Array Technologies (NASDAQ: ARRY) (“Array” or “the Company”), a
leading provider of tracker solutions and services for
utility-scale solar energy projects, today announced financial
results for its third quarter ended September 30, 2022.
“In the third quarter we had record setting
revenue of $515.0 million which represented an increase of 173%
from the prior year and an organic increase of 112%. Adjusted
EBITDA for the quarter was $55.4 million which was a $59.3 million
improvement from the prior year and is reflective of not only our
volume growth, but also our continued gross margin expansion. Gross
margin for the quarter was 15.6% which is comprised of a 16.0%
gross margin in our legacy Array segment and 14.2% in our STI
segment and marks our fourth consecutive quarter of margin
improvement,” said Kevin Hostetler, Chief Executive Officer.
“Additionally, as we had previously forecasted, during the quarter
we produced $102.0 million of free cash flow which allowed us to
fully pay down our revolving credit facility. At quarter-end we had
access to $166.6 million of the revolving facility in addition
to $62.8 million of cash on hand for total liquidity of $229
million, excluding the $100 million of additional preferred share
availability. This significant improvement from the prior quarter
is another key step in solidifying our balance sheet as we prepare
for continued growth. Overall, our performance in the third quarter
demonstrates not only the strength of customer demand for our
product and service offerings, but also the continued effects of
our focused efforts to improve our operational execution in all
aspects of the business.”
Mr. Hostetler continued, “In the last few months
we also debuted two new product offerings in the U.S. - the STI
H250 and the Array OmniTrack. These product launches enable us to
provide even greater site and weather flexibility at a time when
the adoption of utility-scale solar is poised to expand to many new
geographic locations. With our full suite of products and the
strength of our domestic supply chain, we believe we are incredibly
well positioned to take advantage of the secular growth that is on
the horizon due, in part, to the passage of the Inflation Reduction
Act (“IRA”).”
“While we do expect to see meaningful growth
from the IRA, it is important to recognize that there is still much
that is unknown about the final form of this Act. This makes it
challenging to quantify specific revenue growth and the impacts to
our margins at this time. We understand that arriving at a
conclusion on these elements as quickly as possible is important;
however, it is equally important to ensure that a thoughtful and
well-balanced evaluation of all the provisions occurs. So, to that
end, we will continue to actively participate in the processes
established by the various governmental agencies tasked to
implement it and work with our customers and suppliers to ensure
the best outcome for the solar industry in general and Array
specifically.” concluded Mr. Hostetler.
Third Quarter 2022 Financial
Results
Revenue increased 173% to $515.0 million,
compared to $188.7 million for the prior-year period, driven by the
acquisition of STI Norland which contributed revenue of $114.6
million and strong organic growth within our legacy Array business.
Excluding the impact of the acquisition, revenue was up $211.8
million, or 112%, driven by both an increase in the total number of
MWs shipped and an increase in ASP.
Gross profit increased 1260% to $80.2 million
compared to $5.9 million in the prior year period, driven by the
increase in volume both from the acquisition of STI as well as our
organic growth. Gross margin increased to 15.6% from 3.1%
driven by a larger portion of higher priced contracts and the
addition of STI.
Operating expenses increased to $61.7 million
compared to $25.4 million during the same period in the prior
year. The higher expense is primarily related to a
$17.4 million increase in amortization expense related to the STI
acquisition. The remaining increase represents the additional
operating expenses from the STI business as well as higher
headcount related costs to support the Company’s growth.
Net income to common stockholders was $28.6
million compared to a net loss of $33.0 million during the same
period in the prior year, and basic and diluted income per share
were $0.19 compared to basic and diluted loss per share of $0.25
during the same period in the prior year.
Adjusted EBITDA increased to $55.4 million,
compared to a $3.9 million loss for the prior-year
period.
Adjusted net income was $28.0 million compared
to adjusted net loss of $11.8 million during the same period in the
prior year and adjusted basic and diluted adjusted net income per
share was $0.18 compared to adjusted diluted net loss per share of
$0.09 during the same period in the prior
year.
Executed Contracts and Awarded
Orders
Total executed contracts and awarded orders at
September 30, 2022 were $1.8 billion, with $1.4 billion from our
Array Legacy Operations segment and $0.4 billion from STI Norland.
The $1.8 billion represents an increase of 77% from September 30,
2021.
Amended 10-Q for the Quarter Ended June
30, 2022
Today the Company filed an 8-K and an amended
Form 10Q for the quarter ended June 30, 2022. The restatement
was due to (i) an accounting error caused by a clerical error in
the sales order entry process for a contract value which overstated
revenue and gross profit, and (ii) a consolidation error that
resulted in the misclassification of foreign subsidiary personnel
costs within General and Administrative (“G&A”) expense instead
of Cost of Revenue on the income statement. The total income
statement impact of these two errors for the three and six months
ended June 30, 2022 was a reduction of revenue and adjusted EBTIDA
of $5.1 million, a reduction of gross profit of $7.4 million, a
reduction of G&A of $2.4 million and a reduction of net income
of $2.4 million. These errors have no impact on the Company’s
reported cashflow from operations and does not cause non-compliance
with any financial covenants as of June 30th.
For more information regarding these errors
please refer to the Form 8-K as well as the explanatory note in our
Form 10-Q/A.
Full Year 2022 Guidance
For the year ending December 31, 2022, the
Company updates it expectations to:
- Revenue to be in the range of $1.50
billion to $1.60 billion
- Adjusted EBITDA(2) to be in the
range of $122.0 million to $132.0 million
- Adjusted net income per share(2) to
be in the range of $0.32 to $0.37
(2) 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, 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 2022 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
today at 5:00 p.m. Eastern Time to discuss the Company’s financial
results. The conference call can be accessed live over the phone by
dialing (877)-300-8521 (domestic) or (412)-317-6026
(international). A telephonic replay will be available
approximately three 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 10171957. The replay will be available
until 11:59 p.m. (ET) on November 22, 2022.
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 global
renewable energy company and provider of utility-scale solar
tracking technology. Engineered to withstand the harshest
conditions on the planet, Array’s 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 and stinorland.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 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, our continued integration 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.
Array’s 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: we may be unable to successfully
integrate the business of STI Norland into our business or achieve
the anticipated benefits of the acquisition of STI Norland; if
demand for solar energy projects does not continue to grow or grows
at a slower rate than we anticipate, our business will suffer; a
loss of one or more of our significant customers, their inability
to perform under their contracts, or their default in payment,
could harm our business and negatively impact revenue, results of
operations and cash flows; the impact of the ongoing conflict in
Ukraine on our business; the ongoing COVID-19 pandemic; significant
changes in the costs of raw materials could adversely affect our
financial performance; defects or performance problems in our
products could result in loss of customers, reputational damage and
decreased revenue, and we may face warranty, indemnity and product
liability claims arising from defective products; existing electric
utility industry policies and regulations, and any subsequent
changes, may present technical, regulatory and economic barriers to
the purchase and use of solar energy systems, which may
significantly reduce demand for our products or harm our ability to
compete; changes in the U.S. trade environment, including the
imposition of import tariffs, could adversely affect the amount or
timing of our revenues, results of operations or cash flows; the
implementation of the IRA may not deliver as much growth as we are
anticipating; we may be unable to remediate our material weaknesses
on a timely basis or at all; and the other risks and uncertainties
described in more detail in the Company’s 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) certain acquisition related costs, (ix)
certain legal expense, and (x) other costs. We define Adjusted Net
Income as net income (loss) less preferred dividends and accretion
plus (i) amortization of intangibles, (ii) amortization of debt
discount and issuance costs (iii) preferred dividend accretion,
(iv) equity-based compensation, (v) remeasurement of the fair value
of contingent consideration, (vi) certain legal expense, (viii)
certain acquisition related costs, (ix) other costs, and (x) 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
calculate net income (loss) per share as net income (loss) to
common shareholders divided by the basic and diluted weighted
average number of shares outstanding for the applicable period and
we define Adjusted Net Income (as detailed above) per share as
Adjusted Net Income divided by the basic and diluted weighted
average number of shares outstanding for the applicable period.
We believe that these non-GAAP financial
measures are provided to enhance the reader’s understanding of our
past financial performance and our prospects for the future. Our
management team uses these non-GAAP financial measures in assessing
the Company’s 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
Subsidiaries Condensed Consolidated Balance Sheets
(unaudited)(in thousands, except per share and share
amounts)
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
62,778 |
|
|
$ |
367,670 |
|
Accounts receivable, net |
|
485,174 |
|
|
|
236,009 |
|
Inventories, net |
|
269,775 |
|
|
|
205,653 |
|
Income tax receivables |
|
12,765 |
|
|
|
9,052 |
|
Prepaid expenses and other |
|
41,309 |
|
|
|
33,649 |
|
Total current assets |
|
871,801 |
|
|
|
852,033 |
|
Property, plant and equipment,
net |
|
20,024 |
|
|
|
10,692 |
|
Goodwill |
|
359,629 |
|
|
|
69,727 |
|
Other intangible assets,
net |
|
384,084 |
|
|
|
174,753 |
|
Deferred tax assets |
|
18,785 |
|
|
|
9,345 |
|
Other assets |
|
27,502 |
|
|
|
26,429 |
|
Total assets |
$ |
1,681,825 |
|
|
$ |
1,142,979 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
199,358 |
|
|
$ |
91,392 |
|
Accounts payable - related party |
|
478 |
|
|
|
610 |
|
Accrued expenses and other |
|
91,102 |
|
|
|
38,494 |
|
Accrued warranty reserve |
|
4,237 |
|
|
|
3,192 |
|
Income tax payable |
|
10,587 |
|
|
|
60 |
|
Deferred revenue |
|
154,692 |
|
|
|
99,575 |
|
Current portion of contingent consideration |
|
— |
|
|
|
1,773 |
|
Current portion of debt |
|
47,686 |
|
|
|
4,300 |
|
Other current liabilities |
|
4,981 |
|
|
|
5,909 |
|
Total current liabilities |
|
513,121 |
|
|
|
245,305 |
|
Long-term liabilities |
|
|
|
Deferred tax liability |
|
74,139 |
|
|
|
— |
|
Contingent consideration, net of current portion |
|
7,113 |
|
|
|
12,804 |
|
Other long-term liabilities |
|
9,113 |
|
|
|
5,557 |
|
Long-term warranty |
|
3,852 |
|
|
|
— |
|
Long-term debt, net of current portion |
|
725,109 |
|
|
|
711,056 |
|
Total long-term liabilities |
|
819,326 |
|
|
|
729,417 |
|
Total liabilities |
|
1,332,447 |
|
|
|
974,722 |
|
Commitments and
Contingencies |
|
|
|
Series A Redeemable Perpetual Preferred Stock of $0.001 par value -
500,000 authorized; 400,000 and 350,000 shares issued as of
September 30, 2022 and December 31, 2021, respectively; liquidation
preference of $400.0 million and $350.0 million as of
September 30, 2022 and December 31, 2021, respectively |
|
287,561 |
|
|
|
237,462 |
|
Stockholders’ equity
(deficit) |
|
|
|
Preferred stock of $0.001 par value - 4,500,000 shares authorized;
none issued as of September 30, 2022 and December 31, 2021 |
|
— |
|
|
|
— |
|
Common stock of $0.001 par value - 1,000,000,000 shares authorized;
150,334,261 and 135,026,940 shares issued as of September 30, 2022
and December 31, 2021, respectively |
|
150 |
|
|
|
135 |
|
Additional paid-in capital |
|
392,862 |
|
|
|
202,562 |
|
Accumulated deficit |
|
(258,360 |
) |
|
|
(271,902 |
) |
Accumulated other comprehensive income |
|
(72,835 |
) |
|
|
— |
|
Total stockholders’ equity
(deficit) |
|
61,817 |
|
|
|
(69,205 |
) |
Total liabilities, redeemable
perpetual preferred stock and stockholders’ equity |
$ |
1,681,825 |
|
|
$ |
1,142,979 |
|
Array Technologies, Inc. and
Subsidiaries Condensed Consolidated Statements of
Operations (unaudited) (in thousands, except per share
amounts)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue |
$ |
515,024 |
|
|
$ |
188,686 |
|
|
$ |
1,235,475 |
|
|
$ |
633,442 |
|
Cost of revenue |
|
434,801 |
|
|
|
182,789 |
|
|
|
1,088,719 |
|
|
|
560,872 |
|
Gross profit |
|
80,223 |
|
|
|
5,897 |
|
|
|
146,756 |
|
|
|
72,570 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
General and
administrative |
|
38,911 |
|
|
|
18,493 |
|
|
|
107,881 |
|
|
|
58,279 |
|
Contingent consideration |
|
(572 |
) |
|
|
936 |
|
|
|
(5,981 |
) |
|
|
1,071 |
|
Depreciation and
amortization |
|
23,364 |
|
|
|
5,984 |
|
|
|
70,405 |
|
|
|
17,949 |
|
Total operating expenses |
|
61,703 |
|
|
|
25,413 |
|
|
|
172,305 |
|
|
|
77,299 |
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
18,520 |
|
|
|
(19,516 |
) |
|
|
(25,549 |
) |
|
|
(4,729 |
) |
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
Other expense, net |
|
(399 |
) |
|
|
(297 |
) |
|
|
(27 |
) |
|
|
(497 |
) |
Legal settlement |
|
42,750 |
|
|
|
— |
|
|
|
42,750 |
|
|
|
— |
|
Foreign currency gain
(loss) |
|
(159 |
) |
|
|
— |
|
|
|
1,968 |
|
|
|
— |
|
Interest expense |
|
(8,746 |
) |
|
|
(13,109 |
) |
|
|
(23,709 |
) |
|
|
(28,769 |
) |
Total other income (expense) |
|
33,446 |
|
|
|
(13,406 |
) |
|
|
20,982 |
|
|
|
(29,266 |
) |
Income (loss) before income
tax (benefit) expense |
|
51,966 |
|
|
|
(32,922 |
) |
|
|
(4,567 |
) |
|
|
(33,995 |
) |
Income tax (benefit)
expense |
|
11,144 |
|
|
|
(5,361 |
) |
|
|
(18,109 |
) |
|
|
(5,493 |
) |
Net income (loss) |
|
40,822 |
|
|
|
(27,561 |
) |
|
|
13,542 |
|
|
|
(28,502 |
) |
Preferred dividends and accretion |
|
12,257 |
|
|
|
5,479 |
|
|
|
36,045 |
|
|
|
5,479 |
|
Net income (loss) to common
shareholders |
$ |
28,565 |
|
|
$ |
(33,040 |
) |
|
$ |
(22,503 |
) |
|
$ |
(33,981 |
) |
|
|
|
|
|
|
|
|
Income (loss) per common
share |
|
|
|
|
|
|
|
Basic |
$ |
0.19 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.26 |
) |
Diluted |
$ |
0.19 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.26 |
) |
Weighted average number of
common shares |
|
|
|
|
|
|
|
Basic |
|
150,322 |
|
|
|
130,955 |
|
|
|
149,604 |
|
|
|
128,315 |
|
Diluted |
|
151,382 |
|
|
|
130,955 |
|
|
|
149,604 |
|
|
|
128,315 |
|
Array Technologies, Inc. and
Subsidiaries Condensed Consolidated Statements of
Cash Flows (unaudited) (continued) (in
thousands)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
|
Net income (loss) |
|
40,822 |
|
|
|
(27,561 |
) |
|
$ |
13,542 |
|
|
$ |
(28,502 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by, (used in) operating
activities: |
|
|
|
|
|
|
|
Provision for (recovery of) bad debts |
|
150 |
|
|
|
(23 |
) |
|
|
660 |
|
|
|
(574 |
) |
Deferred tax expense |
|
(10,944 |
) |
|
|
(6,498 |
) |
|
|
(30,928 |
) |
|
|
(7,036 |
) |
Depreciation and amortization |
|
23,628 |
|
|
|
6,490 |
|
|
|
71,207 |
|
|
|
19,454 |
|
Amortization of debt discount and issuance costs |
|
1,717 |
|
|
|
8,535 |
|
|
|
5,003 |
|
|
|
13,653 |
|
Equity-based compensation |
|
4,205 |
|
|
|
2,239 |
|
|
|
11,677 |
|
|
|
11,706 |
|
Contingent consideration |
|
(572 |
) |
|
|
936 |
|
|
|
(5,981 |
) |
|
|
1,071 |
|
Warranty provision |
|
3,126 |
|
|
|
(120 |
) |
|
|
4,341 |
|
|
|
305 |
|
Provision for inventory obsolescence |
|
(2,742 |
) |
|
|
(582 |
) |
|
|
(2,333 |
) |
|
|
654 |
|
Changes in operating assets and liabilities, net of business
acquisition |
|
|
|
|
|
|
|
Accounts receivable |
|
(32,488 |
) |
|
|
(20,447 |
) |
|
|
(139,036 |
) |
|
|
(50,840 |
) |
Inventories |
|
62,918 |
|
|
|
(34,878 |
) |
|
|
(14,273 |
) |
|
|
(55,321 |
) |
Income tax receivables |
|
3,452 |
|
|
|
440 |
|
|
|
(3,610 |
) |
|
|
9,676 |
|
Prepaid expenses and other |
|
11,522 |
|
|
|
(6,596 |
) |
|
|
11,146 |
|
|
|
(5,770 |
) |
Accounts payable |
|
(32,440 |
) |
|
|
3,326 |
|
|
|
42,205 |
|
|
|
1,948 |
|
Accounts payable - related party |
|
— |
|
|
|
— |
|
|
|
(132 |
) |
|
|
(1,622 |
) |
Accrued expenses and other |
|
37,915 |
|
|
|
12,224 |
|
|
|
41,271 |
|
|
|
1,683 |
|
Warranty payments |
|
(373 |
) |
|
|
— |
|
|
|
(373 |
) |
|
|
— |
|
Income tax payable |
|
10,168 |
|
|
|
629 |
|
|
|
2,951 |
|
|
|
(8,185 |
) |
Lease liabilities |
|
(2,786 |
) |
|
|
269 |
|
|
|
1,914 |
|
|
|
337 |
|
Deferred revenue |
|
(12,491 |
) |
|
|
29,889 |
|
|
|
34,772 |
|
|
|
(68,474 |
) |
Net cash provided by, (used in) operating activities |
|
104,787 |
|
|
|
(31,728 |
) |
|
|
44,023 |
|
|
|
(165,837 |
) |
Cash flows from investing
activities |
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
(2,795 |
) |
|
|
(1,052 |
) |
|
|
(6,690 |
) |
|
|
(2,252 |
) |
Acquisition of STI, net of cash acquired |
|
2 |
|
|
|
— |
|
|
|
(373,816 |
) |
|
|
— |
|
Investment in equity security |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,975 |
) |
Net cash used in investing activities |
|
(2,793 |
) |
|
|
(1,052 |
) |
|
|
(380,506 |
) |
|
|
(14,227 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
Proceeds from Series A issuance |
|
— |
|
|
|
224,987 |
|
|
|
33,098 |
|
|
|
224,987 |
|
Proceeds from common stock issuance |
|
— |
|
|
|
120,645 |
|
|
|
15,885 |
|
|
|
120,645 |
|
Series A equity issuance costs |
|
(592 |
) |
|
|
(7,195 |
) |
|
|
(1,167 |
) |
|
|
(7,195 |
) |
Common stock issuance costs |
|
— |
|
|
|
(3,873 |
) |
|
|
(450 |
) |
|
|
(3,873 |
) |
Dividends paid on Series A Preferred |
|
(18,670 |
) |
|
|
— |
|
|
|
(18,670 |
) |
|
|
— |
|
Payments on revolving credit facility |
|
(83,000 |
) |
|
|
(102,000 |
) |
|
|
(116,000 |
) |
|
|
(102,000 |
) |
Proceeds from issuance of other debt |
|
8,620 |
|
|
|
— |
|
|
|
39,219 |
|
|
|
— |
|
Proceeds from revolving credit facility |
|
15,000 |
|
|
|
— |
|
|
|
116,000 |
|
|
|
102,000 |
|
Principal payments on debt |
|
(10,909 |
) |
|
|
(101,075 |
) |
|
|
(33,286 |
) |
|
|
(132,150 |
) |
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
(1,483 |
) |
|
|
(7,810 |
) |
Debt issuance costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,590 |
) |
Net cash provided by financing activities |
|
(89,551 |
) |
|
|
131,489 |
|
|
|
33,146 |
|
|
|
188,014 |
|
Effect of exchange rate
changes on cash and cash equivalent balances |
|
(711 |
) |
|
|
— |
|
|
|
(1,555 |
) |
|
|
— |
|
Net change in cash and cash
equivalents |
|
11,732 |
|
|
|
98,709 |
|
|
|
(304,892 |
) |
|
|
7,950 |
|
Cash and cash equivalents,
beginning of period |
|
51,046 |
|
|
|
17,682 |
|
|
|
367,670 |
|
|
|
108,441 |
|
Cash and cash equivalents, end
of period |
$ |
62,778 |
|
|
$ |
116,391 |
|
|
$ |
62,778 |
|
|
$ |
116,391 |
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Information |
|
|
|
|
|
|
|
Stock consideration paid for
acquisition of STI |
$ |
— |
|
|
$ |
— |
|
|
$ |
200,224 |
|
|
$ |
— |
|
Array Technologies,
Inc.Adjusted EBITDA and Adjusted Net Income
Reconciliation (unaudited)(in thousands)
The following table reconciles net income (loss) to Adjusted
EBITDA:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
40,822 |
|
|
$ |
(27,561 |
) |
|
$ |
13,542 |
|
|
$ |
(28,502 |
) |
Preferred dividends and
accretion |
|
12,257 |
|
|
|
5,479 |
|
|
|
36,045 |
|
|
|
5,479 |
|
Net income (loss) to common
shareholders |
$ |
28,565 |
|
|
$ |
(33,040 |
) |
|
$ |
(22,503 |
) |
|
$ |
(33,981 |
) |
Other expense, net |
|
399 |
|
|
|
297 |
|
|
|
27 |
|
|
|
497 |
|
Legal settlement(a) |
|
(42,750 |
) |
|
|
— |
|
|
|
(42,750 |
) |
|
|
— |
|
Foreign currency (gain)
loss |
|
159 |
|
|
|
— |
|
|
|
(1,968 |
) |
|
|
— |
|
Preferred dividends and
accretion |
|
12,257 |
|
|
|
5,479 |
|
|
|
36,045 |
|
|
|
5,479 |
|
Interest expense |
|
8,746 |
|
|
|
13,109 |
|
|
|
23,709 |
|
|
|
28,769 |
|
Income tax (benefit) expense |
|
11,144 |
|
|
|
(5,361 |
) |
|
|
(18,109 |
) |
|
|
(5,493 |
) |
Depreciation expense |
|
663 |
|
|
|
613 |
|
|
|
1,867 |
|
|
|
1,825 |
|
Amortization of intangibles |
|
23,055 |
|
|
|
5,878 |
|
|
|
69,771 |
|
|
|
17,630 |
|
Equity-based compensation |
|
4,198 |
|
|
|
2,240 |
|
|
|
11,677 |
|
|
|
14,271 |
|
Contingent consideration |
|
(572 |
) |
|
|
936 |
|
|
|
(5,981 |
) |
|
|
1,071 |
|
Legal expense(b) |
|
2,227 |
|
|
|
882 |
|
|
|
5,006 |
|
|
|
1,025 |
|
M&A(c) |
|
— |
|
|
|
— |
|
|
|
5,588 |
|
|
|
— |
|
Other costs (d) |
|
7,328 |
|
|
|
5,081 |
|
|
|
14,655 |
|
|
|
11,672 |
|
Adjusted
EBITDA |
$ |
55,419 |
|
|
$ |
(3,886 |
) |
|
$ |
77,034 |
|
|
$ |
42,765 |
|
(a) Settlement in our favor resulting from the action against a
competitor in connection with violation of a non-competition
agreement and misappropriation of trade secrets
(b) Represents certain legal fees and other
related costs associated with (i) action against a competitor in
connection with violation of a non-competition agreement and
misappropriation of trade secrets for which a judgement has been
entered in our favor, (ii) actions filed against the company and
certain officers and directors alleging violations of the
Securities Exchange Acts of 1934 and 1933, and (iii) other
litigation/settlements. 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) Represents fees related to the acquisition
of STI Norland.
(d) For the three months ended September 30,
2022, other costs represent (i) $4.9 million related to certain
professional fees incurred related to the integration of STI
Norland, (ii) $2.2 million in remediation and damages incurred
because of a shutdown of a key supplier due to a severe weather
event, (iii) $0.2 million of certain professional fees &
payroll related costs we do not expect to incur in the future. 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 nine months
ended September 30, 2022, (i) $5.8 million related to certain
professional fees incurred related to integration, (ii) $5.0
million in remediation and damages incurred because of a shutdown
of a key supplier due to a severe weather event, (iii) $3.8 million
associated with the transition of CEOs as well as other one-time
payroll related costs that we do not anticipate repeating in the
future. 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.
The following table reconciles net income (loss) to Adjusted Net
Income:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) |
$ |
40,822 |
|
|
$ |
(27,561 |
) |
|
$ |
13,542 |
|
|
$ |
(28,502 |
) |
Preferred dividends and
accretion |
|
12,257 |
|
|
|
5,479 |
|
|
|
36,045 |
|
|
|
5,479 |
|
Net income (loss) to common
shareholders |
$ |
28,565 |
|
|
$ |
(33,040 |
) |
|
$ |
(22,503 |
) |
|
$ |
(33,981 |
) |
Amortization of intangibles |
|
23,055 |
|
|
|
5,878 |
|
|
|
69,771 |
|
|
|
17,630 |
|
Amortization of debt discount and
issuance costs |
|
1,717 |
|
|
|
8,879 |
|
|
|
5,003 |
|
|
|
13,997 |
|
Preferred accretion |
|
5,885 |
|
|
|
2,684 |
|
|
|
17,240 |
|
|
|
2,684 |
|
Equity based compensation |
|
4,198 |
|
|
|
2,240 |
|
|
|
11,677 |
|
|
|
14,271 |
|
Contingent consideration |
|
(572 |
) |
|
|
936 |
|
|
|
(5,981 |
) |
|
|
1,071 |
|
Legal expense(a) |
|
2,227 |
|
|
|
882 |
|
|
|
5,006 |
|
|
|
1,025 |
|
M&A(b) |
|
— |
|
|
|
— |
|
|
|
5,588 |
|
|
|
— |
|
Legal settlement(c) |
|
(42,750 |
) |
|
|
— |
|
|
|
(42,750 |
) |
|
|
— |
|
Other costs(d) |
|
7,328 |
|
|
|
5,081 |
|
|
|
14,655 |
|
|
|
11,672 |
|
Income tax expense of
adjustments(e) |
|
(1,674 |
) |
|
|
(5,334 |
) |
|
|
(20,681 |
) |
|
|
(11,804 |
) |
Adjusted Net Income
(Loss) |
$ |
27,979 |
|
|
$ |
(11,794 |
) |
|
$ |
37,025 |
|
|
$ |
16,565 |
|
|
|
|
|
|
|
|
|
Net income (loss) per share of
common stock |
|
|
|
|
|
|
|
Basic |
$ |
0.19 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.26 |
) |
Diluted |
$ |
0.19 |
|
|
$ |
(0.25 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.26 |
) |
Weighted average number of shares
of common |
|
|
|
|
|
|
|
Basic |
|
150,322 |
|
|
|
130,955 |
|
|
|
149,604 |
|
|
|
128,315 |
|
Diluted |
|
151,382 |
|
|
|
130,955 |
|
|
|
149,604 |
|
|
|
128,315 |
|
Adjusted net income (loss) per
share of common |
|
|
|
|
|
|
|
Basic |
$ |
0.19 |
|
|
$ |
(0.09 |
) |
|
$ |
0.25 |
|
|
$ |
0.13 |
|
Diluted |
$ |
0.18 |
|
|
$ |
(0.09 |
) |
|
$ |
0.25 |
|
|
$ |
0.13 |
|
Weighted average number of shares
of common stock |
|
|
|
|
|
|
|
Basic |
|
150,322 |
|
|
|
130,955 |
|
|
|
149,604 |
|
|
|
128,315 |
|
Diluted |
|
151,382 |
|
|
|
130,955 |
|
|
|
150,058 |
|
|
|
128,315 |
|
(a) Represents certain legal fees and other
related costs associated with (i) action against a competitor in
connection with violation of a non-competition agreement and
misappropriation of trade secrets for which a judgement has been
entered in our favor, (ii) actions filed against the company and
certain officers and directors alleging violations of the
Securities Exchange Acts of 1934 and 1933, and (iii) other
litigation/settlements. We consider these costs not representative
of legal costs that we will incur from time to time in the ordinary
course of our business.
(b) Represents fees related to the acquisition
of STI Norland.
(c) Settlement in our favor resulting from the
action against a competitor in connection with violation of a
non-competition agreement and misappropriation of trade
secrets.
(d) For the three months ended September 30,
2022, other costs represent (i) $4.9 million related to certain
professional fees incurred related to the integration of STI
Norland, (ii) $2.2 million in remediation and damages incurred
because of a shutdown of a key supplier due to a severe weather
event, (iii) $0.2 million of certain professional fees &
payroll related costs we do not expect to incur in the future. For
the three months ended September 30, 2021, (i) $3.6 million in
remediation and damages incurred because of a shutdown of a key
supplier due to a severe weather event and a specific parts delay
we do not expect to incur in the future, (ii) $1.5 million
reimbursement of certain professional fees & payroll related
costs we do not expect to incur in the future, For the
nine months ended September 30, 2022, (i) $5.8 million related to
certain professional fees incurred related to integration, (ii)
$5.0 million in remediation and damages incurred because of a
shutdown of a key supplier due to a severe weather event, (iii)
$3.8 million associated with the transition of CEOs as well as
other one-time payroll related costs that we do not anticipate
repeating in the future. For the nine months ended September 30,
2021, other costs represent (i) $6.7 million of one-time logistics
charges incurred primarily due to weather events and port issues,
(ii) $3.2 million certain professional fees & payroll related
costs we do not expect to incur in the future, (iii) $1.7 million
certain costs associated with our IPO and Follow-on Offering.
(e) Represents the estimated tax impact of all
Adjusted Net Income add-backs, excluding those which represent
permanent differences between book versus tax.
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