Company: ARRY
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001820721-25-000060
Chunk: 44

Company: Array Technologies, Inc.
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 1
Chunk 44
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 recognized in contingent consideration on the condensed consolidated statements of operations. As of March 31, 2025 and December 31, 2024, the fair value of the TRA was $7.7 million and $9.1 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. 

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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.The following table summarizes the activity related to the estimated TRA liability (in thousands):Three Months Ended March 31,20252024Beginning balance$9,061 $10,363 Payments(1,204)(1,427)Fair value adjustment(150)(735)Ending balance$7,707 $8,201 The TRA liability requires significant judgment and is classified as Level 3 in the fair value hierarchy.Surety BondsAs of March 31, 2025, the Company posted surety bonds in the total amount of $269.9 million. The Company is required to provide surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee the Company’s performance in accordance with contractual or legal obligations. These off-balance sheet arrangements do not adversely impact the Company’s liquidity or capital resources.

12.    Fair Value of Financial Instruments

The carrying values and estimated fair values of the Company’s debt financial instruments were as follows (in thousands):March 31, 2025December 31, 2024Carrying ValueFair ValueCarrying ValueFair ValueConvertible Notes$417,992 $311,661 $417,525 $311,525 The fair value of the Convertible Notes is estimated using Level 2 inputs, as they are not registered securities nor listed on any securities exchange but may be traded by qualified institutional buyers. The fair value of the Term Loan