Array Technologies, Inc. (Nasdaq: ARRY), one of the world’s largest
manufacturers of ground-mounting systems used in solar energy
projects, today announced financial results for its third quarter
ended September 30, 2020.
“The entire team at Array has been energized by the support we
received from our new investors in our IPO and we are working hard
to deliver on the three key pillars of our growth strategy –
continued growth and market share gains in the U.S., international
expansion and bolt-on acquisitions. Our third quarter results
exceeded our plan and we are continuing to see strong growth in our
core U.S. business. We had $703 million of executed contracts
and awarded orders at the end of the quarter which represented a
31% increase versus the same time last year. Since the close
of the quarter, customer activity has increased, and we are in
advanced discussions on a number of sizable new orders. Most
importantly, we are beginning to see results from the groundwork we
laid for international expansion as several of the orders we are
currently negotiating are for projects located outside of the
U.S. We are also in the process of evaluating several
potential acquisition targets that could meaningfully expand our
total addressable market,” said Jim Fusaro, Chief Executive Office
of Array Technologies.
“We are pleased with our financial results, as we beat our plan
for the third quarter on revenue and Adjusted EBITDA due to faster
than anticipated conversion and delivery of projects,” added Nipul
Patel, Chief Financial Officer of Array Technologies. Mr.
Patel continued, “As discussed in our IPO roadshow, the step-downs
in the ITC that began this year incentivize customers to place the
majority of their orders in the second half of the year and take
delivery in the first half of the following year. That
pattern of ordering leads to higher revenues and profits during the
first half of our year when compared to the second half of our
year. We saw that pattern play out with lower revenues and
profits in the third quarter than we generated in the first and
second quarters of the year, while at the same time, our order book
grew substantially during the third quarter. Comparisons of
year-over-year results for the third quarter are less meaningful
than comparisons of year-over-year results for the first nine
months because of the change in the distribution of our quarterly
revenues brought about by the start of the ITC step-downs this
year. As a result, we believe comparing the first nine months
of this year to the first nine months of last year is the best
measure of our financial performance.”
Results for the Nine Months Ended September 30,
2020
Revenues increased 64% to $692.1 million, compared to $423.2
million for the prior-year period driven by increases in the volume
of trackers delivered.
Gross profit increased 86% to $167.3 million, compared to $90.2
million in the prior year period driven primarily by higher
revenues. Gross margin increased to 24.2% from 21.3% in the
prior year period driven by reductions in purchased materials
resulting from improved supplier arrangements and shifting volumes
for certain components to new, lower cost suppliers and greater
leverage on fixed costs from higher sales volumes.
Operating expenses increased to $69.9 million compared to $47.3
million during the same period in the prior year primarily as a
result of a $13.6 million non-cash charge in the third quarter
related to the revaluation of certain earn-out obligations we have
to our founder and approximately $1.8 million of professional fees
related to our recapitalization and initial public
offering.
Income from operations increased 127% to $97.5 million, compared
to $42.9 million during the same period in the prior
year.
Net income increased 431% to $68.8 million, compared to $13.0
million during the same period in the prior year and basic and
diluted income per share was $0.57 compared to $0.11 during the
same period in the prior year. Adjusted net income increased
116% to $93.4 million, compared to $43.2 million during the same
period in the prior year and adjusted net income per share was
$0.78 compared to $0.36 during the same period in the prior
year.
Adjusted EBITDA increased 96% to $140.5 million, compared to
$71.8 million for the prior-year period.
Initial Public Offering
The Company closed its upsized initial public offering of
54,625,000 shares of its common stock at an initial public offering
price of $22.00 per share on October 19th. The offering consisted
of 7,000,000 shares of common stock issued and sold by the Company
and 47,625,000 shares of common stock sold by a parent entity of
the Company controlled by Oaktree Capital. The Company
received net proceeds of $140.2 million from the offering which
were primarily used to repay a portion of the Company’s term
loan.
Full Year 2020 Guidance
“We are providing guidance for the full year 2020 to give our
new public investors additional insight into our outlook for the
remainder of the year. Going forward, we will be providing
annual guidance as part of our fourth quarter and full year
earnings announcements. We will not be providing quarterly
guidance in future periods,” said Mr. Patel.
For the full year 2020 ending December 31, 2020, the Company
expects:
- Revenues to be in the range of $845 million to $865
million
- Adjusted EBITDA(1) to be in the range of $156 million to $160
million
- Adjusted net income per share(1) to be in the range of $0.82 to
$0.86
“The drive to decarbonize energy is only accelerating and we are
a direct beneficiary of that transition. Solar with
single-axis trackers has proven to be one of the cleanest and
lowest cost forms of generation and we see demand for trackers
growing faster than the overall market for solar as customers
convert from fixed-tilt. Moreover, customers are increasingly
recognizing the superior reliability and durability of our tracker
system and that is leading to market share gains for our
products. These factors, combined with our strong order book,
give us confidence that we are very well positioned to have another
year of substantial growth in 2021,” Mr. Fusaro concluded.
(1) A reconciliation of projected adjusted EBITDA and adjusted
net income per share, which are forward-looking measures that are
not prepared in accordance with GAAP, to the most directly
comparable GAAP financial measures, is not provided because we are
unable to provide such reconciliation without unreasonable effort.
The inability to provide a quantitative reconciliation is due to
the uncertainty and inherent difficulty predicting the occurrence,
the financial impact and the periods in which the components of the
applicable GAAP measures and non-GAAP adjustments may be
recognized. The GAAP measures may include the impact of such items
as non-cash share-based compensation, revaluation of the fair-value
of our contingent consideration, amortization of intangible assets
and the tax effect of such items, in addition to other items we
have historically excluded from adjusted EBITDA and adjusted net
income per share. We expect to continue to exclude these items in
future disclosures of these non-GAAP measures and may also exclude
other similar items that may arise in the future (collectively,
“non-GAAP adjustments”). The decisions and events that typically
lead to the recognition of non-GAAP adjustments are inherently
unpredictable as to if or when they may occur. As such, for our
2020 outlook, we have not included estimates for these items and
are unable to address the probable significance of the unavailable
information, which could be material to future results.
Conference Call Information
Array management will host a conference call tomorrow, November
6, 2020, at 8:00 a.m. Eastern Time, to discuss the Company’s
financial results. The conference call may be accessed by dialing
(855) 327-6837 (domestic) or (631) 891-4304 (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
10011754. The replay will be available until 11:59 p.m. (ET) on
November 20, 2020.
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. A slide presentation highlighting the Company’s results and
key performance indicators will also be available on the Investor
Relations section of the Company’s website.
To learn more about Array Technologies, please visit the
company's website at http://ir.arraytechinc.com.
About Array Technologies, Inc.
Array Technologies is one of the world’s largest manufacturers
of ground-mounting systems used in solar energy projects. The
Company’s principal product is an integrated system of steel
supports, electric motors, gearboxes, electronic controllers and
software, commonly referred to as a single-axis “tracker.” Trackers
move solar panels throughout the day to maintain an optimal
orientation to the sun, which significantly increases their energy
production. Solar energy projects that use trackers generate up to
25% more energy and deliver a lower levelized cost of energy than
projects that use conventional “fixed tilt” mounting systems. Array
Technologies is headquartered in the United States with offices in
Europe, Central America, and Australia.
Investor Relations Contact:
Array Technologies, Inc.
Investor Relations
505-437-0010
investors@arraytechinc.com
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 projected future results of
operations, business strategies, 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.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
the forward-looking statements. 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.
Important factors that could cause actual results to differ
materially from our expectations include: the rate of growth in
demand for solar energy projects;
- existing electric utility industry policies and regulations;
our ability to protect our intellectual property; our supply chain;
changes in the U.S. trade environment; the impact of the COVID-19
pandemic on our business and the businesses of our suppliers and
customers; loss or default of one or more of our significant
customers; a reduction of government incentives or regulations
mandating the use of renewable energy; drop in the price of
electricity derived from the utility grid or from alternative
energy sources; an increase in interest rates, or a reduction in
the availability of tax equity or project debt capital in the
global financial markets could make it difficult for customers to
finance the cost of a solar energy system and could reduce the
demand for our products;
- defects or performance problems in our products resulting in
warranty, indemnity and product liability claims arising from
defective products; the requirements of being a public company may
strain our resources, divert management’s attention and affect our
ability to attract and retain qualified board members and officers;
as well as the risks and uncertainties identified in our
Quarterly Report on Form 10-Q for the quarter ended September, 30,
2020
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 unaudited financial measures that exclude items and
therefore are not in accordance with U.S. generally accepted
accounting principles (“GAAP”), including Adjusted EBITDA, Adjusted
Net Income and Adjusted Net Income per share. We present Adjusted
EBITDA, Adjusted Net Income and Adjusted Net Income per share as
supplemental measures of our performance. 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) share 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 and
Adjusted Net Income per share as net income (loss) plus (i)
amortization of intangibles, (ii) share based compensation, (iii)
remeasurement of the fair value of contingent consideration, (iv)
ERP implementation costs, (v) certain legal expenses, (vi) other
costs, and (vii) income tax expense (benefit) of adjustments. A
detailed reconciliation between GAAP results and results excluding
special items (“non-GAAP”) is included within this
presentation.
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.Consolidated Balance Sheets
(Unaudited)(In thousands)
|
September 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current Assets |
|
|
|
Cash |
$ |
27,144 |
|
|
$ |
310,262 |
|
Restricted cash |
— |
|
|
50,995 |
|
Accounts receivable, net |
118,098 |
|
|
96,251 |
|
Inventories, net |
96,515 |
|
|
148,024 |
|
Income tax receivables |
16,518 |
|
|
628 |
|
Prepaid expenses and other |
6,302 |
|
|
13,524 |
|
Total current assets |
264,577 |
|
|
619,684 |
|
Property, plant and equipment,
net |
9,620 |
|
|
10,660 |
|
Goodwill |
69,727 |
|
|
69,727 |
|
Other intangible assets,
net |
204,573 |
|
|
223,510 |
|
Other assets |
3,775 |
|
|
— |
|
Total Assets |
$ |
552,272 |
|
|
$ |
923,581 |
|
|
|
|
|
Liabilities and
Members' Equity |
|
|
|
Current Liabilities |
|
|
|
Accounts payable |
$ |
47,300 |
|
|
$ |
129,584 |
|
Accounts payable - related party |
2,232 |
|
|
5,922 |
|
Accrued expenses and other |
22,740 |
|
|
17,755 |
|
Accrued warranty reserve |
2,884 |
|
|
2,592 |
|
Income tax payable |
8,528 |
|
|
1,944 |
|
Deferred revenue |
44,781 |
|
|
328,781 |
|
Current portion of contingent consideration |
18,123 |
|
|
6,293 |
|
Revolving loan |
102 |
|
|
70 |
|
Current portion of term loan and related party loans |
— |
|
|
97,679 |
|
Total Current Liabilities |
146,690 |
|
|
590,620 |
|
|
|
|
|
Long-Term Liabilities |
|
|
|
Deferred tax liability |
12,187 |
|
|
15,853 |
|
Contingent consideration, net of current portion |
16,135 |
|
|
11,957 |
|
Total Long-Term Liabilities |
28,322 |
|
|
27,810 |
|
Total Liabilities |
175,012 |
|
|
618,430 |
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
Member’s Equity |
377,260 |
|
|
305,151 |
|
Total Liabilities and
Members’ Equity |
$ |
552,272 |
|
|
$ |
923,581 |
|
Array Technologies,
Inc.Consolidated Statements of Operations
(Unaudited)(In thousands, except per share
data)
|
Three Months Ended September
30, |
|
Nine Months Ended September
30, |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Revenues |
$ |
139,462 |
|
|
$ |
197,772 |
|
|
$ |
692,096 |
|
|
$ |
423,189 |
|
Cost of Revenue |
112,731 |
|
|
|
150,845 |
|
|
|
524,747 |
|
|
|
333,024 |
|
Gross profit |
26,731 |
|
|
|
46,927 |
|
|
|
167,349 |
|
|
|
90,165 |
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
General and
administrative |
11,873 |
|
|
|
10,239 |
|
|
|
34,772 |
|
|
|
27,939 |
|
Contingent consideration |
13,591 |
|
|
|
1,968 |
|
|
|
16,008 |
|
|
|
178 |
|
Depreciation and
amortization |
6,374 |
|
|
|
6,371 |
|
|
|
19,117 |
|
|
|
19,133 |
|
Total Operating Expenses |
31,838 |
|
|
|
18,578 |
|
|
|
69,897 |
|
|
|
47,250 |
|
|
|
|
|
|
|
|
|
Income (loss) from
Operations |
(5,107 |
) |
|
|
28,349 |
|
|
|
97,452 |
|
|
|
42,915 |
|
|
|
|
|
|
|
|
|
Other
Expense |
|
|
|
|
|
|
|
Other income (expense),
net |
(29 |
) |
|
|
(8 |
) |
|
|
(2,163 |
) |
|
|
106 |
|
Interest expense |
(673 |
) |
|
|
(4,492 |
) |
|
|
(8,313 |
) |
|
|
(13,879 |
) |
Total Other Expense |
(702 |
) |
|
|
(4,500 |
) |
|
|
(10,476 |
) |
|
|
(13,773 |
) |
Income (Loss) Before
Income Tax Expense |
(5,809 |
) |
|
|
23,849 |
|
|
|
86,976 |
|
|
|
29,142 |
|
Income Tax Expense |
1,423 |
|
|
|
5,658 |
|
|
|
18,131 |
|
|
|
16,177 |
|
Net Income
(Loss) |
$ |
(7,232 |
) |
|
$ |
18,191 |
|
|
$ |
68,845 |
|
|
$ |
12,965 |
|
|
|
|
|
|
|
|
|
Earnings (Loss) per
Unit |
|
|
|
|
|
|
|
Basic and Diluted |
$ |
(0.06 |
) |
|
$ |
0.15 |
|
|
$ |
0.57 |
|
|
$ |
0.11 |
|
Weighted Average
Number of Units |
|
|
|
|
|
|
|
Basic and Diluted |
119,994 |
|
|
|
119,994 |
|
|
|
119,994 |
|
|
|
119,994 |
|
Array Technologies,
Inc.Consolidated Statements of Cash Flows
(Unaudited)(In thousands)
|
Nine Months Ended September
30, |
|
2020 |
|
2019 |
Cash Flows Used in
Operating Activities |
|
|
|
Net income |
$ |
68,845 |
|
|
|
$ |
12,965 |
|
|
Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
Provision for (recovery of) bad debts |
493 |
|
|
|
(3,987 |
) |
|
Deferred tax (benefit) expense |
(3,666 |
) |
|
|
14,539 |
|
|
Depreciation and amortization |
20,587 |
|
|
|
20,487 |
|
|
Amortization of debt discount and issuance costs |
2,160 |
|
|
|
3,004 |
|
|
Interest paid-in-kind |
3,421 |
|
|
|
2,256 |
|
|
Equity based compensation |
3,264 |
|
|
|
— |
|
|
Change in fair value of contingent consideration |
16,008 |
|
|
|
178 |
|
|
Warranty provision |
633 |
|
|
|
244 |
|
|
Provision for inventory obsolescence |
2,517 |
|
|
|
2,201 |
|
|
Changes in operating assets and liabilities |
|
|
|
Accounts receivable |
(22,340 |
) |
|
|
(63,241 |
) |
|
Inventories |
48,992 |
|
|
|
(40,050 |
) |
|
Income tax receivables |
(15.890 |
) |
|
|
8,445 |
|
|
Prepaid expenses and other |
7,222 |
|
|
|
9,848 |
|
|
Accounts payable |
(82,284 |
) |
|
|
33,064 |
|
|
Accounts payable - related party |
(3,690 |
) |
|
|
438 |
|
|
Accrued expenses and other |
4,644 |
|
|
|
(13,221 |
) |
|
Income tax payable |
6,584 |
|
|
|
2,458 |
|
|
Deferred revenue |
(284,000 |
) |
|
|
(1,148 |
) |
|
Net Cash Used in Operating Activities |
(226,500 |
) |
|
|
(11,520 |
) |
|
|
|
|
|
Cash Flows Used in
Investing Activities |
|
|
|
Purchase of property, plant and equipment |
(610 |
) |
|
|
(784 |
) |
|
Net Cash Used in Investing Activities |
(610 |
) |
|
|
(784 |
) |
|
|
|
|
|
Cash Flows from Financing
Activities |
|
|
|
Proceeds from (payments on) revolving loan |
32 |
|
|
|
(5,807 |
) |
|
Principal payments on term loan |
(57,702 |
) |
|
|
(20,000 |
) |
|
Payments on related party loans |
(45,558 |
) |
|
|
— |
|
|
Deferred offering costs |
(3,775 |
) |
|
|
— |
|
|
Capital contribution |
— |
|
|
|
133 |
|
|
Net Cash Used in Financing Activities |
(107,003 |
) |
|
|
(25,674 |
) |
|
|
|
|
|
Net Decrease in Cash and
Restricted Cash |
(334,113 |
) |
|
|
(37,978 |
) |
|
Cash and Restricted Cash,
beginning of year |
361,257 |
|
|
|
40,826 |
|
|
Cash and Restricted Cash, end of
year |
$ |
27,144 |
|
|
|
$ |
2,848 |
|
|
Array Technologies,
Inc.Adjusted EBITDA and Adjusted Net Income
Reconciliation (Unaudited)(In
thousands)
The following table presents a reconciliation of
Net income (loss) to Adjusted EBITDA:
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
Net Income (loss) |
$ |
(7,232 |
) |
$ |
18,191 |
|
$ |
68,845 |
$ |
12,965 |
|
Interest Expense |
|
673 |
|
|
4,492 |
|
|
8,313 |
|
13,879 |
|
Other Expense (income) |
|
29 |
|
|
8 |
|
|
2,163 |
|
(106 |
) |
Income Tax Expense |
|
1,423 |
|
|
5,658 |
|
|
18,131 |
|
16,177 |
|
Depreciation Expense |
|
551 |
|
|
518 |
|
|
1,650 |
|
1,550 |
|
Amortization of Intangibles |
|
6,312 |
|
|
6,312 |
|
|
18,937 |
|
18,937 |
|
Share Based Compensation |
|
852 |
|
|
- |
|
|
3,264 |
|
- |
|
Contingent Consideration |
|
13,591 |
|
|
1,968 |
|
|
16,008 |
|
178 |
|
ERP Implementation Costs(b) |
|
375 |
|
|
888 |
|
|
1,946 |
|
2,225 |
|
Legal Expense(c) |
|
64 |
|
|
1,103 |
|
|
899 |
|
3,240 |
|
Other Costs(d) |
|
- |
|
|
146 |
|
|
334 |
|
2,798 |
|
Adjusted
EBITDA |
$ |
16,638 |
|
$ |
39,284 |
|
$ |
140,490 |
$ |
71,843 |
|
The following table presents a reconciliation of
Net income (loss) to Adjusted Net income:
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) |
$ |
(7,232 |
) |
$ |
18,191 |
|
|
$ |
68,845 |
|
$ |
12,965 |
|
Amortization of Intangibles |
|
6,312 |
|
|
6,312 |
|
|
|
18,937 |
|
|
18,937 |
|
Share Based Compensation |
|
852 |
|
|
- |
|
|
|
3,264 |
|
|
- |
|
Contingent Consideration(a) |
|
13,591 |
|
|
1,968 |
|
|
|
16,008 |
|
|
178 |
|
ERP Implementation Costs(b) |
|
375 |
|
|
888 |
|
|
|
1,946 |
|
|
2,225 |
|
Legal Expense(c) |
|
64 |
|
|
1,103 |
|
|
|
899 |
|
|
3,240 |
|
Other Costs(e) |
|
- |
|
|
146 |
|
|
|
2,566 |
|
|
2,798 |
|
Income Tax Expense of Adjustments(g) |
|
(5,191 |
) |
|
(2,471 |
) |
|
|
(12,492 |
) |
|
(6,475 |
) |
Non-recurring income tax adjustment related to the IRS settlement
and Cares Act |
|
- |
|
|
- |
|
|
|
(6,608 |
) |
|
9,284 |
|
Adjusted Net
Income |
$ |
8,771 |
|
$ |
26,137 |
|
|
$ |
93,365 |
|
$ |
43,152 |
|
|
|
|
|
|
|
Effective/Adjusted Effective
Tax Rate(f) |
|
24.5 |
% |
|
23.7 |
% |
|
|
28.4 |
% |
|
23.7 |
% |
(a) Represents non-cash charges for the
remeasurement of the fair value related to the tax receivable
agreement entered into by the Company and the former majority
shareholder of Array and earn out payment in the form of cash upon
the occurrence of certain events.
(b) Represents consulting costs associated with
our enterprise resource planning system implementation.
(c) 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 and (ii) a pending
action against a competitor in connection with violation of a
non-competition agreement and misappropriation of trade secrets. We
consider these costs not representative of legal costs that we will
incur from time to time in the ordinary course of our business.
(d) For the three months ended September 30,
2020 and 2019, other costs represent (i) consulting fees for
certain accounting, finance and IT services of $0.1 million in
2019, that we do not expect to re-occur in the future. For
the nine-month periods, other costs represent (i) consulting fees
for certain accounting, finance and IT services of $2.6 million in
the nine months ended September 30, 2019. (ii) $0.2 million in the
nine months ended September 30, 2019 for the executive consulting
costs, and (iii) $0.3 million during the nine months ended
September 30, 2020 for costs incurred in preparation for an
IPO.
(e) For the three months ended September 30,
2020 and 2019, other costs represent (i) consulting fees for
certain accounting, finance and IT services of $0.1 million in 2019
that we do not expect to re-occur in the future. For the nine
month periods, other costs represent (i) consulting fees for
certain accounting, finance and IT services of $2.6 million in the
nine months ended September 30, 2019 (ii) $0.2 million in the nine
months ended September 30, 2019 for the executive consulting costs,
(iii) $0.3 million during the nine months ended September 30, 2020
for costs incurred in preparation for a potential IPO and, (iv)
$2.2 million in the nine months ended September 30, 2020 for
amounts owed to the former majority shareholder in connection with
tax benefits received as part of the CARES act.
(f) Represents the Effective Tax Rate for the
periods presented, adjusted for the following items (i) for the
nine months ended September 30, 2019 the effective tax rate of
55.5% was reduced by 31.8% to 23.7% to eliminate the impact of
adjustments made to income tax expense due to the settlement of an
IRS examination and, (ii) for the nine months ended September 30,
2020 the effective tax rate of 20.8% was increased by 7.6% to 28.4%
to eliminate the impact of adjustments made to income tax expense
due to the CARES act.
(g) Represents incremental tax expense (benefit)
from adjustments assuming the effective tax rate.
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