Array Technologies, Inc.

Array Technologies, Inc. (the "Company") operates as a leading global provider of solar tracking technology and fixed-tilt systems for utility-scale and distributed generation solar photovoltaic (PV) sites. The solar energy industry is characterized by rising global energy demand, driven by electrification, digital infrastructure, and AI-driven data center expansion, positioning solar as a scalable, rapidly deployable, and low-cost source of new energy generation. The Company's business model revolves around generating revenue from the sale of solar tracking and fixed-tilt systems, foundation solutions, parts, software, and services to solar developers, independent power producers, utilities, and EPCs, often through master supply agreements or multi-year procurement contracts. Revenue recognition primarily occurs over time using the cost-to-cost method as work progresses, with some point-in-time revenue for component sales.

The Company's competitive positioning is bolstered by its patented DuraTrack® HZ v3 design, which allows one motor to drive multiple rows of solar panels, leading to lower assembly, operating, and maintenance costs compared to competitors' designs that may require one motor per row. This core U.S. patent on a linked-row, rotating gear drive system does not expire until February 5, 2030. The Company competes based on product performance and features, total cost of ownership (LCOE), reliability, product warranty duration, sales and distribution capabilities, and training and customer support. Its principal tracker competitors include Nextpower Inc. (f/k/a Nextracker, Inc.), PV Hardware, and GameChange Solar, while it also competes with manufacturers of fixed-tilt mounting systems and engineered foundations such as UNIRAC, Inc. and Terrasmart.

Array's product portfolio includes several tracker systems. The DuraTrack® HZ v3 is its flagship single-axis tracker, featuring a patented single-bolt per module mounting system, passive wind load mitigation, and a low number of motors and controls per megawatt. The Array STI H250, acquired through the STI acquisition in January 2022, is a dual-row tracker designed for irregular and highly angled sites, moving up to 120 PV modules with one motor. A SmarTrack®-compatible version of the H250 was introduced in 2024, and a non-compatible version is being phased out. The Array OmniTrack, introduced in September 2022, offers enhanced north/south terrain flexibility and minimizes grading requirements. The Array SkyLink features a PV-powered control system for independent operation from the grid, enabling stowing during extreme weather and reducing wiring needs through wireless technology.

The Company also offers Array SmarTrack® Software, a suite of control-based products for optimizing energy production and mitigating extreme weather risks. This includes Diffuse Weather Response for cloudy conditions, Terrain Adaptive Backtracking for shading reduction on sloping terrain, Automated Hail Alert Response, and Automated Snow Response. Following the APA Acquisition on August 14, 2025, Array expanded its offerings to include Array APA Foundation Solutions, providing advanced foundation technologies like ground screws, helicals, c-piles, and ballast for diverse soil conditions. The APA Acquisition also added racking solutions such as APA Titan, an adaptable four-rail design for high snow loads and large modules, APA A-Frame™ Interface, a dual-post tracker foundation for challenging terrain, and APA Titan Duo™, a two-high module configuration with dual ground screws.

For the fiscal year ended December 31, 2025, Array Technologies reported total revenue of $1,284,141 thousand ¹, an increase of 40% compared to $915,807 thousand ² in the prior year. Cost of revenue increased by $367,458 thousand ³, or 59%, to $985,588 thousand ⁴, including an inventory valuation charge of $29,516 thousand ⁵. Gross profit for the year was $298,553 thousand ⁶, a slight increase of $876 thousand ⁷ or 0.3% from $297,677 thousand ⁸ in 2024. Consolidated gross margin decreased to 23% ⁹ from 33% ¹⁰ in the prior year. Operating expenses totaled $327,548 thousand ¹¹, a decrease of 38% from $524,682 thousand ¹² in 2024, primarily due to lower impairment charges. Loss from operations was $(28,995) thousand ¹³, a significant improvement from $(227,005) thousand ¹⁴ in 2024. Net loss for the year was $(52,235) thousand ¹⁵, compared to $(240,394) thousand ¹⁶ in 2024. Diluted EPS was $(0.73) ¹⁷, an improvement from $(1.95) ¹⁸ in the prior year. As of December 31, 2025, cash and cash equivalents were $244,388 thousand ¹⁹. Total debt, net of current portion, was $658,664 thousand ²⁰.

Year-over-year, Array Legacy Operations revenue, including APA, increased by $408,849 thousand ²¹, or 62%, driven by an approximately 62% increase in volume. STI Operations revenue decreased by $40,515 thousand ²², or 16%, due to an approximately 20% decrease in volume, partially offset by a 5% increase in ASP. Array Legacy Operations gross profit increased by $29,961 thousand ²³, or 11%, but its gross margin decreased to 28% ²⁴ from 41% ²⁵, primarily due to a 22% increase in cost per watt (CPW) from higher tariffs, reduced 45X amortization, and inflationary pressures. STI Operations gross profit decreased by $29,085 thousand ²⁶, or 105%, resulting in a negative gross margin of (1)% ²⁷ from 11% ²⁸ in the prior year, mainly due to a $29,516 thousand ²⁹ inventory valuation charge and inflationary cost pressures. Consolidated general and administrative expenses increased by $38,045 thousand ³⁰, or 24%, driven by a $17,700 thousand ³¹ increase in compensation costs, $16,900 thousand ³² in acquisition-related expenses and deferred compensation, and the absence of $3,000 thousand ³³ in favorable one-time variable compensation adjustments from 2024.

During the year, the Company completed the APA Acquisition on August 14, 2025, for a total purchase consideration of approximately $185.4 million ³⁴, expanding its product portfolio to include solar racking, mounting, and foundation systems. In the fourth quarter of 2025, the Company approved a plan to phase out a version of the H250 product not compatible with SmarTrack® to focus on the compatible version introduced in 2024, leading to a $29,516 thousand ³⁵ inventory valuation charge. The Company also resized certain international operations, recognizing $1,200 thousand ³⁶ in severance expenses. On June 27, 2025, Array completed a private placement of $345 million ³⁷ in 2.875% Convertible Senior Notes due 2031, using the net proceeds of $334.6 million ³⁸ to repay its Term Loan Facility and repurchase $100.0 million ³⁹ aggregate principal amount of 2028 Convertible Notes, resulting in a gain on extinguishment of debt of approximately $20.1 million ⁴⁰.

The Company's future prospects are difficult to predict due to the rapidly evolving and competitive nature of the solar industry, with viability and demand for solar energy impacted by factors outside of its control, including government subsidies, raw material costs, permitting and interconnection policies, macroeconomic trends, and shifts in electricity demand. The passage of the One Big Beautiful Bill Act (OBBB) on July 4, 2025, introduced significant changes to energy tax credits, specifically terminating the solar Investment Tax Credit (ITC) for facilities placed in service after December 31, 2027, unless construction begins before July 4, 2026. This creates an incentive for taxpayers to accelerate construction. Furthermore, the OBBB imposes new foreign entity of concern limitations on the ITC and Section 45X credit, disallowing credits for prohibited foreign entities or components receiving material assistance from them in taxable years beginning after enactment. Treasury guidance released on February 13, 2026, clarified methods for calculating material assistance and requested comments, indicating further regulatory evolution.

A major growth area for Array is the expansion of its product portfolio and market reach through strategic acquisitions and product development. The APA Acquisition, completed on August 14, 2025, for approximately $185.4 million ⁴¹, integrated solar racking, mounting, and foundation systems into the Company's business model, expanding its offerings to better serve the evolving needs of the solar industry. This acquisition is expected to enhance installation efficiency, reduce project costs, and improve long-term reliability. The Company also continues to develop its next generation of tracker technology, aiming to improve performance, reliability, and cost of ownership, as evidenced by its current tracker portfolio.

Another key growth vector is the continuous improvement and expansion of its software and services. Array regularly introduces improvements and additional functionality to its Array SmarTrack® software, including unique positioning algorithms for bi-facial panels, pre-positioning instructions based on weather forecasts, enhanced site-specific adaptability, and cybersecurity enhancements. The Company's Field Services and Customer Training programs are designed to optimize installation practices, reduce operational downtime, and increase productivity and quality for utility-scale solar projects, O&M partners, solar site developers, and EPCs.

Operationally, the Company is focused on structured cost management and optimizing its supply chain. It actively manages risks from customer contracts, such as multi-year fixed-pricing agreements, to maintain consistent margins. To address inflationary pressures and volatility in raw material prices, Array has accelerated productivity initiatives, expanded its supplier base, and implemented overhead cost-containment practices. The Company has also increased local sourcing efforts in certain regions to mitigate disruptions in container shipping traffic, such as those experienced in the Red Sea, which have affected transit times, capacity, and shipping costs.

Planned capital allocation includes continued investment in research and development (R&D) to develop innovative new products and services that enhance system performance, improve product reliability, reduce product cost, and simplify installation. R&D costs for the year ended December 31, 2025, were $9.9 million ⁴². 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 its 2025 taxable income, lowering current-year cash taxes and improving near-term operating cash flows. However, this is primarily a timing difference, and cash taxes are expected to increase in future periods as assets become fully depreciated and expensed R&D activities normalize.

Structural headwinds and execution risks management explicitly flagged include the uncertainty surrounding the implementation of the OBBB, particularly the termination of the solar ITC for facilities placed in service after December 31, 2027, and the new foreign entity of concern limitations. If solar developers are unable to satisfy the physical work test prior to certain deadlines, the Company's business, financial condition, and results of operations could be adversely affected. The timing and nature of further implementing regulations clarifying the foreign entity of concern requirements remain uncertain, and the Trump Administration could modify domestic content bonus credit guidance, potentially putting Array at a competitive disadvantage if it cannot maintain a robust domestic supply chain.

Geographic, regulatory, and macro factors identified as constraints include the rapid depreciation of the Brazilian real and existing pricing pressures in the Brazilian energy market, which have made solar project power purchase agreements less attractive and led to project delays. The phase-out of the Brazil value-added tax benefit (ICMS) by 2033 also impacts results, prompting the Company to focus on cost reduction and organizational alignment in Brazil. The ongoing Russia-Ukraine war has reduced material availability in Europe and increased logistics costs for certain inputs. Disruptions in key shipping lanes, such as the Red Sea, continue to affect transit times, capacity, and shipping costs, necessitating increased local sourcing.

The Company faces material risks including the potential inability to successfully integrate APA Solar, LLC's business or realize anticipated benefits and synergies, and the challenge of implementing effective internal controls for the acquired APA business in a timely manner. Demand for solar energy projects is subject to factors outside the Company's control, such as the cost and availability of raw materials like steel and high-voltage breakers, permitting and interconnection policies, and the availability of government incentives, making future prospects difficult to predict. Intense competitive pressures within the solar tracker industry, including from conventional and other renewable energy sources, could lead to greater price competition and adversely affect revenue and margins. Dependence on a relatively small number of customers for sales means the loss of a significant customer or a reduction in order volume could materially impact revenue and operating results. A drop in electricity prices could make solar energy systems less economically attractive, reducing demand for the Company's products. Fluctuations in quarterly results due to project timing, weather, interest rate environments, equipment availability, and macroeconomic factors make future performance difficult to predict. Increases in interest rates or reductions in tax equity or project debt capital could hinder customers' ability to finance solar projects, thereby reducing demand. Changes in electric utility industry policies and regulations, including those from the OBBB, could create technical, regulatory, and economic barriers to solar energy adoption. Supply chain disruptions from international vendors, including new duties, tariffs, and trade restrictions (such as the 25% duties on steel and aluminum imports ⁴³ and the 125% tariffs on Chinese goods ⁴⁴), geopolitical events like the Russia-Ukraine war and Middle East conflicts, and shipping lane disruptions, could increase costs or delay product delivery. The inability to convert orders in backlog into revenue, which stood at $593.7 million ⁴⁵ as of December 31, 2025, could adversely affect future revenue and gross margins. Actions addressing forced labor practices in China, such as the Uyghur Forced Labor Prevention Act (UFLPA), could disrupt solar panel supply and indirectly impact the Company's product delivery schedules and sales. The reduction, elimination, or expiration of government incentives for renewable energy, or the Company's failure to optimize their benefits, could reduce demand for solar energy systems. Failure to obtain, maintain, protect, defend, or enforce intellectual property rights could harm the business and operating results. Defects or performance problems in products could lead to customer loss, reputational damage, and decreased revenue, with warranty accruals based on assumptions that may prove materially different from actual performance. Cybersecurity threats, including those related to artificial intelligence, present risks of data incidents, intellectual property loss, and regulatory non-compliance. The Company's substantial indebtedness, including $325.0 million ⁴⁶ on 2028 Convertible Notes and $345.0 million ⁴⁷ on 2031 Convertible Notes, could adversely affect financial flexibility and competitive position, requiring significant cash flow for servicing.

Management's overall tone emphasizes navigating a dynamic industry landscape while focusing on strategic growth and operational efficiency. They acknowledge the challenges posed by evolving regulatory environments, particularly the changes introduced by the One Big Beautiful Bill Act (OBBB), which terminates the solar Investment Tax Credit (ITC) for facilities placed in service after December 31, 2027, unless construction begins before July 4, 2026. Management also highlights the new foreign entity of concern limitations on the ITC and Section 45X credit, noting the ongoing evaluation of Treasury guidance released on February 13, 2026, to clarify material assistance calculations. Despite these uncertainties, management expects certain tax provisions of the OBBB, such as the reinstatement of 100% bonus depreciation for qualified property and immediate expensing of U.S.-based R&D activities, to reduce 2025 taxable income, thereby improving near-term operating cash flows.

Three strategic priorities emphasized for the period ahead include: first, expanding the product portfolio and market reach through strategic acquisitions, as demonstrated by the APA Acquisition on August 14, 2025, which integrated solar racking, mounting, and foundation systems. Second, continuous innovation in tracker technology and software, with ongoing development of next-generation tracker technology and regular enhancements to Array SmarTrack® software to optimize energy production and mitigate extreme weather risks. Third, disciplined operational management, including structured cost management, expanding the supplier base, and accelerating productivity initiatives to mitigate inflationary pressures and supply chain disruptions, such as increasing local sourcing efforts in response to Red Sea shipping disruptions.