research analyst presentation - overview

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ibdroot\projects\IBD-NY\app2020B\662225_1\00. Roadshow Presentation\Array Roadshow Presentation_v40.pptx

INVESTOR PRESENTATIONSeptember 2021

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DisclaimerForward-Looking Statements and Other Information

This presentation contains forward-looking statements, as the term is used within federal securities laws. All statements other than those of historical fact which appear in this presentation, including (without limitation) statements regarding our future results, financialpositions, operations, business strategies, plans, objectives, expectations, intentions, and predictions, are forward-looking statements. Additional indicators that a statement is forward-looking may include the use of descriptors or qualifiers, such as: “anticipate,”“believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

Important factors that could cause actual results to differ materially from our expectations include: (i) if demand for solar energy projects does not continue to grow or grows at a slower rate than we anticipate, our business will suffer; (ii) the viability and demand forsolar energy are impacted by many factors outside of our control, which makes it difficult to predict our future prospects; (iii) a loss of one or more of our significant customers, their inability to perform under their contracts, or their default in payment, could harm ourbusiness and negatively impact revenue, results of operations and cash flow; (iv) a drop in the price of electricity derived from the utility grid or from alternative energy sources may harm our business, financial condition, results of operations and prospects; (v)defects or performance problems in our products could result in loss of customers, reputational damage and decreased revenue, and we may face warranty, indemnity and product liability claims arising from defective products; (vi) an increase in interest rates, or areduction in the availability of tax equity or project debt capital in the global financial markets could make it difficult for customers to finance the cost of a solar energy system and could reduce the demand for our products; (vii) existing electric utility industry policiesand regulations, and any subsequent changes, may present technical, regulatory and economic barriers to the purchase and use of solar energy systems, which may significantly reduce demand for our products or harm our ability to compete; (viii) the interruption ofthe flow of materials from international vendors could disrupt our supply chain, including as a result of the imposition of additional duties, tariffs and other charges on imports and exports; (ix) changes in the U.S. trade environment, including the imposition of importtariffs, could adversely affect the amount or timing of our revenues, results of operations or cash flows; (x) the reduction, elimination or expiration of government incentives for, or regulations mandating the use of, renewable energy and solar energy specifically couldreduce demand for solar energy systems and harm our business; (xi) if we fail to, or incur significant costs in order to, obtain, maintain, protect, defend or enforce, our intellectual property and other proprietary rights, our business and results of operations could bematerially harmed; (xii) we may need to defend ourselves against third-party claims that we are infringing, misappropriating or otherwise violating others’ intellectual property rights, which could divert management’s attention, cause us to incur significant costs andprevent us from selling or using the technology to which such rights relate; (xiii) significant changes in the cost of raw materials could adversely affect our financial performance; (xiv) we are dependent on transportation and logistics providers to deliver our products ina cost efficient manner, and disruptions to transportation and logistics, including increases in shipping costs, could adversely impact our financial condition and results of operations; (xv) the requirements of being a public company may strain our resources, divertmanagement’s attention and affect our ability to attract and retain qualified board members and officers; (xv) we face risks related to actual or threatened health epidemics, such as the COVID-19 pandemic, and other outbreaks, which could significantly disrupt ourmanufacturing and operations; and (xvii) provisions in our certificate of incorporation and our bylaws may delay or prevent a change of control.

These forward-looking statements are only predictions. They relate to future events, performance, and variables, and involve risks and uncertainties both known and unknown. It is possible that levels of activity, performance or achievements will materially differ fromwhat is implied by the forward-looking statements contained within this presentation and associated materials and explication. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, youshould not rely on these forward-looking statements as guarantees of future events, or implications of certainty. The forward-looking statements in this presentation represent our expectations as of the date the presentation was created. We anticipate that subsequentevents and developments will cause our expectations to change. We undertake no obligation to update any forward-looking statement to reflect events or developments after the date on which the statement is made or to reflect the occurrence of unanticipated eventsexcept to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date after the date of this presentation.

Non-GAAP Financial Information

This presentation includes unaudited financial measures that exclude items and therefore are not in accordance with U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA and Adjusted Net Income. We define Adjusted EBITDA as netincome (loss) plus (i) interest expense, (ii) other (income) expense, (iii) income tax expense (benefit), (iv) depreciation expense, (v) amortization of intangibles, (vi) equity based compensation, (vii) remeasurement of the fair value of contingent consideration, (viii) ERPimplementation costs, (ix) certain legal expense, and (x) other costs. We define Adjusted Net Income as net income (loss) plus (i) amortization of intangibles, (ii) amortization of debt discount and issuance costs (iii) equity based compensation, (iv) remeasurement ofthe fair value of contingent consideration, (v) ERP implementation costs, (vi) certain legal expense, (vii) other costs, and (viii) income tax (expense) benefit of adjustments. A detailed reconciliation between GAAP results and results excluding special items (“non-GAAP”) is included within this presentation.

We present non-GAAP measures when we believe that the additional information is useful and meaningful to investors. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented byother companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See the Appendix for the reconciliations of certain non-GAAP financial measures to the comparable GAAP measures.

Market and Industry Data

This presentation also contains information regarding our market and our industry that is derived from third-party research and publications. That information may rely upon a number of assumptions and limitations, and we have not independently verified its accuracyor completeness.

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CompanyOverview

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Introduction to Array Technologies

Technology Company with a Differentiated Product

Continued Strong Demand

(1) See appendix for a reconciliation from GAAP net income to adjusted EBITDA and Adjusted Net Income(2) Comparison of generation growth based on FERC data for new generation with capacities in excess of 1 MW placed in service between 2014 and 2019. Solar is the most popular energy source in the U.S. according to Gallup.(3) Calculated by dividing the 2020 to 2024 CAGR of installations of U.S. ground mounted photovoltaic solar projects over 1 MW using trackers (10.1%) by the 2020 to 2024 CAGR of all installations of U.S. ground mounted photovoltaic solar projects over 1 MW (8.2%) using the IHS Markit Global PV Tracker Market Report 2021 forecast.

Serving a Large & Growing Market

Financial PerformanceBusiness Overview

• Leading manufacturer of tracking systems for utility-scale solar energy projects

• Patented tracker technology enables 25% more energy production than fixed tilt

• Order book at record levels –$882 million of executed contracts and awarded orders as of June 30, 2021

• 45% Growth year-over-year

• Awarded an additional 18 new projects totaling approximately $135 million in July after the close of the quarter

• Solar is the fastest growing and most popular form of new generation(2)

• Tracker demand growing 20% faster than the overall solar market(3)

$13.1

$16.2

Q2

Adjusted EBITDA(1)

2020 2021

$114.9

$202.8

Q2

Revenue

2020 2021

+76%

+23%

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$50

$39

Fixed Tilt Single Axis Tracker

A Compelling Value Proposition

Array broadens the envelope of peak generationto better match with demand/energy value

Electricity Price ($/kWh)

Illustrative Daily Generation ProfileLevelized Cost of Energy (“LCOE”)

Trackers deliver up to a 25% energy gain for a ~7% increase in project capital cost and increase productionduring the evening hours when electricity is the most valuable(2)

22% Reduction in LCOE according to

Bloomberg(1)

Array increases production during the evening hours when electricity is the most valuable

Trackers

The mounting system rotates throughout the day to align the

solar panel at the optimal angle to

the sun to maximize power

production

Fixed Tilt (Not an Array Offering)

The mounting system has no moving parts

and the angle of the solar panel to the sun is

fixed at the time of installation

Fixed Tilt Single Axis Tracker

Energy Value

Energy Value ($/kWh)En

ergy

Gen

erat

ion

Time of day6:00 7:00 8:00 9:00 10:00 11:00 12:00 13:00 14:00 15:00 17:0016:00 18:00 19:00 20:00

(1) Based on BloombergNEF 1H 2020 LCOE Update, published April 2020.(2) Based on BloombergNEF—Global Capex Benchmark, Utility-Scale PV (April 28, 2020).

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Industry Leading Tracker System

GREATESTSITE DESIGN FLEXIBLITY

Up to 40° offset

Up to 26% gradeN-S

1-7¢ PER WATT SAVINGS FROM REDUCED

GRADING(2)

HIGHEST POWER

DENSITY

100+ modules per row

32 rows pertracker block

+5% POWER GENERATIONPER ACRE(3)

MACHINE LEARNING SOFTWARE

Determines optimalrow position based on

site-specific experience

Machine learning improves performance

over system life

UP TO 5% MORE ENERGY PRODUCTION(4)

UNIQUEPASSIVE

WIND STOW

Fully mechanical, passive wind-load mitigation system

Individual row stow maintains generation in

unaffected rows

REDUCED RISK OF DAMAGE AND MORE POWER GENERATION

FEWEST NUMBER OF

COMPONENTS

Less than1 Motor per MW

Over 190x fewer components than closest

competitor

UP TO 25% LESSLABOR TO INSTALL(1)

ZERO SCHEDULED

MAINTENANCE

Industrial grade components

Maintenance-free motors and gears

31% LOWERO&M COST(5)

Driving LCOE Lower for the Customer

Lower Capex Higher Production Lower Opex

Note: Statements are relative to largest competitor’s products. (1) Per customer estimate.(2) Based on 3P grading analysis, assuming Midwest-based cost analysis of grading.(3) Based on Array analysis of largest competitor’s system.(4) Based on DNV-GL’s independent review of field testing conducted by Array Technologies, May 21, 2020.(5) Based on TUV Rheinland study published September 8, 2017

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Array’s Tracker System

Array’s tracker system resonates with customers across Major IPPs and Utilities, Large Developers and EPCs.

A highly engineered, system oriented and optimized solution

Only 1 motor required for many

rows

Articulating drivelines allow for rows to

follow site contours

Array trackers maximize land usage – articulated driveline joints allow rows to be vertically and horizontally offset

Array Tracker System - DuraTrack® DuraTrack ® Uses Less Than 1 Motor per MWDC

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2nd Quarter 2021 Highlights and Recent Developments

Significant Growth in Q2, But Input Costs

Impacted Margins

• Revenues increased 76% versus the prior year period

• Adjusted EBITDA increased 23% versus the prior year period

• Gross margins contracted 610 bps as a result of higher input costs (14% increase versus prior year period)

ContinuedStrong Demand

• Order book at record levels – $882 million of executed contracts and awarded orders as of June 30, 2021

• 45% Growth year-over-year

• Awarded an additional 18 new projects totaling approximately $135 million in July after the close of the quarter

Business Processes Changed to Reduce

Commodity Exposure

• Cut time between when we agree on price with the customer and when we order materials to reduce exposure to commodity price movements

• Locked-in pricing from suppliers on 85% of input costs – and nearly 100% of steel – for the remainder of the year

• Contracts signed in Q2 have gross margins comparable to historical, pre-inflation levels

Policy TailwindsStrengthening

• Solar ITC step-downs delayed by two years in December 2020

• “Continuity Safe Harbor” expanded to 2025 in June, effectively making the 26% ITC rate available to most projects for another four years

• Bipartisan infrastructure bill includes $73 billion for upgrading the electric grid which could drive incremental demand for solar

Actions Taken to Strengthen the Business and Accelerate Growth

• Entered into an agreement to sell up to $500 million of perpetual preferred stock to Blackstone

• Added three new independent board members with experience complementary to our business

• Strengthened executive team with new hires

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Q2 2021 Financial Highlights

$606.0

$882.0

As of

Order Book(2)

30-Jun-20 30-Jun-21

$13.1

$16.2

Q2

Adjusted EBITDA(1)

2020 2021

$114.9

$202.8

Q2

Revenue

2020 2021

+76%+23% +45%

► Strong financial performance despite macro headwinds in commodities and logistics

► Order book growth highlights continued strong demand and customer confidence in our products

($ in millions)

(1) See Appendix for reconciliation of non-GAAP measures to the closest GAAP measure(2) Executed Contracts & Awarded Orders

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Key MarketThemes

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2021 Market Themes

Solar is Pulling Away from the Competition

U.S. Market Growth is Accelerating

U.S. Policy Support is Strengthening

• LCOE continues to fall

• Faster to construct and less variability than wind

• Becoming preferred source of generation in many geographies

• Expanding corporate sustainability mandates creating incremental demand

• Fossil generation retirements being accelerated

• Utilities responding to anticipated regulatory action by proactively procuring more renewables

• 2-Year ITC extension passed in December

• Executive actions mandating renewable energy in federal buildings and on federal lands

• Biden administration released a blueprint to solar producing almost half of the US energy requirement by 2050

Tailwinds behind solar are growing stronger

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$64

$34$28 $29

$175

$33

$22 $24

Solar is Pulling Away from the Competition

…Cheaper …Faster …More Consistent

Combustion Turbine

CombinedCycle

OnshoreWind(4)

Solar withTrackers(4)

(1) U.S. Energy Information Administration, Levelized Cost and Levelized Avoided Cost of New Generation Resources, February 2020 & February 2021. Based on new generation entering service in 2022 and 2023, respectively. Prices shown in 2019 $/MWh and 2020 $/MWh, respectively.

(2) U.S. Energy Information Administration, Cost and Performance Characteristics of New Generating Technologies, Annual Energy Outlook, February 2021.(3) Moody’s, Solar Outshines Wind and Hydro Power With Steadier Output (April 10, 2017).(4) Includes applicable tax credits as estimated by the U.S. Energy Information Administration.

LCOE for New Generation Entering Service in Two Years(1)

(Capacity Weighted, $/MWh)Years to Bring Generation Online(2)

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3 3

2

Nuclear NaturalGas

OnshoreWind

Solar

MWh Production Variability(3)

(% Standard Deviation)

20%

9%

4%

Hydro Wind Solar

Solar is…

Previous Estimate (February, 2020)

New / Current Estimate (February, 2021)

17% Improvement

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U.S. Policy Support is Strengthening

Policy Catalysts What Has Already Happened What Could Happen

Solar ITC • Two year extension of 26% ITC

• Step-down to 22% delayed from 2021 to 2023

• Placed-in-service deadline extended to 2025

• Extension of renewable energy tax credits for five years (e.g. GREEN Act, CLEAN Future Act)

Executive Orders • Rejoined Paris Climate Accord

• Mandate for federal agencies to procure 100% renewable energy

• Restoration of Obama Clean Power plan leading to accelerated retirements of fossil generation that will be replaced with renewables

• FERC capacity market and interconnection reform lowers barriers to renewable energy development leading to increased demand

Proposed Infrastructure Bill

• Includes $73 billion for upgrading the electric grid

• 48C Tax Credit – $8 Billion in Energy-related Manufacturing and Industry

• Driving demand for incremental solar

• Potential opportunity to take advantage of 30% investment tax credit

Other Legislation • Secretary of the Interior must set national goals for wind, solar and geothermal projects on Federal lands

• Permit at least 25 GW of renewable generation on Federal lands by 2025

• National Clean Energy Standard to reach zero-carbon electricity industry by 2035

• Federal “green bank” to invest $100 billion in renewable energy

• Introduction of a carbon tax

• Additional tax incentives for renewables

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Growth &Innovation

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Goal: Double the business Vision: Global balance of system leader

The Building Blocks of Our Growth Strategy

ACQUISITIONS PRODUCTINNOVATION

INTERNATIONAL EXPANSION

Top Line Levers

Bottom Line Levers

U.S. MARKET GROWTH

OPERATIONAL EFFICIENCY

VALUEENGINEERING

PROCESSINNOVATION

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Innovation Addressing Installation “Pain Points”

New Array Technologies Research CenterKey Pain Points & Array Solutions

Site Work

Foundations

Module Installation

Key Issues: Hilly Terrain requires grading Minimizing site work a key focus for EPCs

Array Solutions: Rough Terrain Tracker

Key Issues: Foundations ~3-7% of total project cost Costs are even higher in rocky or soft soils

Array Solutions: Revised post design Foundations for challenging soils

Key Issues: Most labor-intensive part of installation Manual process with multiple tools required

Array Solutions: Toolless module mounting hardware

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Three Simple Reasons to Invest in Array

• Ground mount solar is fastest growing source of new generation in the U.S.

• Ground mount market is over 6x the size of residential market(2)

• Mounting systems are “agnostic”

• Mature competitive environment

• Growing policy and economic tailwinds

Gain Exposure to the Largest Part of the Solar Market…

…With a Company That Can GrowFaster Than the Market…

…And Deliver Strong Returnsfor Stakeholders

• Array’s products have the lowest LCOE(1)

• Trackers taking share from fixed tilt

• Underpenetrated international market

• Early innings of converting distributed solar market from fixed tilt

• Opportunities for new products and services

• Double-digit organic growth

• Strong EBITDA Margins

• High free cash flow conversion

• Self-funding – no new equity capital required to grow the business

• Multiple levers to accelerate growth, including acquisitions

(1) Based on TÜV Rheinland study published September 8, 2017.(2) Based on IHS Solar Market Tracker – North America: First Half 2021, February 2021. Estimates for 2020 installations.

1 2 3

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APPENDIX

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Adjusted EBITDA and Net Income Reconciliation

Three Months Ended

June 30,

2021 2020

Net income (loss)(17) 2,392

Interest expense, net6,651 2,411

Other expense, net 122 2,242Income tax expense (benefit)

(1,050) (5,834)Depreciation expense

608 550Amortization of intangibles

5,875 6,313Equity-based compensation

4,120 653Contingent consideration

(13) 3,430ERP implementation costs(a)

— 477Legal expense(b)

99 367Other costs(c)

(224) 115Adjusted EBITDA

16,171 13,116

Adjusted EBITDA Adjusted Net IncomeThree Months Ended

June 30,

2021 2020

Net Income (loss) (17) 2,392

Amortization of Intangibles 5,875 6,313

Amortization of debt discount and issuance costs 1,532 —

Equity Based Compensation 4,120 653

Contingent Consideration (13) 3,430

ERP Implementation Costs(a) — 477

Legal Expense(b) 99 367

Other Costs(c) (224) 2,347

Income Tax Expense of Adjustments(d) (2,858) (2,232)

Non-recurring income tax adjustments related to the IRS settlement and CARES Act — (6,608)

Adjusted Net Income 8,514 7,139

(a) Represents consulting costs associated with our enterprise resource planning system implementation.

(b) Represents certain legal fees and other related costs associated with (i) a patent infringement action against a competitor for which a judgement has been entered in

our favor and successful defense of a related matter and (ii) a pending action against a competitor in connection with violation of a non-competition agreement and

misappropriation of trade secrets. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business.

(c) For the three months ended March 31, 2021, other costs represent (i) $3.2 million of logistics charges incurred primarily due to weather events and port issues

which we do not expect to incur in the future (ii) certain costs associated with our follow-on offerings of $2.4 million, (iii) certain professional fees and payroll related

costs which we do not expect to incur in the future of $1.2 million. For the quarter ended March 31, 2020, other costs represent certain professional fees which we do

not expect to incur in the future of $0.2 million.

(a) Represents consulting costs associated with our enterprise resource planning system implementation.

(b) Represents certain legal fees and other related costs associated with (i) a patent infringement action against a competitor for which a judgement has been entered in our

favor and successful defense of a related matter and (ii) a pending action against a competitor in connection with violation of a non-competition agreement and

misappropriation of trade secrets. We consider these costs not representative of legal costs that we will incur from time to time in the ordinary course of our business

(c) For the three months ended March 31, 2021, other costs represent (i) $3.2 million of logistics charges incurred primarily due to weather events and port issues which we

do not expect to be a part of our on-going operations (ii) certain costs associated with our follow-on offering of $2.4 million, (iii) certain professional fees and payroll related

costs which we do not expect to incur in the future of $1.2 million. For the quarter ended March 31, 2020, other costs represents certain professional fees which we do not

expect to incur in the future of $0.2 million.

(d) Represents the estimated tax impact of all Adjusted Net Income add-backs, excluding those which represent permanent differences between book versus tax.

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