Array Technologies, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Array manufactures utility-scale solar tracking systems. The year includes STI, acquired January 11, 2022, so year-over-year comparisons reflect both acquisition and organic growth.
Financial performance
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | $1.638 billion | $853.3 million |
| Gross profit / margin | $227.3 million / 13.9% | $82.9 million / 9.7% |
| Operating income (loss) | $(18.1) million | $(24.7) million |
| Net income (loss) | $4.4 million | $(50.4) million |
| Net income (loss) attributable to common shareholders | $(43.6) million; $(0.29) per diluted share | $(66.1) million; $(0.51) per diluted share |
| Cash provided by (used in) operating activities | $141.5 million | $(263.2) million |
Revenue rose 92%. Array Legacy revenue increased 49% to $1.268 billion, reflecting 22% more MW shipped and a 21% higher average selling price; STI contributed $369.7 million. Gross margin improved, primarily from better recovery of commodity costs through pricing. Net income included a $42.8 million litigation settlement; the company remained loss-making at the operating level. Preferred dividends and accretion of $48.1 million made the annual result attributable to common shareholders a loss.
Fourth-quarter 2022 revenue was $402.1 million, gross profit $80.5 million (20.0% margin), operating income $16.3 million, net loss $5.3 million, and loss attributable to common shareholders $17.3 million. Quarterly results were uneven: Q3 had net income of $40.6 million, including the settlement, while Q4 returned to a net loss.
Liquidity, debt and cash flow
At year-end, cash and cash equivalents were $133.9 million and net working capital was $365.9 million. The company reported $312.5 million outstanding on its term loan, $425.0 million of 1.00% convertible notes due 2028, and $52.0 million of STI-assumed debt. The revolving facility had no borrowings, $38.8 million of letters of credit and $161.2 million available. The term-loan rate was 7.94% at year-end; the company said it complied with debt covenants. Reported long-term debt, net of discounts and issuance costs, was $759.0 million.
Operating cash flow improved by $404.7 million year over year, supported in part by $59.0 million of increased deferred revenue from customer deposits and a $20.9 million inventory reduction; higher receivables used $77.0 million. Investing cash outflow was $384.4 million, primarily the $373.8 million cash component of the STI acquisition. Financing cash flow was $8.4 million. Remaining performance obligations were $719.3 million, which Array expected to recognize fully within 12 months. Surety bonds outstanding were $199.3 million.
Restatement, outlook and key risks
- Restatement: Array restated its first three 2022 interim periods after identifying errors in STI acquisition accounting: acquired intangibles and goodwill were recorded or allocated incorrectly, foreign-currency treatment was incorrect, and an asset should have been expensed. Previously filed quarterly reports were not amended; investors are directed to the restated data in this 10-K.
- Controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2022. Material weaknesses include controls over inventory, revenue recognition, receivables, consolidation/business combinations, foreign currency and STI processes. The auditor issued an adverse opinion on internal control. Remediation is ongoing; successful remediation is not assured.
- Management commentary: Array described inflationary pressures as likely to persist near term and cited selective price increases, productivity actions, supplier diversification and overhead controls. Ukraine-related supply constraints increased logistics costs. Solar-module trade investigations and import restrictions had delayed some projects, with future effects uncertain.
- Outlook: The filing provides no numerical company revenue or earnings guidance. Management said it believed liquidity and available financing were sufficient for future needs. The Inflation Reduction Act extended the 30% U.S. investment tax credit, but domestic-content rules and other implementation details could affect customer demand, costs and sales timing.
- Other risks and items: Dependence on solar demand, customer and supplier concentration, steel and logistics costs, interest rates and customer project financing, foreign exchange, acquisition integration, and substantial indebtedness. Securities class and derivative actions remained pending; management considered material loss remote and recorded no material contingency. A $42.8 million trade-secret litigation settlement boosted 2022 results.
Most important facts for investors to verify
- Review Note 21’s restated quarterly figures and understand the acquisition-accounting and foreign-currency adjustments.
- Track whether Array remediates each material weakness and whether subsequent auditor assessments support effective controls.
- Assess the durability of gross-margin improvement, particularly pricing pass-through versus steel, freight and other input costs.
- Monitor cash conversion, receivables and customer deposits, alongside the $789.5 million face amount of debt and preferred-stock obligations.
- Evaluate STI integration, the conversion of the $719.3 million performance-obligation balance into revenue and cash, and project delays tied to module supply or policy changes.