory environment. Forward-looking statements include statements that are not historical facts and can be identified by terms such as anticipate, believe, could, estimate, expect, intend, may, plan, potential, predict, project, "seek," should, will, would or similar expressions and the negatives of those terms.

Arrays actual results and the timing of events could materially differ from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those described in more detail in the Companys most recent Annual Report on Form 10-K and other documents on file with the SEC, each of which can be found on our website www.arraytechinc.com.

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.

Non-GAAP Financial InformationThis presentation includes certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (GAAP), including Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share. We define Adjusted EBITDA as net income (loss) plus (i) interest expense, (ii) other (income) expense, (iii) income tax expense (benefit), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity-based compensation, (vii) remeasurement of the fair value of contingent consideration, (viii) ERP implementation costs, (ix) certain legal expense, and (x) other costs. We define Adjusted Net Income as net income (loss) plus (i) amortization of intangibles, (ii) amortization of debt discount and issuance costs (iii) equity-based compensation, (iv) remeasurement of the fair value of contingent consideration, (v) ERP implementation costs, (vi) certain legal expense, (vii) other costs, and (viii) income tax (expense) benefit of adjustments. A detailed reconciliation between GAAP results and results excluding special items (non-GAAP) is included within this presentation. We define Adjusted Net Income per share as Adjusted Net Income divided by the diluted weighted average number of shares outstanding for the applicable period.

We believe that these non-GAAP financial measures are provided to enhance the readers understanding of our past financial performance and our prospects for the future. Our management team uses these non-GAAP financial measures in assessing the Companys performance, as well as in planning and forecasting future periods. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies.

Among other limitations, Adjusted EBITDA and Adjusted Net Income do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; do not reflect income tax expense or benefit; and other companies in our industry may calculate Adjusted EBITDA and Adjusted Net Income differently than we do, which limits their usefulness as comparative measures. Because of these limitations, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or as substitutes for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA and Adjusted Net Income on a supplemental basis. You should review the reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income below and not rely on any single financial measure to evaluate our business.

Array Technologies, Inc. and SubsidiariesConsolidated Balance Sheets (unaudited)(in thousands except share and per share amounts)

September December 30, 31, 2021 2020ASSETS Current assets Cash and cash equivalents $ 116,391 $ 108,441 Accounts receivable, net 177,462 118,694 Inventories, net 173,126 118,459 Income tax receivables 6,453 17,158 Prepaid expenses and other 18,193 12,423 Total current assets 491,625 375,175 Property, plant and equipment, net 10,202 9,774 Goodwill 69,727 69,727 Other intangible assets, net 180,630 198,260 Other assets 24,405 3,088 Total assets $ 776,589 $ 656,024 LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) Current Liabilities Accounts payable $ 84,703 $ 82,755 Accounts payable - related party 610 2,232 Accrued expenses and other 31,256 29,164 Accrued warranty reserve 3,025 3,049 Income tax payable 629 8,814 Deferred revenue 81,347 149,821 Current portion of contingent consideration 2,168 8,955 Current portion of term loan 4,300 4,313 Other current liabilities 6,457 ? Total current liabilities 214,495 289,103 Long-term liabilities Deferred tax liability 6,583 13,114 Contingent consideration, net of current portion 10,784 10,736 Other long-term liabilities 2,953 ? Long-term debt, net of current portion, debt discount 299,212 423,970 and issuance costsTotal long-term liabilities 319,532 447,820 Total liabilities 534,027 736,923 Commitments and contingencies Series A Reedemable Perpetual Preferred Stock of$0.001 par value - 500,000authorized; 350,000 at $350.0 million par value and 235,278 ? none issued as of September 30, 2021 andDecember 31, 2020Stockholders? equity/(deficit) Preferred stock of $0.001 par value - 4,500,000shares authorized; zeroissued as of ? ? September 30, 2021 and December 31,2020Common stock of $0.001 par value - 1,000,000,000shares authorized;134,869,467 and 126,994,467 shares issued as of 135 127 September 30, 2021and December 31, 2020Additional paid-in capital 251,330 140,473 Accumulated deficit (244,181 ) (221,499 )Total stockholders? equity/(deficit) 7,284 (80,899 )Total liabilities and stockholders? equity/(deficit) $ 776,589 $ 656,024

Array Technologies, Inc. and SubsidiariesConsolidated Statements of Operations (unaudited)(in thousands, except share amounts)

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Revenue $ 192,068 $ 139,462 $ 640,796 $ 692,096 Cost of revenue 182,789 112,731 560,872 524,747 Gross profit 9,279 26,731 79,924 167,349 Operating expenses General and 18,493 11,873 58,279 34,772 administrativeContingent 936 13,591 1,071 16,008 considerationDepreciation and 5,984 6,374 17,949 19,117 amortizationTotal operating 25,413 31,838 77,299 69,897 expenses Income (loss) from (16,134 ) (5,107 ) 2,625 97,452 operations Other expense Other expense, net (297 ) (29 ) (497 ) (2,163 )Interest expense (13,109 ) (673 ) (28,769 ) (8,313 )Total other expense (13,406 ) (702 ) (29,266 ) (10,476 )Income (loss) beforeincome tax expense (29,540 ) (5,809 ) (26,641 ) 86,976 (benefit)Income tax expense (3,988 ) 1,423 (3,959 ) 18,131 (benefit)Net income (loss) $ (25,552 ) $ (7,232 ) $ (22,682 ) $ 68,845 Preferred dividends and (5,479 ) ? (5,479 ) ? accretionNet income (loss) to (31,031 ) (7,232 ) (28,161 ) 68,845 common shareholdersEarnings (loss) per shareBasic $ (0.24 ) $ (0.06 ) $ (0.22 ) $ 0.57 Diluted $ (0.24 ) $ (0.06 ) $ (0.22 ) $ 0.57 Weighted average number of sharesBasic 130,955 119,994 128,315 119,994 Diluted 130,955 119,994 128,315 119,994

Array Technologies, Inc. and SubsidiariesConsolidated Statements of Cash Flows (unaudited)(in thousands)

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Cash flows used in operating activitiesNet income (loss) $ (25,552 ) $ (7,232 ) $ (22,682 ) $ 68,845 Adjustments to reconcilenet income to net cash used in operatingactivities:Provision for (recovery (23 ) 270 (574 ) 493 of) bad debtsDeferred tax benefit (7,889 ) (2,290 ) (6,531 ) (3,666 )Depreciation and 6,490 6,863 19,454 20,587 amortizationAmortization of debtdiscount and issuance 8,535 ? 13,653 2,160 costsInterest paid-in-kind ? 348 ? 3,421 Equity-based compensation 2,239 853 11,706 3,264 Contingent consideration 936 13,591 1,071 16,008 Warranty provision (120 ) 36 305 633 Provision for inventory (582 ) 2,296 654 2,517 obsolescenceChanges in operating assets and liabilitiesAccounts receivable (23,829 ) (19,750 ) (58,194 ) (22,340 )Inventories (34,878 ) 6,469 (55,321 ) 48,992 Income tax receivables 3,204 2,799 10,705 (15,890 )Prepaid expenses and (6,596 ) 39 (5,770 ) 7,222 otherAccounts payable 3,326 17,112 1,948 (82,284 )Accounts payable - ? (3,690 ) (1,622 ) (3,690 )related partyAccrued expenses and 12,224 9,009 1,683 4,644 otherIncome tax payable 629 (29,240 ) (8,185 ) 6,584 Lease liabilities 269 ? 337 ? Contingent consideration ? ? ? ? Deferred revenue 29,889 23,917 (68,474 ) (284,000 ) Net cash used in (31,728 ) 21,400 (165,837 ) (226,500 )operating activitiesCash flows used in investing activitiesPurchase of property, (1,052 ) (345 ) (2,252 ) (610 )plant and equipmentInvestment in equity ? ? (11,975 ) security Net cash used in (1,052 ) (345 ) (14,227 ) (610 )investing activitiesCash flows from financing activitiesProceeds from revolving ? (4,298 ) 102,000 32 credit facilityPrincipal payments on (101,075 ) ? (132,150 ) (57,702 )term loan facilityProceeds from (Payments (102,000 ) ? (102,000 ) ? on) revolving loanPayments on related party ? (23,822 ) ? (45,558 )loansProceeds from issuance of 224,987 ? 224,987 ? Series A PreferredProceeds from issuance of 120,645 ? 120,645 common stockIssuance costs of Series (7,195 ) ? (7,195 ) ? A PreferredIssuance costs of common (3,873 ) ? (3,873 ) ? stockContingent consideration ? ? (7,810 ) ? Debt issuance costs ? (3,775 ) (6,590 ) (3,775 ) Net cash provided by(used in) financing 131,489 (31,895 ) 188,014 (107,003 )activitiesNet change in cash, cashequivalents and 98,709 (10,840 ) 7,950 (334,113 )restricted cashCash, cash equivalents, 17,682 37,984 108,441 361,257 beginning of periodCash, cash equivalents, $ 116,391 $ 27,144 $ 116,391 $ 27,144 end of period

Array Technologies, Inc. and SubsidiariesAdjusted EBITDA Reconciliation (unaudited)(in thousands)

The following table reconciles net income (loss) to Adjusted EBITDA:

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Net income (loss) $ (31,031 ) $ (7,232 ) $ (28,161 ) $ 68,845 Preferred dividends and 5,479 ? 5,479 ? accretionInterest expense, net 13,109 673 28,769 8,313 Other expense, net 297 29 497 2,163 Income tax expense (3,988 ) 1,423 (3,959 ) 18,131 (benefit)Depreciation expense 613 550 1,825 1,650 Amortization of 5,878 6,313 17,630 18,937 intangiblesEquity-based compensation 2,240 852 14,271 3,264 Contingent consideration 936 13,591 1,071 16,008 ERP implementation costs^ ? 375 ? 1,946 (a)Legal expense^(b) 882 64 1,025 899 Other costs^(c) 5,081 ? 11,672 334 Adjusted EBITDA $ (504 ) $ 16,638 $ 50,119 $ 140,490

(a) Represents consulting costs associated with our enterprise resource planning system implementation.

(b) Represents certain legal fees and other related costs associated with (i) a patent infringement action against a competitor for which a judgement has been entered in our favor and successful defense of a related matter, (ii) a pending action against a competitor in connection with violation of a non-competition agreement and misappropriation of trade secrets, and (iii) actions filed against the company and certain officers and directors alleging violations of the Securities Exchange Acts of 1934 and 1933. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business.

(c) For the three months ended September 30, 2021, other costs represent (i) $3.6 million of certain logistics and other costs incurred primarily due to supplier constraints and port issues which we do not expect to occur on an ongoing basis (ii) $1.0 million for certain costs related to M&A activities (iii) recovery of certain professional fees & payroll related costs we do not expect to incur in the future of $0.5 million. For the three months ended September 30, 2020, other costs were not incurred. For the nine months ended September 30, 2021, other costs represent (i) $6.7 million of one-time logistics charges incurred primarily due to supplier constraints and port issues (ii) Certain costs associated with our IPO and Follow-on Offering of $1.9 million, (iii) $1.7 million of certain costs related to M&A activities (iv) Certain professional fees & payroll related costs we do not expect to incur in the future of $1.3 million. For the nine months ended September 30, 2020, other costs represent (i) Certain professional fees & payroll related costs we do not expect to incur in the future of $0.3 million.

Array Technologies, Inc. and SubsidiariesAdjusted Net Income Reconciliation (Unaudited)(In thousands)

The following table reconciles net income (loss) to Adjusted Net Income:

Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Net income (loss) $ (31,031 ) $ (7,232 ) $ (28,161 ) $ 68,845 Accretion of Series A 2,684 ? 2,684 ? PreferredAmortization of 5,878 6,313 17,630 18,937 intangiblesAmortization of debtdiscount and issuance 8,879 ? 13,997 2,160 costsEquity-based 2,240 852 14,271 3,264 compensationContingent 936 13,591 1,071 16,008 considerationERP implementation ? 375 ? 1,946 costs^(a)Legal expense^(b) 882 64 1,025 899 Other costs^(c) 5,081 ? 11,672 2,566 Income tax expense of (5,334 ) (1,586 ) (11,804 ) (6,227 )adjustments^(d)Non-recurring incometax adjustmentsrelated to the IRS ? ? ? (6,608 )settlement and CARESActAdjusted Net Income $ (9,785 ) $ 12,377 $ 22,385 $ 101,790 (loss)

(a) Represents consulting costs associated with our enterprise resource planning system implementation.

(b) Represents certain legal fees and other related costs associated with (i) a patent infringement action against a competitor for which a judgement has been entered in our favor and successful defense of a related matter,(ii) a pending action against a competitor in connection with violation of a non-competition agreement and misappropriation of trade secrets, and (iii) actions filed against the company and certain officers and directors alleging violations of the Securities Exchange Acts of 1934 and 1933. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business.

(c) For the three months ended September 30, 2021, other costs represent (i) $3.6 million of certain logistics and other costs incurred primarily due to supplier constraints and port issues which we do not expect to occur on an ongoing basis (ii) $1.0 million for certain costs related to M&A activities (iii) recovery of certain professional fees & payroll related costs we do not expect to incur in the future of $0.5 million. For the three months ended September 30, 2020, other costs were not incurred. For the nine months ended September 30, 2021, other costs represent (i) $6.7 million of one-time logistics charges incurred primarily due to supplier constraints and port issues (ii) Certain costs associated with our IPO and Follow-on Offering of $1.9 million, (iii) $1.7 million in certain costs related to M&A activities (iv) Certain professional fees & payroll related costs we do not expect to incur in the future of $1.3 million. For the nine months ended September 30, 2020, other costs represent (i) $2.2 million to the former majority shareholder in connection with tax benefits received as part of the CARES act and (ii) Certain professional fees & payroll related costs we do not expect to incur in the future of $0.3 million.

(d) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.