Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 12, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-39613 | |
Entity Registrant Name | ARRAY TECHNOLOGIES, INC. | |
Entity Central Index Key | 0001820721 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2747826 | |
Entity Address, Address Line One | 3901 Midway Place NE | |
Entity Address, City or Town | Albuquerque | |
Entity Address, State or Province | NM | |
Entity Address, Postal Zip Code | 87109 | |
City Area Code | (505) | |
Local Phone Number | 881-7567 | |
Title of 12(b) Security | Common stock, $0.001 par value | |
Trading Symbol | ARRY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock Shares Outstanding | 126,994,467 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash | $ 27,144 | $ 310,262 |
Restricted cash | 0 | 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 | 0 |
Total Assets | 552,272 | 923,581 |
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 | 0 | 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 (Note 11) | ||
Member’s Equity | 377,260 | 305,151 |
Total Liabilities and Members’ Equity | $ 552,272 | $ 923,581 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
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 (in dollars per share) | $ (0.06) | $ 0.15 | $ 0.57 | $ 0.11 |
Weighted-average units (in shares) | 119,994 | 119,994 | 119,994 | 119,994 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Member's Equity (unaudited) shares in Thousands, $ in Thousands | USD ($)shares | |
Beginning balance (in shares) at Dec. 31, 2018 | shares | 1 | [1] |
Beginning balance at Dec. 31, 2018 | $ 264,474 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Capital contribution | 133 | |
Net income (loss) | $ 12,965 | |
Ending balance (in shares) at Sep. 30, 2019 | shares | 1 | [1] |
Ending balance at Sep. 30, 2019 | $ 277,572 | |
Beginning balance (in shares) at Jun. 30, 2019 | shares | 1 | [1] |
Beginning balance at Jun. 30, 2019 | $ 259,381 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Net income (loss) | $ 18,191 | |
Ending balance (in shares) at Sep. 30, 2019 | shares | 1 | [1] |
Ending balance at Sep. 30, 2019 | $ 277,572 | |
Beginning balance (in shares) at Dec. 31, 2019 | shares | 1 | [1] |
Beginning balance at Dec. 31, 2019 | $ 305,151 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Equity based compensation | 3,264 | |
Net income (loss) | $ 68,845 | |
Ending balance (in shares) at Sep. 30, 2020 | shares | 1 | [1] |
Ending balance at Sep. 30, 2020 | $ 377,260 | |
Beginning balance (in shares) at Jun. 30, 2020 | shares | 1 | [1] |
Beginning balance at Jun. 30, 2020 | $ 383,639 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Equity based compensation | 853 | |
Net income (loss) | $ (7,232) | |
Ending balance (in shares) at Sep. 30, 2020 | shares | 1 | [1] |
Ending balance at Sep. 30, 2020 | $ 377,260 | |
[1] | See Note 2 - Summary of Significant Accounting Policies - Corporate Conversion and Stock Split |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Cash Flows [Abstract] | ||
Net Income (Loss) | $ 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 | 0 |
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) | 0 |
Deferred offering costs | (3,775) | 0 |
Capital contribution | 0 | 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 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business ATI Intermediate Holdings, LLC, (the “Company”) is a Delaware limited liability company formed in December 2018 as a wholly owned subsidiary of ATI Investment Parent, LLC (“Parent”). On October 14, 2020, we converted from a Delaware limited liability company to a Delaware corporation and changed our name to Array Technologies, Inc. The Company is headquartered in Albuquerque, New Mexico, and manufactures and supplies solar tracking systems and related products for customers across the United States and internationally. The Company, through its wholly-owned subsidiaries, High Desert Finance, LLC (“HDF”) and ATI Investment Holdings, Inc. (“ATI Investment”) owns two other subsidiaries through which it conducts substantially all operations; Array Technologies, Inc. and Array Technologies Patent Holdings Co., LLC (“Array”). Parent acquired Array on July 8, 2016. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Accounting and Presentation The accompanying consolidated financial statements were prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Corporate Conversion and Stock Split On October 14, 2020, prior to the issuance of any of our shares of common stock in our initial public offering (the “IPO”), we converted from a Delaware limited liability company to a Delaware corporation. In connection with the corporate conversion we converted all 1,000 of our outstanding member units into 100,000,000 shares of common stock and then completed a stock split of 1.19994-for-1. The corporate conversion and stock split representing 119,994,467 shares of common stock have been adjusted retroactively for the purposes of calculating basic and diluted earnings per share. Principles of Consolidation The consolidated financial statements include the accounts of ATI Intermediate Holdings, LLC and its Subsidiaries, which include HDF, ATI Investment and Array. All intercompany accounts and transactions have been eliminated upon consolidation. Unaudited Interim Financial Information The accompanying balance sheet as of September 30, 2020, the statements of operations, the statements of member’s equity and statements of cash flows for the three and nine months ended September 30, 2020 and 2019 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2020 and the results of its operations and its cash flows for the three and nine months ended September 30, 2020 and 2019. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2020 and 2019 are also unaudited. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period. The balance sheet as of December 31, 2019 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim financial statements. These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s final prospectus dated October 14, 2020 and filed with Securities and Exchange Commission on October 16, 2020. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates include impairment of goodwill, impairment of long-lived assets, fair value of contingent consideration, allowance for doubtful accounts, reserve for excess or obsolete inventories, valuation of deferred tax assets and warranty reserve. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Impact of COVID-19 Pandemic In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. To date, the Company has maintained uninterrupted business operations with normal turnaround times for its delivery of solar tracking systems. The Company has implemented adjustments to its operations designed to keep employees safe and comply with federal, state and local guidelines, including those regarding social distancing. The extent to which COVID19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence. In response to COVID-19, the United States government has passed legislation and taken other actions to provide financial relief to companies and other organizations affected by the pandemic. Deferred Offering Costs Deferred offering costs consist primarily of legal and accounting fees, which are direct and incremental fees related to the IPO. The deferred offering costs will be offset against the IPO proceeds, which will be recorded in the fourth quarter of 2020. As of September 30, 2020, the Company had incurred $3.3 million in deferred offering costs, which are reported as Other assets - long-term on the condensed consolidated balance sheets. Additionally, as of September 30, 2020, the Company had incurred debt issuance costs of $0.5 million associated with a new senior secured credit facility that was obtained in October 2020. Revenue Recognition The Company recognized revenues from the sale of solar tracking systems and parts and determines its revenue recognition through the following steps (i) identification of the contract or contracts with a customer, (ii) identification of the performance obligations within the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations within the contract, and (v) recognition of revenue when, or as the performance obligation has been satisfied. Performance Obligations The Company’s contracts with customers are predominately accounted for as one performance obligation, as the majority of tasks and services is part of a single project or capability. As these contracts are typically a customized assembly for a customer-specific solution, the Company uses the expected cost-plus margin approach to estimate the standalone selling price of each performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. In assessing the recognition of revenue, the Company also evaluates whether two or more contracts should be combined and accounted for as one contract and if the combined or single contract should be accounted for as multiple performance obligations which could change the amount of revenue and profit (loss) recorded in a period. Change orders may include changes in specifications or design, manner of performance, equipment, materials, scope of work, and/or the period of completion of the project. The Company analyzes its change orders to determine if they should be accounted for as a modification to an existing contract or a new stand-alone contract. The Company’s change orders are generally modifications to existing contracts and are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized. The majority of the Company’s contracts do not contain variable consideration provisions as a continuation of the original contract. The Company’s performance obligations are satisfied predominately over-time as work progresses for its custom assembled solar systems, utilizing an output measure of completed products and based on the timing of the product’s shipments considering the shipping terms described in the contract. Revenue recognized for the Company’s part sales are recorded at a point in time and recognized when obligations under the terms of the contract with our customer are satisfied. Generally, this occurs with the transfer of control of the asset, which is in line with shipping terms. Contract Estimates Accounting for contracts utilizing the over-time method and their expected cost-plus margins is based on various assumptions to project the outcome of future events that can exceed a year. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; and the availability and timing of funding from the customer. The Company reviews and updates its contract-related estimates each reporting period. The Company recognizes adjustments in estimated expected cost-plus on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the period it is identified. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheets. The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. Billing sometimes occurs subsequent to revenue recognition, resulting in contract assets. The changes in contract assets (i.e. unbilled receivables) and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings for the Company’s revenue recognized over-time. As of September 30, 2020 and December 31, 2019, contract assets consisting of unbilled receivables totaling $34.8 million and $16.1 million, respectively, are recorded within accounts receivable on the consolidated balance sheets on a contract-by-contract basis at the end of the reporting period. The Company also receives advances or deposits from its customers, before revenue is recognized, resulting in contract liabilities. The changes in contract liabilities (i.e. deferred revenue) relate to advanced orders and payments received by the Company and are the result of customers looking to take advantage of certain U.S. federal tax incentives set to decrease at the end of 2019. Based on the terms of the tax incentives the customer must pay for the goods prior to December 31, 2019 which accounts for the increase in the advanced orders and payments and the resulting deferred revenue at December 31, 2019 and subsequent reduction for deliveries which occurred during the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, contract liabilities consisting of deferred revenue were $44.8 million and $328.8 million, respectively and were recorded on a contract-by-contract basis at the end of each reporting period. During the nine months ended September 30, 2020 and 2019, the Company converted $20.5 million and $328.8 million deferred revenue to revenue, respectively, which represented 99.2% and 100% of the prior years deferred revenue balance. Remaining Performance Obligations As of September 30, 2020, the Company had $227.0 million of remaining performance obligations. The Company expects to recognize revenue on 100% of these performance obligations in the next twelve months. Equity-Based Compensation The Company recognizes equity-based compensation expense based on the equity award’s grant date fair value. The determination of the fair value of equity awards issued to employees of the Company is based upon the underlying share price and a number of assumptions, including volatility, performance period, risk-free interest rate and expected dividends. The Company accounts for forfeitures as they occur. The grant date fair value of each unit is amortized on a straight-line basis over the requisite service period. Earnings per Unit (“EPU”) Basic earnings (loss) per unit, or EPU, is computed by dividing net income (loss) available to unit holders by the weighted average units outstanding during the period. Diluted EPU takes into account the potential dilution that could occur if securities or other contracts to issue units, such as stock options and unvested restricted stock units, were exercised and converted into units. Diluted EPU is computed by dividing net income (loss) available to unit holders by the weighted average units outstanding during the period, increased by the number of additional units that would have been outstanding if the potential units had been issued and were dilutive. CARES Act Payroll Tax Deferral The CARES Act permits employers to defer the payment of the employer share of social security taxes due for the period beginning March 27, 2020 and ending December 31, 2020. Of the amounts deferred, 50% are required to be paid by December 31, 2021 and the remaining 50% are required to be paid by December 31, 2022. The Company began deferring payment of the employer share of social security taxes in April 2020. As of September 30, 2020, the Company had deferred payment of $0.7 million of such taxes. Credit Concentration Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, restricted cash and accounts receivable. The Company has no significant off balance sheet concentrations of credit risk. The Company maintains its cash and restricted cash with financial institutions that are believed to be of high credit quality and has not experienced any material losses relating to any cash and restricted cash. As of September 30, 2020 and December 31, 2019, $26.6 million and $360.9 million, respectively, of the Company’s bank balances were uninsured and uncollateralized and exposed to custodial credit risk. The Company’s customer base consists primarily of solar contractors and utilities. The Company does not require collateral on its trade receivables. For the nine months ended September 30, 2020, the Company’s largest customer and five largest customers constituted 14.3% and 45.9% of total revenues, respectively. Two customers made up 24.5% of revenue and are the only customers greater than 10% of total revenue for the nine months ended September 30, 2020. For the nine months ended September 30, 2019, the Company’s largest customer and five largest customers constituted 21.1% and 55.2% of total revenues, respectively. Three customers made up 43.1% of revenue and are the only customers constituting greater than 10% of total revenue for the nine months ended September 30, 2019. The loss of any one of the Company’s top five customers could have a materially adverse effect on the revenues and profits of the Company. Further, the Company’s trade accounts receivable are from companies within the solar industry and, as such, the Company is exposed to normal industry credit risks. As of September 30, 2020, the Company’s largest customer and five largest customers constituted 21.7% and 23.9% of trade accounts receivable, respectively. As of December 31, 2019, the Company’s largest customer and five largest customers constituted 29.5% and 69.0% of trade accounts receivable, respectively. The Company continually evaluates its reserves for potential credit losses and establishes reserves for such losses. Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 - Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities. Assets valued using Level 1 inputs are determined by quoted market prices derived from an active market and Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets. Level 3 inputs are valued by management’s assumptions about the assumptions the market participants would utilize in pricing the asset. The fair values of the Company’s cash, restricted cash, accounts receivable, and accounts payable approximate their carrying values due to their short maturities. The carrying value of the Company’s notes payable and related party loans approximates their fair values, as they are based on current market rates at which the Company could borrow funds with similar terms. The Company follows the provisions of FASB ASC Topic 820-10 for nonfinancial assets and liabilities measured at fair value on a non-recurring basis. As it relates to the Company, this applies to certain nonfinancial assets and liabilities acquired in business combinations and measurement of goodwill impairment and non-amortizable intangibles and is thereby measured at fair value. The Company has determined such fair value primarily by third-party valuations. New Accounting Standards To be adopted In February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases” which supersedes the lease recognition requirements in ASC Topic 840, “Leases” . Under ASU No. 2016-02, lessees are required to recognize assets and liabilities on the consolidated balance sheets for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. For companies that are not emerging growth companies (“EGCs”), the ASU is effective for fiscal years beginning after December 15, 2018. For EGCs, the ASU is effective for fiscal years beginning after December 15, 2021. The Company plans to adopt the new standard using the modified retrospective method, under which the Company will apply Topic 842 to existing and new leases as of the effective date, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods. The Company anticipates that the adoption will not have a material impact on its consolidated statements of operations or its consolidated statements of cash flows but expects to recognize right-of-use assets and liabilities for lease obligations associated with its operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses , which was subsequently amended by ASU No. 2018-19 and ASU No. 2019-10, requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for the fiscal year beginning after December 15, 2022, or December 15, 2021 if we were to lose EGC’s status in 2021. The Company will continue to assess the possible impact of this standard, but currently does not expect the adoption of this standard will have a significant impact on its consolidated financial statements and its limited history of bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”), which is intended to simplify various aspects of the accounting for income taxes. ASU No. 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement against or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The Company adopted ASU 2018-13 as of January 1, 2020. The Company’s disclosures related to its Level 3 financial statements did not materially change for the periods presented. See Note 11 - Commitments and Contingencies for more information. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following (in thousands): September 30, 2020 December 31, 2019 Raw materials $ 32,506 $ 62,923 Finished goods 71,726 90,301 Reserve for excess or obsolete inventory (7,717) (5,200) Total $ 96,515 $ 148,024 |
Property, Plant, and Equipment
Property, Plant, and Equipment | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment consisted of the following (in thousands): Estimated Useful Lives (Years) September 30, 2020 December 31, 2019 Land N/A $ 1,340 $ 1,340 Buildings and land improvements 15-39 2,487 2,464 Manufacturing equipment 7 13,002 12,631 Furniture, fixtures and equipment 5-7 287 277 Vehicles 5 140 140 Hardware and software 3-5 589 398 Total 17,845 17,250 Less: accumulated depreciation (8,225) (6,590) Property, plant and equipment, net $ 9,620 $ 10,660 Depreciation expense was $0.6 million and $0.5 million for the three months ended September 30, 2020 and 2019, respectively, of which $0.5 million and $0.4 million, respectively, has been allocated to cost of revenue and $0.1 million and $0.1 million, respectively, is included in depreciation and amortization in the accompanying consolidated statements of operations for the three months ended September 30, 2020 and 2019. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill Goodwill relates to Parent’s acquisition of Array. At the acquisition date, July 8, 2016, goodwill was $121.6 million. At December 31, 2019 and September 30, 2020 goodwill totaled $69.7 million, net of accumulated impairment of $51.9 million and is not deductible for tax purposes. Other Intangible Assets Other intangible assets consisted of the following (in thousands): Estimated Useful Lives (Years) September 30, 2020 December 31, 2019 Amortizable: Costs: Developed technology 14 $ 203,800 $ 203,800 Customer relationship 10 89,500 89,500 Internal-use software modification 2.5 4,356 4,356 Total Amortizable Intangibles 297,656 297,656 Accumulated amortization: Developed technology 61,594 50,676 Customer relationship 37,869 31,157 Internal-use software modification costs 3,920 2,613 Total Accumulated Amortization 103,383 84,446 Total Amortizable Intangibles, Net 194,273 213,210 Non-amortizable costs: Trade name 10,300 10,300 Total Other Intangible Assets, Net $ 204,573 $ 223,510 Amortization expense related to intangible assets amounted to $6.3 million for the three months ended September 30, 2020 and 2019 and $18.9 million for the nine months ended September 30, 2020 and 2019, respectively. Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through December 31, as follows (in thousands): Amount 2020 $ 6,313 2021 23,507 2022 23,507 2023 23,507 2024 23,507 Thereafter 93,932 $ 194,273 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. Among other things, the CARES Act provided the ability for taxpayers to carryback a net operating loss (“NOL”) arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 to each of the five years preceding the year of the loss. The Company generated a significant NOL during its tax year ended March 31, 2019 and filed a carryback claim in June 2020 for this NOL. As a result of the carryback claim, the Company recorded an income tax benefit of $6.6 million on its condensed consolidated statement of operations for the nine months ended September 30, 2020, resulting from the difference in the current U.S. federal tax rate of 21% and the tax rate of 35% applicable in the carryback year. The Company’s 2017 federal income tax return was selected for examination by the IRS in 2018. As a result of the examination, an adjustment related to the value allocated to the developed technology for tax purposes was potentially required. During 2019, the Company settled the 2017 examination and agreed to a reduction in the developed technology value from $210 million to $188 million for federal income tax purposes. As a result of this change in the value of the acquired developed technology, the Company has reduced its NOL carryforwards by approximately $2.8 million for previously taken amortization and increased the deferred tax liability related to the revised developed technology tax basis by approximately $4.6 million. In addition, the Company will no longer receive the tax basis upon payment of the Tax Receivable Agreement (“TRA”) liability, as the related deferred tax asset of $4.7 million for the TRA was also written off during 2019. The adjustments resulting from the change in developed technology value have been recorded as an income tax expense for the nine months ended September 30, 2019. |
Term and Revolving Loan
Term and Revolving Loan | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Term and Revolving Loan | Term and Revolving Loan The Company had a Term Loan Credit and Guarantee Agreement (the “Term Loan”) as amended. The Term Loan was secured by assets of ATI Investment. The Term Loan was payable in quarterly installments of $5 million. As of December 31, 2019, the Term Loan had a balance of $57.7 million. The Term Loan accrued interest equal to applicable margin of 6.25% plus base rate (the “Base Rate Loan”) (8.96% at December 31, 2019). The balance of the Term loan is presented in the accompanying consolidated balance sheets net of debt discount and issuance costs of $1.8 million at December 31, 2019. The Term Loan had an annual excess cash flow calculation which could require the Company to make advance principal payments. At December 31, 2019, the excess cash flow calculation resulted in the Term Loan be classified as current on the accompanying condensed consolidated balance sheet. The Company paid the outstanding amount due on the Term Loan on February 2, 2020 and settled all obligations with respect to the Term Loan. The Company had a credit facility (the “Revolving Loan”) as amended, which had a commitment of $100.0 million. As of September 30, 2020 and December 31, 2019, the Revolving Loan had an outstanding balance of $0.1 million and $70 thousand, respectively. The Revolving Loan had $30.7 million in letters of credit outstanding and availability of $68.9 million at September 30, 2020. The Revolving Loan accrues interest at base rate plus applicable margin (4.0% at September 30, 2020). The Revolving Loan and Term Loan subjected the Company to a number of restrictive covenants, including financial covenants. These financial covenants include a minimum fixed charge coverage ratio, net leverage ratio, EBITDA, and excess cash flow percentage, as defined in the Revolving Loan and Term Loan Credit Facility. As of September 30, 2020, the Company was in compliance with all the required covenants. In connection with the IPO and New Senior Secured Credit Facility the Company paid the remaining balance and settled all obligations related to the Revolving Loan. See Note 14 – Subsequent Events for discussion of New Senior Secured Credit Facility. |
Related Party Loan
Related Party Loan | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Loan | Related Party Loan On August 22, 2018, the Company entered into a $38.6 million senior secured promissory note, as amended (the “Senior Secured Loan”) with a unit holder of Parent that bears interest at a stated rate of 12% per year. Interest payments on the Senior Secured Loan are due quarterly and were based on the division of the Senior Secured Loan into two tranches: a $22.5 million tranche (“Tranche A”) that requires cash interest payments and; a $16.1 million tranche (“Tranche B”) that provides for payments in kind (“PIK”) through the addition of accrued interest to the principal balance. The balance of the Senior Secured Loan, presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs, is $41.8 million at December 31, 2019. The Company paid the remaining outstanding balance and accrued interest on July 31, 2020 to settle the obligation with respect to the Senior Secured Loan. Accounts Payable-Related Party The Company had $2.2 million and $5.9 million at September 30, 2020 and December 31, 2019, respectively, of accounts payable - related party with the former shareholders of Array and current unit holder of Parent. The payables relate to a Federal tax refund related to the pre-acquisition periods, restricted cash at acquisition date which were due to the sellers of Array upon release of the restriction offset by a receivable related to a sales/use tax audit from the pre-acquisition period for which the seller provided the Company with indemnification. Consent Fees-Related Party The Company incurred $2.2 million in consent fees with the former majority shareholder of Array to allow a carryback of post-acquisition net operating losses to pre-acquisition periods under the CARES Act. The consent fee is included in accounts payable – related party and other income (expense), net in the accompanying condensed consolidated financial statements at September 30, 2020 and for the three and nine months ended September 30, 2020, respectively. Related Party Loans - see Note 8 Contingent Consideration - see Note 11 |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Based on Topic 606 provisions, the Company disaggregates its revenue from contracts with customers by those sales recorded over-time and sales recorded at a point in time. The following table presents the Company’s revenue disaggregated by sales recorded over-time and sales recorded at a point in time (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Over-time Revenues $ 112,329 $ 170,283 $ 620,447 $ 383,135 Point in time Revenues 27,133 27,489 71,649 40,054 Total Revenue $ 139,462 $ 197,772 $ 692,096 $ 423,189 |
Earnings (Loss) per Unit
Earnings (Loss) per Unit | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Unit | Earnings (Loss) per Unit The following table sets forth the computation of basic and diluted earnings (loss) per unit (in thousands, except per unit amounts): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Basic and Diluted: Net income (loss) $ (7,232) $ 18,191 $ 68,845 $ 12,965 Weighted-average units 119,994 119,994 119,994 119,994 Basic and diluted net earnings (loss) per unit $ (0.06) $ 0.15 $ 0.57 $ 0.11 There are 26,671,594 Class B units and 1,000 Class C units of Parent issued to certain employees or directors of the Company which were not included in the calculation of basic or diluted EPS for the three months ended September 30, 2020 and 2019 and for the nine months ended September 30, 2020 and 2019, as the Class B and Class C units do not represent potential units of the Company. |
Commitment and Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company, in the normal course of business, is subject to claims and litigation. Management believes that there are no outstanding claims or assessments against the Company that would result in a material unfavorable outcome. Contingent Consideration TRA Concurrent with Parent’s acquisition of Array Technologies Patent Holdings Co., LLC (the “Patent LLC”), Array Tech, Inc. (f/k/a Array Technologies, Inc.) entered into a TRA with the former majority shareholder of Array. The TRA is valued based on the future expected payments under the agreement. The TRA provides for the payment by Array Tech, Inc. (f/k/a Array Technologies, Inc.) to the former owners for certain federal, state, local and non-U.S. tax benefits deemed realized in post-closing taxable periods by Array, from the use of certain deductions generated by the increase in the tax value of the developed technology. The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in general and administrative in the accompanying consolidated statements of operations. At September 30, 2020 and December 31, 2019, the fair value of the TRA was $18.3 million and $17.8 million, respectively. Estimating the amount of payments that may be made under the TRA is by nature imprecise. The significant fair value inputs used to estimate the future expected TRA payments to the former owners include the timing of tax payments, a discount rate, book income projections, timing of expected adjustments to calculate taxable income and the projected rate of use for attributes defined in the TRA. Payments made under the TRA consider tax positions taken by the Company and are due within 125 days following the filing of the Company’s U.S. federal and state income tax returns under procedures described in the agreement. The current portion of the TRA liability is based on tax returns. The TRA will continue until all tax benefit payments have been made or the Company elects early termination under the terms described in the TRA. As of September 30, 2020, the undiscounted future expected payments through December 31, under the TRA are as follows (in thousands): Amount 2020 $ 7,414 2021 1,692 2022 1,748 2023 1,748 2024 1,748 2025 and thereafter 10,931 $ 25,281 Earn-Out Liability The Company is required to pay the selling stockholders of Array future contingent consideration consisting of earn-out payments in the form of cash upon the occurrence of certain events, including the sale, transfer, assignment, pledge, encumbrance, distribution or disposition of shares held by the acquirer to a third party; initial public offering of the equity securities of Parent, acquirer or the Company; the sale of equity securities or assets of Parent, acquirer or the Company to a third-party; or a merger, consolidation, recapitalization or reorganization of Parent, acquirer or the Company. The maximum aggregate earn-out consideration is $25.0 million. The earn-out liability is included in contingent consideration in the accompanying consolidated balance sheets in the amount of $15.9 million and $0.4 million at September 30, 2020 and December 31, 2019, respectively. The fair value of the earn-out liability was initially determined as of the acquisition date using unobservable inputs. These inputs include the estimated amount and timing of future cash flows, the probability of a qualifying event occurring, and a risk-free rate used to adjust the probability-weighted cash flows to their present value. Subsequent to the acquisition date, at each reporting period, the earn-out liability is re-measured to fair value with changes in fair value recorded in general and administrative in the accompanying consolidated statements of operations. The following table summarizes the liability related to the estimated contingent consideration (in thousands): TRA Earn-Out Liability Contingent Consideration Balance, June 30, 2019 $ 15,378 $ 442 $ 15,820 Fair value adjustment 1,968 — 1,968 Balance, September 30, 2019 $ 17,346 $ 442 $ 17,788 Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667 Fair value adjustment (521) 14,112 13,591 Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258 TRA Earn-Out Liability Contingent Consideration Balance, December 31, 2018 $ 17,168 $ 442 $ 17,610 IRS Settlement (2,727) — (2,727) Fair value adjustment 2,905 — 2,905 Balance, September 30, 2019 $ 17,346 $ 442 $ 17,788 Balance, December 31, 2019 $ 17,808 $ 442 $ 18,250 Fair value adjustment 516 15,492 16,008 Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258 |
Equity Based Compensation
Equity Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Equity Based Compensation | Equity Based Compensation The Company accounts for equity grants to employees (Class B units and Class C units, “the Units”, of Parent) as equity based compensation under ASC 718, Compensation-Stock Compensation . The Units contain vesting provisions as defined in the agreement. Vested units do not forfeit upon termination and represent a residual interest in Parent. Equity based compensation cost is measured at the grant date fair value and is recognized on a straight-line basis over the requisite service period, including those units with graded vesting with a corresponding credit to additional paid-in capital as a capital contribution from Parent. However, the amount of equity based compensation at any date is equal to the portion of the grant date value of the award that is vested. The Units issued to employees are measured at fair value on the grant date using an option pricing model. The Company utilizes the estimated weighted average of the Company’s expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the average of historical and implied volatility of a set of comparable companies, adjusted for size and leverage. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms. Actual results may vary depending on the assumptions applied within the model. On November 19, 2019 and May 19, 2020, Parent issued 22,326,653 and 4,344,941, respectively, Class B units to certain employees of the Company. On March 28, 2020, Parent issued 1,000 Class C units to a member of the board of directors of Array Technologies, Inc. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Loan On August 22, 2018, the Company entered into a $38.6 million senior secured promissory note, as amended (the “Senior Secured Loan”) with a unit holder of Parent that bears interest at a stated rate of 12% per year. Interest payments on the Senior Secured Loan are due quarterly and were based on the division of the Senior Secured Loan into two tranches: a $22.5 million tranche (“Tranche A”) that requires cash interest payments and; a $16.1 million tranche (“Tranche B”) that provides for payments in kind (“PIK”) through the addition of accrued interest to the principal balance. The balance of the Senior Secured Loan, presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs, is $41.8 million at December 31, 2019. The Company paid the remaining outstanding balance and accrued interest on July 31, 2020 to settle the obligation with respect to the Senior Secured Loan. Accounts Payable-Related Party The Company had $2.2 million and $5.9 million at September 30, 2020 and December 31, 2019, respectively, of accounts payable - related party with the former shareholders of Array and current unit holder of Parent. The payables relate to a Federal tax refund related to the pre-acquisition periods, restricted cash at acquisition date which were due to the sellers of Array upon release of the restriction offset by a receivable related to a sales/use tax audit from the pre-acquisition period for which the seller provided the Company with indemnification. Consent Fees-Related Party The Company incurred $2.2 million in consent fees with the former majority shareholder of Array to allow a carryback of post-acquisition net operating losses to pre-acquisition periods under the CARES Act. The consent fee is included in accounts payable – related party and other income (expense), net in the accompanying condensed consolidated financial statements at September 30, 2020 and for the three and nine months ended September 30, 2020, respectively. Related Party Loans - see Note 8 Contingent Consideration - see Note 11 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events New Senior Secured Credit Facility On October 14, 2020, the Company entered into a new credit senior credit facility consisting of (i) a $575 million senior secured seven-year term loan facility (the “New Term Loan Facility”) and (ii) a $150 million senior secured 5-year revolving credit facility (the “New Revolving Credit Facility” and, together with the New Term Loan Facility, the “New Senior Secured Credit Facility”). We used $105 million of our initial public offering (“IPO”) proceeds to pay down the balance of the New Term Loan Facility to $470 million, and the remaining proceeds for general corporate purposes, including working capital, operating expenses and capital expenditure. Interest Rate The interest rates applicable to the loans under the New Term Loan Facility equals, at our option, either, (i) in the case of ABR borrowings, the highest of (a) the Federal Funds Rate as of such day plus 50 basis points, (b) the prime rate and (c) the adjusted LIBOR rate as of such day for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, provided that in no event shall the ABR be less than 150 basis points, plus, in each case, the applicable margin of 300 basis points per annum; or (ii) in the case of Eurocurrency borrowings, the greater of (a) the London interbank offered rate for the relevant currency, adjusted for statutory reserve requirements, and (b) 100 basis points, plus, in each case, the applicable margin of 400 basis points per annum. The interest rates applicable to the loans under the New Revolving Facility equals, at our option, either, (i) in the case of ABR borrowings, the highest of (a) the Federal Funds Rate as of such day plus 50 basis points, (b) the prime rate and (c) the adjusted LIBOR rate as of such day for a deposit in U.S. dollars with a maturity of one month plus 100 basis points, provided that in no event shall the ABR be less than 150 basis points, plus, in each case, the applicable margin of 225 basis points per annum; or (ii) in the case of Eurocurrency borrowings, the greater of (a) the London interbank offered rate for the relevant currency, adjusted for statutory reserve requirements, and (b) 50 basis points, plus, in each case, the applicable margin of 325 basis points per annum. Guarantees and Security The obligations under the New Senior Secured Credit Facility are guaranteed by ATI Investment Sub, Inc. and its wholly owned domestic subsidiaries other than certain immaterial subsidiaries and other excluded subsidiaries. The obligations under the New Senior Secured Credit Facility are secured by a first priority security interest in substantially all of Array Tech, Inc.’s and the guarantors’ existing and future property and assets, including accounts receivable, inventory, equipment, general intangibles, intellectual property, investment property, other personal property, material owned real property, cash and proceeds of the foregoing, subject to customary exceptions. Prepayments and Amortization Loans under the New Revolving Credit Facility may be voluntarily prepaid in whole, or in part, in each case without premium or penalty. Loans under the New Term Loan Facility may be voluntarily prepaid in whole, or in part, in each case without premium or penalty (other than a 1% premium with respect to prepayments on account of certain “repricing events,” subject to exceptions, occurring within 12 months of the closing date of the New Senior Secured Credit Facility), subject to certain customary conditions. Subject to certain customary exceptions, the New Senior Secured Credit Facility requires mandatory prepayments, but not permanent reductions of commitments thereunder, for excess cash flow, asset sales, subject to a right of reinvestment, and refinancing facilities. The New Term Loan Facility amortizes in equal quarterly installments in aggregate annual amounts equal to 1.00% per annum of the original principal amount of the loans funded thereunder. There is no scheduled amortization under the New Revolving Credit Facility. Restrictive Covenants and Other Matters The New Senior Secured Credit Facility contains affirmative and negative covenants that are customary for financings of this type, including covenants that restrict our incurrence of indebtedness, incurrence of liens, dispositions, investments, acquisitions, restricted payments, transactions with affiliates, as well as other negative covenants customary for financings of this type. The New Revolving Credit Facility also includes a springing financial maintenance covenant that is tested on the last day of each fiscal quarter if the outstanding loans and certain other credit extensions under the New Revolving Credit Facility exceed 35% of the aggregate amount of commitments thereunder, subject to customary exclusions and conditions. If the financial maintenance covenant is triggered, the first lien net leverage ratio will be tested for compliance not to exceed 7.10 to 1.00. The New Senior Secured Credit Facility also includes customary events of default, including the occurrence of a change of control. Special Distribution to Parent On October 14, 2020, the Company issued a special distribution of $589 million to Parent (the “Special Distribution”). Proceeds for the New Senior Secured Credit facility and cash on hand were used to fund the special distribution. Corporate Conversion and Stock Split On October 14, 2020, prior to the issuance of any of our shares of common stock in our IPO, we converted from a Delaware limited liability company to a Delaware corporation. In connection with the corporate conversion we converted all 1,000 of our outstanding member units into 100,000,000 shares of common stock and then completed a stock split of 1.19994-for-1. The corporate conversion and stock split representing 119,994,467 shares of common stock have been adjusted retroactively for the purposes of calculating basic and diluted earnings per share. Authorized Shares of Common and Preferred Stock On October 14, 2020, in connection with the IPO, a new Certificate of Incorporation became effective for the Company, which authorized capital stock of 1,000,000,000 shares of common stock, $0.001 par value, and 5,000,000 shares of preferred stock, $0.001 par value. IPO On October 19, 2020, we closed the IPO and sold 7,000,000 shares of common stock at a public offering price of $22.00 per share. We received net proceeds of $140.2 million after deducting underwriting discounts and commissions of $8.5 million and other offering costs of $5.3 million. We used $105 million of the IPO proceeds to pay down the balance of the New Term Loan Facility to $470 million. Equity Incentive Plan On October 14, 2020, the Company’s 2020 Equity Incentive Plan (the “2020 Plan”) became effective. The 2020 Plan authorized 6,683,919 new shares, subject to adjustments pursuant to the 2020 Plan. Effective October 14, 2020, the Company granted an aggregate of 29,398 restricted stock units (RSU’s) to its non-employee directors in connection with their service on the board of directors and 470,608 RSU’s to certain executives and members of management. The RSU’s were granted under the 2020 Plan at the IPO price of $22.00 per share. Each share has a vesting commencement date of and is subject to a two Earn-out Payment On October 14, 2020, as a result of certain qualifying events, the Special Distribution and shares sold in the IPO by the selling stockholders, a payment of $9.1 million was made to holders of the earn-out. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Accounting and Presentation and Unaudited Interim Financial Information | Basis of Accounting and Presentation The accompanying consolidated financial statements were prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). |
Corporate Conversion and Stock Split | Corporate Conversion and Stock Split On October 14, 2020, prior to the issuance of any of our shares of common stock in our initial public offering (the “IPO”), we converted from a Delaware limited liability company to a Delaware corporation. In connection with the corporate conversion we converted all 1,000 of our outstanding member units into 100,000,000 shares of common stock and then completed a stock split of 1.19994-for-1. The corporate conversion and stock split representing 119,994,467 shares of common stock have been adjusted retroactively for the purposes of calculating basic and diluted earnings per share. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of ATI Intermediate Holdings, LLC and its Subsidiaries, which include HDF, ATI Investment and Array. All intercompany accounts and transactions have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates include impairment of goodwill, impairment of long-lived assets, fair value of contingent consideration, allowance for doubtful accounts, reserve for excess or obsolete inventories, valuation of deferred tax assets and warranty reserve. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. |
Impact of COVID-19 Pandemic and CARES Act Payroll Tax Deferral | Impact of COVID-19 Pandemic In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China. Since then, COVID-19 has spread to multiple countries, including the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. To date, the Company has maintained uninterrupted business operations with normal turnaround times for its delivery of solar tracking systems. The Company has implemented adjustments to its operations designed to keep employees safe and comply with federal, state and local guidelines, including those regarding social distancing. The extent to which COVID19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence. In response to COVID-19, the United States government has passed legislation and taken other actions to provide financial relief to companies and other organizations affected by the pandemic.CARES Act Payroll Tax Deferral The CARES Act permits employers to defer the payment of the employer share of social security taxes due for the period beginning March 27, 2020 and ending December 31, 2020. Of the amounts deferred, 50% are required to be paid by December 31, 2021 and the remaining 50% are required to be paid by December 31, 2022. |
Deferred Offering Costs | Deferred Offering CostsDeferred offering costs consist primarily of legal and accounting fees, which are direct and incremental fees related to the IPO. The deferred offering costs will be offset against the IPO proceeds, which will be recorded in the fourth quarter of 2020. |
Revenue Recognition | Revenue Recognition The Company recognized revenues from the sale of solar tracking systems and parts and determines its revenue recognition through the following steps (i) identification of the contract or contracts with a customer, (ii) identification of the performance obligations within the contract, (iii) determination of the transaction price, (iv) allocation of the transaction price to the performance obligations within the contract, and (v) recognition of revenue when, or as the performance obligation has been satisfied. Performance Obligations The Company’s contracts with customers are predominately accounted for as one performance obligation, as the majority of tasks and services is part of a single project or capability. As these contracts are typically a customized assembly for a customer-specific solution, the Company uses the expected cost-plus margin approach to estimate the standalone selling price of each performance obligation. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. In assessing the recognition of revenue, the Company also evaluates whether two or more contracts should be combined and accounted for as one contract and if the combined or single contract should be accounted for as multiple performance obligations which could change the amount of revenue and profit (loss) recorded in a period. Change orders may include changes in specifications or design, manner of performance, equipment, materials, scope of work, and/or the period of completion of the project. The Company analyzes its change orders to determine if they should be accounted for as a modification to an existing contract or a new stand-alone contract. The Company’s change orders are generally modifications to existing contracts and are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized. The majority of the Company’s contracts do not contain variable consideration provisions as a continuation of the original contract. The Company’s performance obligations are satisfied predominately over-time as work progresses for its custom assembled solar systems, utilizing an output measure of completed products and based on the timing of the product’s shipments considering the shipping terms described in the contract. Revenue recognized for the Company’s part sales are recorded at a point in time and recognized when obligations under the terms of the contract with our customer are satisfied. Generally, this occurs with the transfer of control of the asset, which is in line with shipping terms. Contract Estimates Accounting for contracts utilizing the over-time method and their expected cost-plus margins is based on various assumptions to project the outcome of future events that can exceed a year. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; and the availability and timing of funding from the customer. The Company reviews and updates its contract-related estimates each reporting period. The Company recognizes adjustments in estimated expected cost-plus on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the period it is identified. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheets. The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. Billing sometimes occurs subsequent to revenue recognition, resulting in contract assets. The changes in contract assets (i.e. unbilled receivables) and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings for the Company’s revenue recognized over-time. As of September 30, 2020 and December 31, 2019, contract assets consisting of unbilled receivables totaling $34.8 million and $16.1 million, respectively, are recorded within accounts receivable on the consolidated balance sheets on a contract-by-contract basis at the end of the reporting period. The Company also receives advances or deposits from its customers, before revenue is recognized, resulting in contract liabilities. The changes in contract liabilities (i.e. deferred revenue) relate to advanced orders and payments received by the Company and are the result of customers looking to take advantage of certain U.S. federal tax incentives set to decrease at the end of 2019. Based on the terms of the tax incentives the customer must pay for the goods prior to December 31, 2019 which accounts for the increase in the advanced orders and payments and the resulting deferred revenue at December 31, 2019 and subsequent reduction for deliveries which occurred during the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, contract liabilities consisting of deferred revenue were $44.8 million and $328.8 million, respectively and were recorded on a contract-by-contract basis at the end of each reporting period. During the nine months ended September 30, 2020 and 2019, the Company converted $20.5 million and $328.8 million deferred revenue to revenue, respectively, which represented 99.2% and 100% of the prior years deferred revenue balance. Remaining Performance Obligations |
Equity-Based Compensation | Equity-Based Compensation The Company recognizes equity-based compensation expense based on the equity award’s grant date fair value. The determination of the fair value of equity awards issued to employees of the Company is based upon the underlying share price and a number of assumptions, including volatility, performance period, risk-free interest rate and expected dividends. The Company accounts for forfeitures as they occur. The grant date fair value of each unit is amortized on a straight-line basis over the requisite service period. |
Earnings per Unit ("EPU") | Earnings per Unit (“EPU”) Basic earnings (loss) per unit, or EPU, is computed by dividing net income (loss) available to unit holders by the weighted average units outstanding during the period. Diluted EPU takes into account the potential dilution that could occur if securities or other contracts to issue units, such as stock options and unvested restricted stock units, were exercised and converted into units. Diluted EPU is computed by dividing net income (loss) available to unit holders by the weighted average units outstanding during the period, increased by the number of additional units that would have been outstanding if the potential units had been issued and were dilutive. |
Credit Concentration | Credit Concentration Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, restricted cash and accounts receivable. The Company has no significant off balance sheet concentrations of credit risk. The Company maintains its cash and restricted cash with financial institutions that are believed to be of high credit quality and has not experienced any material losses relating to any cash and restricted cash. |
Fair Value | Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 - Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities. Assets valued using Level 1 inputs are determined by quoted market prices derived from an active market and Level 2 inputs are based primarily on quoted prices for similar assets in active or inactive markets. Level 3 inputs are valued by management’s assumptions about the assumptions the market participants would utilize in pricing the asset. The fair values of the Company’s cash, restricted cash, accounts receivable, and accounts payable approximate their carrying values due to their short maturities. The carrying value of the Company’s notes payable and related party loans approximates their fair values, as they are based on current market rates at which the Company could borrow funds with similar terms. |
New Accounting Standards | New Accounting Standards To be adopted In February 2016, the FASB issued ASU No. 2016-02 (Topic 842) “Leases” which supersedes the lease recognition requirements in ASC Topic 840, “Leases” . Under ASU No. 2016-02, lessees are required to recognize assets and liabilities on the consolidated balance sheets for most leases and provide enhanced disclosures. Leases will continue to be classified as either finance or operating. For companies that are not emerging growth companies (“EGCs”), the ASU is effective for fiscal years beginning after December 15, 2018. For EGCs, the ASU is effective for fiscal years beginning after December 15, 2021. The Company plans to adopt the new standard using the modified retrospective method, under which the Company will apply Topic 842 to existing and new leases as of the effective date, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods. The Company anticipates that the adoption will not have a material impact on its consolidated statements of operations or its consolidated statements of cash flows but expects to recognize right-of-use assets and liabilities for lease obligations associated with its operating leases. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses , which was subsequently amended by ASU No. 2018-19 and ASU No. 2019-10, requires the measurement of expected credit losses for financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions and reasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount of credit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security has been in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for the fiscal year beginning after December 15, 2022, or December 15, 2021 if we were to lose EGC’s status in 2021. The Company will continue to assess the possible impact of this standard, but currently does not expect the adoption of this standard will have a significant impact on its consolidated financial statements and its limited history of bad debt expense relating to trade accounts receivable. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”), which is intended to simplify various aspects of the accounting for income taxes. ASU No. 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures. Adopted In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement against or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The Company adopted ASU 2018-13 as of January 1, 2020. The Company’s disclosures related to its Level 3 financial statements did not materially change for the periods presented. See Note 11 - Commitments and Contingencies for more information. |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of current inventory | Inventories consist of the following (in thousands): September 30, 2020 December 31, 2019 Raw materials $ 32,506 $ 62,923 Finished goods 71,726 90,301 Reserve for excess or obsolete inventory (7,717) (5,200) Total $ 96,515 $ 148,024 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Summary of property, plant and equipment | Property, plant and equipment consisted of the following (in thousands): Estimated Useful Lives (Years) September 30, 2020 December 31, 2019 Land N/A $ 1,340 $ 1,340 Buildings and land improvements 15-39 2,487 2,464 Manufacturing equipment 7 13,002 12,631 Furniture, fixtures and equipment 5-7 287 277 Vehicles 5 140 140 Hardware and software 3-5 589 398 Total 17,845 17,250 Less: accumulated depreciation (8,225) (6,590) Property, plant and equipment, net $ 9,620 $ 10,660 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | Other intangible assets consisted of the following (in thousands): Estimated Useful Lives (Years) September 30, 2020 December 31, 2019 Amortizable: Costs: Developed technology 14 $ 203,800 $ 203,800 Customer relationship 10 89,500 89,500 Internal-use software modification 2.5 4,356 4,356 Total Amortizable Intangibles 297,656 297,656 Accumulated amortization: Developed technology 61,594 50,676 Customer relationship 37,869 31,157 Internal-use software modification costs 3,920 2,613 Total Accumulated Amortization 103,383 84,446 Total Amortizable Intangibles, Net 194,273 213,210 Non-amortizable costs: Trade name 10,300 10,300 Total Other Intangible Assets, Net $ 204,573 $ 223,510 |
Schedule of indefinite-lived intangible assets | Other intangible assets consisted of the following (in thousands): Estimated Useful Lives (Years) September 30, 2020 December 31, 2019 Amortizable: Costs: Developed technology 14 $ 203,800 $ 203,800 Customer relationship 10 89,500 89,500 Internal-use software modification 2.5 4,356 4,356 Total Amortizable Intangibles 297,656 297,656 Accumulated amortization: Developed technology 61,594 50,676 Customer relationship 37,869 31,157 Internal-use software modification costs 3,920 2,613 Total Accumulated Amortization 103,383 84,446 Total Amortizable Intangibles, Net 194,273 213,210 Non-amortizable costs: Trade name 10,300 10,300 Total Other Intangible Assets, Net $ 204,573 $ 223,510 |
Schedule of future annual amortization expense of amortizable intangible assets | Estimated future annual amortization expense for the above amortizable intangible assets for the remaining periods through December 31, as follows (in thousands): Amount 2020 $ 6,313 2021 23,507 2022 23,507 2023 23,507 2024 23,507 Thereafter 93,932 $ 194,273 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following table presents the Company’s revenue disaggregated by sales recorded over-time and sales recorded at a point in time (in thousands): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Over-time Revenues $ 112,329 $ 170,283 $ 620,447 $ 383,135 Point in time Revenues 27,133 27,489 71,649 40,054 Total Revenue $ 139,462 $ 197,772 $ 692,096 $ 423,189 |
Earnings (Loss) per Unit (Table
Earnings (Loss) per Unit (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of earnings per share, basic and diluted | The following table sets forth the computation of basic and diluted earnings (loss) per unit (in thousands, except per unit amounts): Three Months Ended Nine Months Ended 2020 2019 2020 2019 Basic and Diluted: Net income (loss) $ (7,232) $ 18,191 $ 68,845 $ 12,965 Weighted-average units 119,994 119,994 119,994 119,994 Basic and diluted net earnings (loss) per unit $ (0.06) $ 0.15 $ 0.57 $ 0.11 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Undiscounted future expected payments under the TRA | As of September 30, 2020, the undiscounted future expected payments through December 31, under the TRA are as follows (in thousands): Amount 2020 $ 7,414 2021 1,692 2022 1,748 2023 1,748 2024 1,748 2025 and thereafter 10,931 $ 25,281 |
Summary of liability related to estimated contingent consideration | The following table summarizes the liability related to the estimated contingent consideration (in thousands): TRA Earn-Out Liability Contingent Consideration Balance, June 30, 2019 $ 15,378 $ 442 $ 15,820 Fair value adjustment 1,968 — 1,968 Balance, September 30, 2019 $ 17,346 $ 442 $ 17,788 Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667 Fair value adjustment (521) 14,112 13,591 Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258 TRA Earn-Out Liability Contingent Consideration Balance, December 31, 2018 $ 17,168 $ 442 $ 17,610 IRS Settlement (2,727) — (2,727) Fair value adjustment 2,905 — 2,905 Balance, September 30, 2019 $ 17,346 $ 442 $ 17,788 Balance, December 31, 2019 $ 17,808 $ 442 $ 18,250 Fair value adjustment 516 15,492 16,008 Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Thousands | Oct. 14, 2020shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019shares | Sep. 30, 2020USD ($)shares | Sep. 30, 2019USD ($)shares | Dec. 31, 2019USD ($) |
Class of Stock [Line Items] | ||||||
Weighted-average units (in shares) | shares | 119,994,000 | 119,994,000 | 119,994,000 | 119,994,000 | ||
Deferred offering costs | $ 3,300 | $ 3,300 | ||||
Debt issuance costs | 500 | 500 | ||||
Contract assets | 34,800 | 34,800 | $ 16,100 | |||
Contract liabilities | 44,800 | 44,800 | 328,800 | |||
Deferred revenue recognized | $ 20,500 | $ 328,800 | ||||
Percentage of deferred revenue recognized | 99.20% | 100.00% | ||||
Remaining performance obligation | $ 227,000 | $ 227,000 | ||||
Percentage of performance obligation to be recognized | 100.00% | 100.00% | ||||
Cash that is uninsured and uncollateralized | $ 26,600 | $ 26,600 | $ 360,900 | |||
Largest Customer | Revenue Benchmark | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 14.30% | 21.10% | ||||
Largest Customer | Trade Accounts Receivable | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 21.70% | 29.50% | ||||
Five Largest Customers | Revenue Benchmark | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 45.90% | 55.20% | ||||
Five Largest Customers | Trade Accounts Receivable | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 23.90% | 69.00% | ||||
Two Customers | Revenue Benchmark | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 24.50% | |||||
Three Customers | Revenue Benchmark | Customer Concentration Risk | ||||||
Class of Stock [Line Items] | ||||||
Concentration risk percentage | 43.10% | |||||
CARES Act Payroll Tax Deferral | ||||||
Class of Stock [Line Items] | ||||||
Deferred payment of employer share of social security taxes | $ 700 | $ 700 | ||||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-10-01 | ||||||
Class of Stock [Line Items] | ||||||
Remaining performance obligation, period | 12 months | 12 months | ||||
Subsequent event | ||||||
Class of Stock [Line Items] | ||||||
Stock split conversion ratio | 1.19994 | |||||
Weighted-average units (in shares) | shares | 119,994,467 | |||||
Member units | Subsequent event | ||||||
Class of Stock [Line Items] | ||||||
Number of shares converted | shares | 1,000 | |||||
Common Stock | Subsequent event | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued upon conversion | shares | 100,000,000 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 32,506 | $ 62,923 |
Finished goods | 71,726 | 90,301 |
Reserve for excess or obsolete inventory | (7,717) | (5,200) |
Inventories, net | $ 96,515 | $ 148,024 |
Property, Plant, and Equipmen_2
Property, Plant, and Equipment - Summary of Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 17,845 | $ 17,250 |
Less: accumulated depreciation | (8,225) | (6,590) |
Property, plant and equipment, net | 9,620 | 10,660 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | 1,340 | 1,340 |
Buildings and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 2,487 | 2,464 |
Buildings and land improvements | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 15 years | |
Buildings and land improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 39 years | |
Manufacturing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 7 years | |
Property, plant, and equipment, gross | $ 13,002 | 12,631 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 287 | 277 |
Furniture, fixtures and equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 5 years | |
Furniture, fixtures and equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 7 years | |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 5 years | |
Property, plant, and equipment, gross | $ 140 | 140 |
Hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment, gross | $ 589 | $ 398 |
Hardware and software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 3 years | |
Hardware and software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Lives (Years) | 5 years |
Property, Plant, and Equipmen_3
Property, Plant, and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 0.6 | $ 0.5 | $ 1.7 | $ 1.6 |
Depreciation allocated to cost of revenue | 0.5 | 0.4 | 1.5 | 1.4 |
Depreciation included in depreciation and amortization | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | Jul. 08, 2016 | |
Goodwill [Line Items] | ||||||
Goodwill | $ 69,727 | $ 69,727 | $ 69,727 | |||
Accumulated impairment | 51,900 | 51,900 | $ 51,900 | |||
Amortization expense related to intangible assets | $ 6,300 | $ 6,300 | $ 18,900 | $ 18,900 | ||
Array | ||||||
Goodwill [Line Items] | ||||||
Goodwill | $ 121,600 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of other intangible assets (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | Jan. 01, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Total Amortizable Intangibles | $ 297,656 | $ 297,656 | ||
Total Accumulated Amortization | 103,383 | 84,446 | ||
Total Amortizable Intangibles, Net | 194,273 | 213,210 | ||
Indefinite-lived Intangible Assets [Line Items] | ||||
Other intangible assets, net | 204,573 | 223,510 | ||
Trade name | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Non-amortizable costs | $ 10,300 | 10,300 | ||
Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Useful Lives (Years) | 14 years | |||
Total Amortizable Intangibles | $ 203,800 | 203,800 | ||
Total Accumulated Amortization | $ 61,594 | 50,676 | ||
Total Amortizable Intangibles, Net | $ 188,000 | $ 210,000 | ||
Customer relationship | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Useful Lives (Years) | 10 years | |||
Total Amortizable Intangibles | $ 89,500 | 89,500 | ||
Total Accumulated Amortization | $ 37,869 | 31,157 | ||
Internal-use software modification | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Estimated Useful Lives (Years) | 2 years 6 months | |||
Total Amortizable Intangibles | $ 4,356 | 4,356 | ||
Total Accumulated Amortization | $ 3,920 | $ 2,613 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of future annual amortization expense of amortizable intangible assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2020 | $ 6,313 | |
2021 | 23,507 | |
2022 | 23,507 | |
2023 | 23,507 | |
2024 | 23,507 | |
Thereafter | 93,932 | |
Total Amortizable Intangibles, Net | $ 194,273 | $ 213,210 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | Jan. 01, 2017 | |
Income Tax Examination [Line Items] | ||||
Income tax benefit | $ 6,600 | |||
Reduction in developed technology value for federal income tax purposes | $ 194,273 | $ 213,210 | ||
Reduction of NOL carryforward | 2,800 | |||
Increase in deferred tax liability from income tax examination | 4,600 | |||
Write off of deferred tax asset related to TRA | $ 4,700 | |||
Developed technology | ||||
Income Tax Examination [Line Items] | ||||
Reduction in developed technology value for federal income tax purposes | $ 188,000 | $ 210,000 |
Term and Revolving Loan (Detail
Term and Revolving Loan (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | ||
Revolving loan outstanding balance | $ 102,000 | $ 70,000 |
Letters of credit outstanding | $ 30,700,000 | |
Base Rate | ||
Debt Instrument [Line Items] | ||
Effective interest rate | 4.00% | |
New Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 100,000,000 | |
Revolving loan outstanding balance | 100,000 | 70,000 |
Available borrowing capacity | 68,900,000 | |
Term Loan Credit and Guarantee Agreement | Secured Debt | ||
Debt Instrument [Line Items] | ||
Quarterly installment payments | $ 5,000,000 | |
Term Loan balance | $ 57,700,000 | |
Effective interest rate | 8.96% | |
Debt discount and issuance costs | $ 1,800,000 | |
Term Loan Credit and Guarantee Agreement | Base Rate | Secured Debt | ||
Debt Instrument [Line Items] | ||
Interest rate applicable margin | 6.25% |
Related Party Loan (Details)
Related Party Loan (Details) - Unit holder of Parent - USD ($) | Aug. 22, 2018 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Senior Secured Loan | ||||||
Related Party Transaction [Line Items] | ||||||
Balance of Senior Secured Loan | $ 41,800,000 | |||||
Interest expense | $ 300,000 | $ 500,000 | $ 3,800,000 | $ 4,100,000 | ||
Senior Secured Loan | Secured Debt | ||||||
Related Party Transaction [Line Items] | ||||||
Senior secured promissory note | $ 38,600,000 | |||||
Stated rate | 12.00% | |||||
Tranche A | Secured Debt | ||||||
Related Party Transaction [Line Items] | ||||||
Senior secured promissory note | $ 22,500,000 | |||||
Tranche B | Secured Debt | ||||||
Related Party Transaction [Line Items] | ||||||
Senior secured promissory note | $ 16,100,000 |
Revenues (Details)
Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 139,462 | $ 197,772 | $ 692,096 | $ 423,189 |
Over-time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 112,329 | 170,283 | 620,447 | 383,135 |
Point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 27,133 | $ 27,489 | $ 71,649 | $ 40,054 |
Earnings (Loss) per Unit - Sche
Earnings (Loss) per Unit - Schedule of earnings per share, basic and diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and Diluted: | ||||
Net income (loss) | $ (7,232) | $ 18,191 | $ 68,845 | $ 12,965 |
Weighted-average units (in shares) | 119,994 | 119,994 | 119,994 | 119,994 |
Basic and diluted net earnings (loss) per unit (in dollars per share) | $ (0.06) | $ 0.15 | $ 0.57 | $ 0.11 |
Earnings (Loss) per Unit - Narr
Earnings (Loss) per Unit - Narrative (Details) - Equity grants - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Class B units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of shares not included in the calculation of basic or diluted EPS | 26,671,594 | 26,671,594 | 26,671,594 | 26,671,594 |
Class C Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Number of shares not included in the calculation of basic or diluted EPS | 1,000 | 1,000 | 1,000 | 1,000 |
Commitment and Contingencies -
Commitment and Contingencies - Narrative (Details) - USD ($) | 9 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Dec. 31, 2018 | |
Business Acquisition, Contingent Consideration [Line Items] | ||||||
Contingent consideration | $ 34,258,000 | $ 20,667,000 | $ 18,250,000 | $ 17,788,000 | $ 15,820,000 | $ 17,610,000 |
Array | TRA | ||||||
Business Acquisition, Contingent Consideration [Line Items] | ||||||
Contingent consideration | $ 18,324,000 | 18,845,000 | 17,808,000 | 17,346,000 | 15,378,000 | 17,168,000 |
Tax Receivable Agreement, payment term | 125 days | |||||
Array | Earn-Out Liability | ||||||
Business Acquisition, Contingent Consideration [Line Items] | ||||||
Contingent consideration | $ 15,934,000 | $ 1,822,000 | $ 442,000 | $ 442,000 | $ 442,000 | $ 442,000 |
Maximum aggregate earn-out consideration | $ 25,000,000 |
Commitment and Contingencies _2
Commitment and Contingencies - Undiscounted future expected payments under the TRA (Details) - Array - TRA $ in Thousands | Sep. 30, 2020USD ($) |
Other Commitments [Line Items] | |
2020 | $ 7,414 |
2021 | 1,692 |
2022 | 1,748 |
2023 | 1,748 |
2024 | 1,748 |
2025 and thereafter | 10,931 |
Total | $ 25,281 |
Commitment and Contingencies _3
Commitment and Contingencies - Summary of liability related to estimated contingent consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Combination, Contingent Consideration Arrangements, Change In Amount Of Contingent Consideration [Roll Forward] | ||||
Beginning balance | $ 20,667 | $ 15,820 | $ 18,250 | $ 17,610 |
Fair value adjustment | 13,591 | 1,968 | 16,008 | 178 |
IRS Settlement | (2,727) | |||
Fair value adjustment | 2,905 | |||
Ending balance | 34,258 | 17,788 | 34,258 | 17,788 |
Array | TRA | ||||
Business Combination, Contingent Consideration Arrangements, Change In Amount Of Contingent Consideration [Roll Forward] | ||||
Beginning balance | 18,845 | 15,378 | 17,808 | 17,168 |
Fair value adjustment | (521) | 1,968 | 516 | |
IRS Settlement | (2,727) | |||
Fair value adjustment | 2,905 | |||
Ending balance | 18,324 | 17,346 | 18,324 | 17,346 |
Array | Earn-Out Liability | ||||
Business Combination, Contingent Consideration Arrangements, Change In Amount Of Contingent Consideration [Roll Forward] | ||||
Beginning balance | 1,822 | 442 | 442 | 442 |
Fair value adjustment | 14,112 | 0 | 15,492 | |
IRS Settlement | 0 | |||
Fair value adjustment | 0 | |||
Ending balance | $ 15,934 | $ 442 | $ 15,934 | $ 442 |
Equity Based Compensation (Deta
Equity Based Compensation (Details) - Equity grants - USD ($) $ in Millions | May 19, 2020 | Mar. 28, 2020 | Nov. 20, 2019 | Sep. 30, 2020 | Sep. 30, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Equity based compensation | $ 0.9 | $ 3.3 | |||
Forfeitures in period (in shares) | 0 | ||||
Class B units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 4,344,941 | 22,326,653 | |||
Unrecognized compensation costs | $ 7.5 | $ 7.5 | |||
Unrecognized compensation costs, period of recognition | 3 years 3 months | ||||
Class C Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares granted in period (in shares) | 1,000 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Accounts payable - related party | $ 2,232 | $ 5,922 |
Unit holder of Parent | Consent Fees | ||
Related Party Transaction [Line Items] | ||
Consent fees incurred | $ 2,200 |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 19, 2020USD ($) | Oct. 14, 2020USD ($)$ / sharesshares | Sep. 30, 2020shares | Sep. 30, 2019shares | Sep. 30, 2020shares | Sep. 30, 2019shares |
Subsequent Event [Line Items] | ||||||
Retroactively adjusted shares of common stock | 119,994,000 | 119,994,000 | 119,994,000 | 119,994,000 | ||
Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Special distribution | $ | $ 589,000,000 | |||||
Stock split conversion ratio | 1.19994 | |||||
Retroactively adjusted shares of common stock | 119,994,467 | |||||
Authorized capital stock (in shares) | 1,000,000,000 | |||||
Common stock, par value (usd per share) | $ / shares | $ 0.001 | |||||
Authorized preferred stock (in shares ) | 5,000,000 | |||||
Preferred stock, par value (usd per share) | $ / shares | $ 0.001 | |||||
Payment of Earn-out | $ | $ 9,100,000 | |||||
Subsequent event | RSU's | ||||||
Subsequent Event [Line Items] | ||||||
Share price (usd per share) | $ / shares | $ 22 | |||||
Subsequent event | RSU's | Minimum | ||||||
Subsequent Event [Line Items] | ||||||
Vesting period | 2 years | |||||
Subsequent event | RSU's | Maximum | ||||||
Subsequent Event [Line Items] | ||||||
Vesting period | 3 years | |||||
Subsequent event | RSU's | Non-employee directors | ||||||
Subsequent Event [Line Items] | ||||||
Shares granted in period (in shares) | 29,398 | |||||
Subsequent event | RSU's | Executives and members of management | ||||||
Subsequent Event [Line Items] | ||||||
Shares granted in period (in shares) | 470,608 | |||||
Subsequent event | 2020 Plan | ||||||
Subsequent Event [Line Items] | ||||||
Authorized shares | 6,683,919 | |||||
Subsequent event | IPO | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares of common stock issued | 7,000,000 | |||||
Public offering price (usd per share) | $ / shares | $ 22 | |||||
Net proceeds | $ | $ 140,200,000 | |||||
Underwriting discounts and commissions | $ | 8,500,000 | |||||
Other offering costs | $ | $ 5,300,000 | |||||
Subsequent event | Member units | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares converted | 1,000 | |||||
Subsequent event | Common stock | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares issued upon conversion | 100,000,000 | |||||
Subsequent event | New Term Loan Facility | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ | $ 575,000,000 | |||||
Debt instrument term | 7 years | |||||
Repayment of long term line of credit | $ | $ 105,000,000 | |||||
New Term Loan outstanding balance | $ | $ 470,000,000 | |||||
Subsequent event | New Term Loan Facility | Fed Funds Effective Rate Overnight Index Swap Rate | ||||||
Subsequent Event [Line Items] | ||||||
Revolving Loan applicable margin | 0.50% | |||||
Subsequent event | New Term Loan Facility | London Interbank Offered Rate (LIBOR) | ||||||
Subsequent Event [Line Items] | ||||||
Monthly basis spread on variable rate | 1.00% | |||||
Subsequent event | New Term Loan Facility | Base Rate | ||||||
Subsequent Event [Line Items] | ||||||
Minimum allowable variable rate | 0.0150 | |||||
Minimum annual variable rate | 0.0300 | |||||
Subsequent event | New Term Loan Facility | Eurodollar | ||||||
Subsequent Event [Line Items] | ||||||
Minimum allowable variable rate | 0.0100 | |||||
Minimum annual variable rate | 0.0400 | |||||
Subsequent event | New Revolving Credit Facility | ||||||
Subsequent Event [Line Items] | ||||||
Maximum borrowing capacity | $ | $ 150,000,000 | |||||
Debt instrument term | 5 years | |||||
Prepayment premium | 1.00% | |||||
Annual amortization rate | 1.00% | |||||
Springing financial maintenance covenant | 35.00% | |||||
Net leverage ratio | 7.10 | |||||
Subsequent event | New Revolving Credit Facility | Fed Funds Effective Rate Overnight Index Swap Rate | ||||||
Subsequent Event [Line Items] | ||||||
Revolving Loan applicable margin | 0.50% | |||||
Subsequent event | New Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | ||||||
Subsequent Event [Line Items] | ||||||
Monthly basis spread on variable rate | 1.00% | |||||
Subsequent event | New Revolving Credit Facility | Base Rate | ||||||
Subsequent Event [Line Items] | ||||||
Minimum allowable variable rate | 0.0150 | |||||
Minimum annual variable rate | 0.0225 | |||||
Subsequent event | New Revolving Credit Facility | Eurodollar | ||||||
Subsequent Event [Line Items] | ||||||
Minimum allowable variable rate | 0.0050 | |||||
Minimum annual variable rate | 0.0325 |