ARRY Q3 2026 earnings call transcript, November 4, 2026

Good morning, everyone, and thank you for joining us. to discuss the agreement announced today between Scholz and Array to combine in a stock-for-stock merger, creating an integrated energy infrastructure platform. The transaction announcement and accompanying presentation are available on both companies' investor relations websites and our joint transaction website at poweringforwardtogether.com. We also have issued separate releases this morning with each company's third-quarter results, which we will cover before.

Thank you for taking your questions. Joining today's call is the chairman of the board for both Array and Shoals, Brad Forth, CEO of Shoals Technologies Group, Brandon Moss, and CEO of Array Technologies, Kevin Hostetler. Dominic Bartos and Keith Jennings, CFOs of Shoals and Array, respectively, will also be available for Q&A following today's prepared remarks. Before we begin, today's discussion... ...includes forward-looking statements based on current expectations and assumptions. These include statements regarding the proposed transaction, its expected timing and benefits, anticipated synergies, capital structure, and future financial performance. These statements are subject to risks and uncertainties, and actual results may differ materially. Please refer to the disclosures in today's releases and presentation, as well as each company's filings with the SEC.

Thank you very much.

We will also discuss certain non-GAAP financial measures, including adjusted EBITDA. Please refer to the applicable earnings materials for definitions and reconciliations of historical non-GAAP measures to the most directly comparable GAAP measures. As described in the transaction materials, the companies are not providing reconciliations of certain of these non-GAAP measures to the most directly comparable GAAP financial measure because certain information necessary to calculate such measures are not available without unreasonable effort. In connection with the transaction, the companies expect to file a registration statement and joint proxy statement and prospectus with the US Securities and Exchange Commission. Investors should read those documents carefully when they become available because they will contain important information about the companies and the proposed transaction. We anticipate these filings will be available in the coming weeks. Brad, I'll turn the call to you.

Thank you, Matt.

Good morning, everyone. I'm very pleased to announce the merger of Shoals and Array. I have had the privilege of serving as chairman of both companies since they became public, and over that time, I have seen firsthand the strength of each business, the quality of each team, and the significant opportunity that could be unlocked by bringing these two platforms together. Customers across the utility-scale solar market are increasingly looking... for partners that can simplify sourcing, reduce vendor complexity, accelerate project execution, and deliver greater value through innovation. We believe this combination is uniquely positioned to do exactly that. The timing is also right. Scholz has built the category leading electrical balance of systems through its BLA solution. Array has assembled a highly differentiated structural balance of system platforms, including APA, a leading foundation solution, AWM, a leading wire management solution, and its latest innovation, Duratrack D2S. At the same time, both companies have strengthened their operations, expanded their capabilities, and built the foundation required to execute a transaction of this scale successfully. I also want to thank Kevin. Kevin had the foresight to build ARRAY into a much broader platform, through both strategic M&A and through significant investment in a global supply chain and a state-of-the-art manufacturing facility.

Together, those steps have assembled a portfolio and an operating base that we believe have significant embedded potential. In many ways, he has created the equivalent of a coiled spring, and we believe this combination... is the catalyst that will allow that platform to reach its full potential. I am also very excited about Brandon's leadership of the combined company. Since joining Shoals, Brandon has brought a higher level of execution across nearly every discipline in the organization, growing our customer relationships, diversifying the business into adjacent markets, and building a world-class manufacturing campus. I believe he is the right leader for the combined company and its next phase of growth. With that, I'll turn it over to Brandon to walk you through the transaction.

I would also like to thank Kevin for setting Array up for success, and I look forward to working with him to ensure a smooth transition. I'll begin with an overview of the transaction, as there are several elements which we want our shareholders to clearly understand. Array insurance. Shoals are merging in a stock-for-stock transaction. Array will be the surviving legal entity, and their common stock will be the equity of the combined company. Under the terms of the transaction, each Shoals shareholder will receive 1.6931 shares of Array stock for each share of Shoals they own. While Array is the legal acquirer, Shoals shareholders will own approximately 65%. of the combined company's basic shares outstanding, and Array shareholders will own the remaining 35%. One reason we structured the transaction this way was to avoid the need to refinance Array's existing debt. Array has attractive financing in place today, and this structure preserves that financing, keeps interest costs down, and reduces transaction-related execution risk and financing costs. it is also important to understand that at closing, all Shoals shares will be exchanged for Array common stock. From this point forward, Array's share price should be viewed as reflecting the value of the combined business, not Array on a standalone basis. Following closing, I will serve as CEO of the combined company, Brad Forth will serve as chairman, and Kevin will transition to a special advisor role.

the combined business. The combined board will have 10 directors, four independent directors from each of the current shoals and Array boards, plus Brad and me. As Brad noted, we believe this transaction is transformational. To reflect the broader platform, expanded product offering, and larger opportunity set, we plan to announce a new corporate name and ticker symbol in the coming months. We recognize that reducing the Series A preferred stock is an important priority for Array investors. In connection with the merger, the company will redeem $161.3 million of its preferred stock within 90 days of closing. And we've committed to redeem an additional $156.3 million of preferred stock over the next three years, together reducing preferred stock outstanding by over 60%. Finally, the transaction is subject to approval by a majority of... both Array and Scholl's shareholders. We expect the transaction, which is subject to regulatory approvals, to close in the first quarter of 2027. Now, let me turn to why we believe this combination creates such a compelling strategic and financial opportunity. At a high level, we believe this merger does three very important things. One, it provides us faster revenue growth. Two, it creates greater profitability and free cash flow. And three, it provides more strategic flexibility. Let me break each one of these down further. On revenue growth, the combination of SBOS and EBOS is expected to enhance customer value by simplifying sourcing, reducing vendor complexity, streamlining project execution, lowering installation costs, and providing integrated warranty support, all of which we believe should help us win shares.

While we believe in preserving choice for our customers, we see a significant cross-selling opportunity. Today, only 20% of solar projects use products from both companies. This provides a significant opportunity to bring a full portfolio of products to customers who already know and trust at least one side of the business. Also, by bringing EBOS and SBOS under one roof, we can... We can engineer new integrated products that create a compelling reason for customers to buy the full stack from us. On profitability and cash flow, the combined company will be able to address a larger profit pool with minimal incremental investment. Our customers already buy foundations, trackers, EBOS, and wire management. We are not trying to reach a new universe of customers. We are expanding the solutions we bring to customers we already to use. We also expect significant savings from eliminating duplicate public company costs and other corporate overhead, totaling more than $20 million annually. Another important cash flow benefit comes from Scholz tax assets. Scholz has approximately $1.6 billion of tax amortization and $237 million of NOLs, which we expect will reduce the combined company's cash tax obligations. In addition, the preferred stock redemptions are expected to reduce future cash distributions by approximately $100 million over the next five years. And finally, this transaction enhances balance sheet flexibility. We expect the combined company to have net debt to EBITDA of 2.6 times on a pro forma 2026 basis and less than two times on a 2027 basis,

which gives us better. Access to capital and flexibility to continue investing in growth, including future M&A. Together, Array and Shoals will be able to supply essentially all of the key SBOS and EBOS components required for a utility scale solar project. That includes Shoals EBOS platform, APA fixed tilt and engineered foundations, Array trackers, and AWM wire management solutions. The power of this combination is not simply. that we will have a broader product set. It is that each of these products is either a leading solution in its category or highly differentiated from a technical standpoint. That matters. There are other companies that claim to offer a full stack, but in many cases, those offerings have been assembled by acquiring products that customers do not view as category leaders. We believe this transaction creates something different. An integrated SBOS and EBOS software. The combined offering built around leading products. Customers will not have to compromise in order to buy the full stack from us. Instead, they will get the benefits of best-in-class products combined with the convenience, engineering coordination, execution benefits, and accountability of a single-source solution. That is the customer value proposition at the heart of this merger. The combined offering also gives us access to a very attractive profit. Importantly, the opportunity should not be evaluated only on revenue dollars. Some of these product categories may be smaller on a revenue basis, but they carry a highly attractive margins. So we believe the more relevant lens is the gross margin pool available across the products we offer. Based on the presentation, the combined company will have access to an estimated U.S. profit pool of approximately $1.8 billion annually.

That is a significant opportunity. And we already have the customer access required to pursue it. Between Array and Shoals, we serve many of the most important developers and EPCs in the market today. This is not a situation where we need to build a new channel or introduce ourselves to a new customer base. The task ahead is to bring the combined solution to customers in a coordinated way, demonstrate the value of integration, and execute at the level our customers expect. If we do all that well, we believe we can capture a very meaningful share of this profit pool over time. Through this merger, we remain committed to offering our customers choice across the entirety of the product portfolio. However, I want to spend a moment on why combining SBOSS and EBOSS together creates immediate value for customers. For developers and operators, an integrated offering can simplify procurement. Reduce the number of vendors they need to manage and improve project certainty. Developers care deeply about schedule, cost, reliability, and risk. By coordinating the design of foundations, trackers, wire management, and electrical balance of systems, we can help reduce friction across the project lifecycle, support faster execution, and optimize energy yield. For EPCs, the value is equally clear. EPCs are responsible for turning designs into working projects in the field, and every installation hour saved matters. Integrated design can optimize field labor, reduce coordination challenges, minimize rework, and create a cleaner installation process.

It can also improve accountability because the customer is working with one integrated partner rather than multiple vendors whose components may not have been designed to work together. In short, developers and operators benefit from a simpler, more reliable, and more coordinated project experience. EPCs benefit from faster, more efficient installation, and fewer execution challenges in the field. That is why we believe the combined platform is differentiated immediately, even before we begin co-developing the next generation of integrated products. Over the long term, bringing ESPYs... E-Boss and E-Boss together creates meaningful opportunities for product innovation. The immediate value is coordination and simplicity. But the bigger opportunity is to design products that work together from the beginning. Products that reduce labor, improve reliability, lower the total project cost, and give customers a compelling reason to buy the full interoperable solution from us. One straightforward example... ...is designing tracker torque tubes with integrated attachment points for the Scholl's BLA system. Today, that process can involve manual fieldwork, including drilling holes and spending significant labor hours on a typical project. By designing the attachment points into the tracker system up front, we can save customers time in the field, reduce installation complexity, and create a more robust installation that is better suited to withstand the elements.

Other potential areas of innovation include integrated wire management and tracker designs, pre-engineered E-BOSS and S-BOSS kits, foundation and wiring layouts optimized together, and digital project design tools that coordinate mechanical and electrical layouts. Each of these opportunities have the same underlying objectives. Reduce field labor. Reduce complexity. Enable automation. Improve reliability. And help customers bring projects online faster. This is one of the most exciting parts of the merger. We are not just combining two product portfolios. We are creating a platform for the next generation of integrated solutions. While solar is at the core of this merger, our opportunity does not stop there. It provides an opportunity to accelerate the diversification of our business. The combined company's growth opportunity. Extend beyond solar, including into battery energy storage systems and data center power infrastructure. In battery storage, AWM's wire management products and APA's foundation solutions are highly relevant. Those capabilities pair naturally with the eBoss product Scholz has developed for batteries. By bringing that amount of content together in a combined offering, we believe we can become a more important partner to battery storage developers who are looking for reliable, scalable, and efficient infrastructure solutions. In data centers, Scholz has been developing AirLink, a plug-and-play power distribution solution. We believe AWM's wire management products will complement that offering. Data center customers are increasingly focused on speed to power, installation efficiency, and reliability. A combined power distribution

data center customers are increasingly focused on speed to speed to speed to speed to speed to speed to speed to speed to speed to speed and wire management solution can help address those needs. While the combination strengthens our position in solar, it also gives us additional growth factors in markets where electrification, power demand, and speed of deployment are becoming increasingly important. The benefits of this merger go beyond products. They also extend to what each organization brings in terms of capabilities, culture, and customer relationships. Schultz has built a strong reputation as an innovator. The company has consistently developed products that reduce field labor, accelerate speed to power, and solve real pain points for developers and EPCs. Schultz also has a deeply customer-focused culture, and that focus has created strong momentum with key customers across the industry. ARRAY brings exceptional engineering capability, high-quality products, deep technical expertise. and a strong international presence. ARRAY's experience operating across global markets, combined with its SBOS product platform, is highly complementary to Schultz's eBOS strengths. We believe the combination of these competencies will allow us to deliver both best-in-class products and a best-in-class customer experience. That is what we believe will set us apart over time. This is not a merger of two companies that do the same thing.

It is a combination of two companies with highly complementary strengths and cultures. And when those are brought together, we believe the result is a more complete, more capable, and a more valuable partner for customers. Let me now turn to our priorities as a combined company, which we think about in three categories, commercial, financial, and strategic. Commercially, our first goal is to accelerate growth by selling the full-staff of solutions into as many projects as possible. Our second goal is to leverage both companies' customer engagement, relationships, and credibility to increase tracker share. And our third goal is to expand Scholl's international reach by using the global footprint and customer relationships Array has already built. Financially, we are focused on three things. First, we are targeting one hundred million dollars of annual incremental EBITDA from cost and commercial synergies by year three. Second, we are committed to reducing the amount of Array's preferred stock outstanding. And third, we want to maintain the balance sheet flexibility required to continue investing in growth and pursuing strategic M&A. Strategically, we will invest in integrated SBOS and EBOS product development and including some of the more advanced opportunities I discussed earlier. We will also continue advancing AirLink and PowerHub for battery storage and data center markets. And over time, we intend to expand into additional infrastructure categories beyond solar. Taken together, these priorities define the roadmap for how we plan to create value from this combination. Our first commercial priority is to sell the full stack of products to our existing customers.

One of the things that made this merger so compelling was the relatively low project overlap between the two companies. Since 2025, only 20% of project volume deployed both companies' products. That means 80% of project volume represent an opportunity to expand wallet share. To put this in perspective, if we had delivered the combined company's full products. To every project we touched, we would have generated $2.5 billion of incremental sales. This is a very large cross-selling opportunity. Importantly, this is not a theoretical market opportunity. These are customers we already know, projects we already touched, and relationships where one of the two companies has already earned a position. We do not need to capture all of this opportunity to create meaningful value. Even converting a portion of it over time would have significant impact on revenue growth, EBITDA, and the overall earnings power of the combined company. Now I'll turn it over to Kevin to discuss our second commercial priority.

One of the things we have been working on at Array over the past few years is upgrading our commercial organization and increasing the level and quality of engagement we have with customers. We have taken. steps to make Array a more customer centric organization. We've changed the way we engage with customers through improved responsiveness and investments in customer service resources, commercial processes, project management capabilities, and engineering support. On top of these efforts, we intend to leverage Shoals customer engagement excellence. The company has built a reputation for being responsive, customer focused, specialist. And highly effective in helping customers solve execution challenges. That creates a major opportunity for our combined company. By doubling down on the voice of customer mindset and continuing to invest in AI-enabled capabilities, we believe we can enhance customer satisfaction and accelerate the progress already underway at Array. The entire organization is excited about what this means, and we believe the combined commercial team can improve its competitive position and win share in the tracker market. This slide helps put the tracker share opportunity into context. In the U.S. market, even relatively small share gains can have a significant impact on the combined company's financial results. For example, winning just two additional projects per year can move our U.S. market share by roughly two percentage points

with our U.S. market. Or more. We believe the combined commercial organization can deliver those types of gains and potentially more over time. And the resulting EBITDA upside is also meaningful. Using the two-point share gain example, that would translate into nearly $20 million of incremental EBITDA. The third commercial priority is international expansion. ARRAY has historically moved faster than Scholl's in penetrating markets outside. the United States. ARRAY has built an established international footprint, customer relationships, and market knowledge that would take Scholl's significant time and investment to replicate on its own. This creates a very attractive opportunity. We can use ARRAY's existing international sales infrastructure and relationships to introduce Scholl's products into markets where Scholl's has not yet had the same level of presence. in looking at the target interests. It should allow us to expand Scholl's reach more quickly while avoiding much of the expense and time required to build that infrastructure from scratch. The logic is straightforward. ARRAY brings the global platform. Scholl's brings a highly differentiated eBoss offering. And together, we can approach international customers with a broader and more valuable solution. With that, I will turn it back to you, Brandon.

Let me now turn to our financial priorities, starting with synergies. Synergies were one of the driving forces behind this transaction. And achieving our targets is our number one financial priority. We expect to achieve $35 million of run rate synergies in year one, ramping to more than $100 million by year three. In year one, we expect more than half of those synergies to come from cost savings. In year three, we expect roughly one-third of our savings from cost and two-thirds from commercial synergies. On the cost side, we expect savings from eliminating duplicate public company costs, consolidating corporate overhead, improving procurement leverage, and creating operating efficiencies across the combined organization. On the revenue side, the largest opportunities are cross-selling the combined portfolio. And to existing customer relationships, increasing ARRAY tracker share through stronger customer engagement, expanding Shoals internationally through ARRAY's global footprint, and developing integrated products that allow us to capture more content per project. We are confident in these targets because many of the cost opportunities are within our control and many of the commercial opportunities are rooted in relationships and projects where one of the two companies is already present. This is not a synergy case that depends on entering new markets or building a new customer base, but rather it's based on doing more with customers, products, and capabilities we already have. We believe the upside for our shareholders is very significant. I'll pass it back to Kevin to discuss the treatment of Array's preferred stock.

Our second financial priority is reducing the preferred stock output. Outstanding. As we mentioned earlier, we have heard investors clearly on this point. They would like to see the combined company reduce the amount of outstanding preferred stock, and we agree that doing so will create value. As part of this transaction, Array has reached an agreement with the preferred shareholders that includes several important elements. Initially, we will redeem $161.3 million of our... preferred stock at $0.93 on the dollar within 90 days following the closing of the merger. This initial redemption captures seven points of discount, or approximately $11.3 million, and improves free cash flow by reducing future distributions by more than $60 million over the next five years. Next, we have committed to redeem an additional $156.3 million of preferred stock... ...over the next three years at $0.96 on the dollar in amounts of not less than $52 million on each of the first, second, and third anniversaries of the initial redemption. Together with the initial redemption, that will save the company nearly $100 million in distributions over the next five years. Importantly, that is the minimum schedule. We may elect to redeem more or... ...redeem earlier. We have the option to redeem the balance of preferred stock in excess of $317.5 million at 96 cents on the dollar, provided that the redemptions occur within 48 months of closing. That effectively builds an attractive discount if we choose to accelerate the reduction of the preferred. Finally, the structure enables regular redemptions using available free...

...cash flow by reducing the minimum amount that we could redeem at one time from $200 million to $50 million. Brandon? Our third financial priority is to maintain balance sheet flexibility. This page shows our current estimate of the combined company's year-end 2026 balance sheet, pro forma for the merger, and the initial $161.3 million preferred stock. The key point is, this transaction is structured to preserve financial flexibility. We do not expect to issue new debt to complete the merger, and the combined company is expected to have both manageable leverage and solid liquidity at closing. On a pro forma basis, we expect 2026 net debt to adjusted EBITDA to be 2.6 times, with leverage declining to less than two times in 2020. The flexibility is strategically important. It allows us to continue investing in the business, fund innovation, support customer growth, reduce the remaining preferred stock over time, and pursue additional M&A opportunities that can further diversify and strengthen the platform. In short, we believe this combination creates a larger, more capable company without over-levering the balance sheet. And that positions us well for the next phase of growth. This is a summary of the key figures in preliminary 2027 outlook for the combined company. On the balance sheet, the figures are presented on an indicative pro forma basis, assuming the transaction closed on December 31st, 2026.

For the combined company, our preliminary estimated 2027 revenues range between $2.2 billion and $2.4 billion. And adjusted EBITDA, including synergies, ranges between $410 and $480 million. This indicative revenue estimate is supported by the combined company's significant backlog in awarded orders as of September 30th of approximately $3.4 billion. We will provide more details in the S-4, which will be filed in the coming weeks. Turning briefly to our Q3 results. Scholl's had an exceptional quarter delivering revenue and adjusted EBITDA well above our guided range. Revenue of $195.3 million, a company record, grew at 44% from the prior year. This was driven by meaningful productivity improvements made on our factory floor. Congratulations to the team for a great quarter. Gross profit percentage came in at 31.9, a 160 basis point. improvement from the second quarter. The commercial team added approximately $186 million in new orders, the third highest bookings period on record. Book to bill, given our strong revenue performance, was approximately 1.0. Adjusted EBITDA was approximately $40 million, representing 20.4% of revenue. And we delivered healthy operating cash flow of 28. $0.9 million, enabling us to pay down $33 million of our revolving credit facility in the period. Guidance for our fourth quarter can be found in the earnings release issued this morning. Kevin?

Thank you, Brandon. Q3 was a quarter of strong execution for ARRAY operationally, commercially, and strategically. We delivered an order book of $2.6 billion, up 42% year-over-year, a record for the fourth consecutive quarter. We booked well over $400 million of new orders for the fifth consecutive quarter, bringing trailing 12-month new orders to more than $1.8 billion and our book-to-bill to 1.6 times. New products now represent nearly 60% of the order book, evidence that our innovation investments are translating into adoption. Revenue came in at $330 million, including our first month of contribution from Affordable Wire Management, or AWM, which we closed on August 31st. Excluding AWM, revenue was $321 million, driven by strong domestic tracker execution. Adjusted gross margin was 22.8%, which included a 330 basis point charge for a long-dated $330 million. 35x rebate reserve with a certain supplier. Our year-to-date adjusted gross margin stands at 27.8%, 30 basis points higher than the same period last year. Finally, adjusted EBITDA was $32 million, a 10% margin. AWM's first month was accretive to both our margins and our earnings, and early validation of the investment thesis. we laid out last quarter. I'll now turn it back to Brandon for some closing remarks.

In closing, this transaction is about creating something neither company could build as quickly or as effectively on its own. Together, we have leading products across SBOS and EBOS, deeper customer relationships, greater scale, stronger financial capacity, and a platform that can grow well beyond solar. We.. see a significant opportunity ahead of us, and we have a clear roadmap to turn that opportunity into growth, earnings, and long-term shareholder value. We could not be more excited about the future of the combined company. With that, Operator, let's take your questions.

Your first question comes from the line of Brian Lee with Goldman Sachs & Co. Your line is open. Please go ahead.

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It comes from the line of Dimple Gosai with Piper Sandler. Your line is open. Please go ahead.