2023 Q2 Form 10-Q Financial Statement

#000182072123000099 Filed on May 10, 2023

View on sec.gov

Income Statement

Concept 2023 Q2 2023 Q1
Revenue $507.7M $376.8M
YoY Change 19.48% 25.35%
Cost Of Revenue $357.7M $275.6M
YoY Change -5.26% 0.58%
Gross Profit $150.0M $101.2M
YoY Change 216.7% 280.56%
Gross Profit Margin 29.55% 26.85%
Selling, General & Admin $40.25M $38.14M
YoY Change 27.74% -4.23%
% of Gross Profit 26.83% 37.7%
Research & Development $2.300M $2.100M
YoY Change
% of Gross Profit 1.53% 2.08%
Depreciation & Amortization $13.16M $14.53M
YoY Change -46.41% -36.88%
% of Gross Profit 8.77% 14.36%
Operating Expenses $53.80M $53.72M
YoY Change -3.75% -8.56%
Operating Profit $96.24M $47.46M
YoY Change -1229.32% -247.56%
Interest Expense -$9.155M $9.500M
YoY Change -6.17% 36.85%
% of Operating Profit -9.51% 20.02%
Other Income/Expense, Net $125.0K -$11.45M
YoY Change -133.69% 390.15%
Pretax Income $87.21M $36.01M
YoY Change -613.85% -204.38%
Income Tax $22.40M $9.900M
% Of Pretax Income 25.69% 27.49%
Net Earnings $52.02M $26.13M
YoY Change -1973.39% -218.49%
Net Earnings / Revenue 10.25% 6.94%
Basic Earnings Per Share $0.34 $0.09
Diluted Earnings Per Share $0.34 $0.09
COMMON SHARES
Basic Shares Outstanding 150.9M shares 150.8M shares
Diluted Shares Outstanding 152.1M shares 151.8M shares

Balance Sheet

Concept 2023 Q2 2023 Q1
SHORT-TERM ASSETS
Cash & Short-Term Investments $156.0M $147.8M
YoY Change 205.54% 198.55%
Cash & Equivalents $156.0M $147.8M
Short-Term Investments
Other Short-Term Assets $42.74M $46.38M
YoY Change -19.1% -0.25%
Inventory $206.9M $254.6M
Prepaid Expenses
Receivables $502.4M $414.7M
Other Receivables $312.0K $3.163M
Total Short-Term Assets $908.2M $866.6M
YoY Change 0.03% 6.08%
LONG-TERM ASSETS
Property, Plant & Equipment $30.67M $25.86M
YoY Change 72.31% 53.24%
Goodwill $441.3M $428.2M
YoY Change 5.64% 12.72%
Intangibles $375.5M $379.4M
YoY Change -13.98% -19.4%
Long-Term Investments
YoY Change
Other Assets $97.09M $30.80M
YoY Change 97.76% -1.64%
Total Long-Term Assets $944.5M $927.5M
YoY Change 8.89% 3.21%
TOTAL ASSETS
Total Short-Term Assets $908.2M $866.6M
Total Long-Term Assets $944.5M $927.5M
Total Assets $1.853B $1.794B
YoY Change 4.36% 4.57%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $188.6M $200.6M
YoY Change -18.79% 7.0%
Accrued Expenses $62.70M $60.24M
YoY Change 2.9% -12.6%
Deferred Revenue $114.8M $151.3M
YoY Change -31.48% 24.44%
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $37.45M $34.38M
YoY Change -27.27% -28.64%
Total Short-Term Liabilities $435.0M $470.6M
YoY Change -15.59% 8.65%
LONG-TERM LIABILITIES
Long-Term Debt $702.5M $705.8M
YoY Change -11.93% -9.31%
Other Long-Term Liabilities $28.15M $13.94M
YoY Change 61.71% 96.27%
Total Long-Term Liabilities $730.6M $719.8M
YoY Change -10.35% -19.34%
TOTAL LIABILITIES
Total Short-Term Liabilities $435.0M $470.6M
Total Long-Term Liabilities $730.6M $719.8M
Total Liabilities $1.240B $1.275B
YoY Change -12.34% -3.83%
SHAREHOLDERS EQUITY
Retained Earnings -$176.5M -$241.3M
YoY Change -41.71% -17.9%
Common Stock $151.0K $150.0K
YoY Change 0.67% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $612.3M $207.3M
YoY Change
Total Liabilities & Shareholders Equity $1.853B $1.794B
YoY Change 4.36% 4.57%

Cashflow Statement

Concept 2023 Q2 2023 Q1
OPERATING ACTIVITIES
Net Income $52.02M $26.13M
YoY Change -1973.39% -218.49%
Depreciation, Depletion And Amortization $13.16M $14.53M
YoY Change -46.41% -36.88%
Cash From Operating Activities $20.54M $45.82M
YoY Change -292.56% -191.45%
INVESTING ACTIVITIES
Capital Expenditures $5.541M $3.883M
YoY Change -460.27% 64.74%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities $0.00 $0.00
YoY Change -100.0% -100.0%
Cash From Investing Activities -$5.541M -$3.883M
YoY Change 259.81% -98.97%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -15.55M -$23.76M
YoY Change -170.82% -123.59%
NET CHANGE
Cash From Operating Activities 20.54M $45.82M
Cash From Investing Activities -5.541M -$3.883M
Cash From Financing Activities -15.55M -$23.76M
Net Change In Cash -553.0K $13.86M
YoY Change -105.67% -104.35%
FREE CASH FLOW
Cash From Operating Activities $20.54M $45.82M
Capital Expenditures $5.541M $3.883M
Free Cash Flow $15.00M $41.93M
YoY Change -264.3% -179.94%

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Organization, Business and Out-of-Period Adjustments <div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">Array Technologies, Inc. (the “Company”), formerly ATI Intermediate Holdings, LLC, is a Delaware corporation formed in December 2018 as a wholly owned subsidiary of ATI Investment Parent, LLC (“Former Parent”). On October 14, 2020, the Company converted from a Delaware limited liability company to a Delaware corporation and changed the Company’s 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 subsidiary, ATI Investment Sub, Inc. owns subsidiaries through which it conducts substantially all operations.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:125%">Acquisition of STI Norland</span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">On January 11, 2022 (the “Acquisition Date”), the Company acquired 100% of the share capital of Soluciones Técnicas Integrales Norland, S.L.U., a Spanish private limited liability Company, and its subsidiaries (collectively, “STI”) with cash and common stock of the Company (the “STI Acquisition”). The STI Acquisition was accounted for as a business combination. </span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">Upon completion of the STI Acquisition, the Company began operating as two reportable operating segments: the Array legacy operating segment (the “Array Legacy Operations”) and the newly acquired operations (the “STI Operations”) pertaining to STI.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:125%">Out-of-Period Adjustment for the Correction of Errors</span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">During the first quarter of fiscal year 2023, the Company identified certain errors in its previously issued financial statements that have been corrected through a cumulative out-of-period adjustment in the condensed consolidated financial statements as of and for the three months ended March 31, 2023. The Company has concluded that the errors are not material to the previously issued financial statements and the cumulative out-of-period adjustment for the correction of these errors is not material to the financial statements for the three months ended March 31, 2023. Below is a summary of each of the errors corrected and a summary of the cumulative impact.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-style:italic;font-weight:400;line-height:125%">Capped Calls</span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">As discussed in Note 8 – Debt, of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2023, in November 2021, the Company paid $52.9 million to enter into capped call option agreements (the “Capped Calls”) to reduce the potential dilution to holders of the Company’s common stock after a conversion of the Company’s Convertible Notes (as defined below). The Company originally concluded that the Capped Calls met the criteria for equity classification because the Capped Calls are indexed to the Company’s common stock, and the Company has discretion to settle the Capped Calls in shares or cash. As a result, the Company originally recorded the amount paid for the Capped Calls as a reduction to additional paid-in capital of $52.9 million, offset by $12.4 million of income taxes.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">When the Company entered into the Capped Calls, the Company executed certain side letters (the “Side Letters”) with the counterparties that replaced some of the terms described in the primary contract including the volatility inputs used to value the Capped Calls under certain circumstances. Upon further evaluation, the Company has concluded that the modification to the volatility inputs precludes the Capped Calls from being </span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">indexed to its own stock because there is the possibility that the Capped Calls will settle at an amount that exceeds fair value and, therefore, prevents the Capped Calls from being classified as equity.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">In addition, the Side Letters also provide for certain adjustments to settlement amounts on the basis of holder-specific taxes which are impermissible inputs to the valuation that also prevents the Capped Calls from being indexed to the Company’s own stock, and therefore, prevents the Capped Calls from being classified as equity. As a result, for the three months ended March 31, 2023, the Company has concluded that the cash paid for the Capped Calls should have been recorded as an asset of $52.9 million with the asset being subsequently marked to market at the end of each accounting period.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-style:italic;font-weight:400;line-height:125%">Additional Closing Purchased Put Option</span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">As discussed in Note 9 – Redeemable Perpetual Preferred Stock, of the Company’s consolidated financial statements for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2023, in August 2021, the Company entered into a Securities Purchase Agreement (the “SPA”) with certain Purchasers (as defined below), which gives the Company the option to require the Purchasers to purchase up to an additional 150,000 shares of Series A Shares (as defined below) and up to 3,375,000 shares of common stock for $148.0 million until June 30, 2023 (the “Put Option”). Upon issuance of the Put Option, the Company recorded a reduction to additional paid-in-capital of approximately $12.4 million because the Company originally concluded that the Put Option should be classified as equity.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">During the first quarter of 2023, the Company reconsidered the provisions of this option. Because the Series A Shares underlying the Put Option could potentially require redemption under the Certificate of Designations governing the Series A Shares, the Put Option should not have been equity classified. As a result, during the three months ended March 31, 2023, the Company has concluded that the value of the Put Option at inception should have been recorded as an asset of $12.4 million, with the asset being subsequently marked to market at the end of each accounting period.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-style:italic;font-weight:400;line-height:125%">Correction of the Capped Calls and Put Option </span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">The adjustments to correct the Capped Calls and the Put Option at January 1, 2023 resulted in an increase in Derivative assets of $55.7 million, a decrease in Deferred income tax assets of $11.0 million, an increase in additional paid-in-capital of $52.9 million, and a decrease in net income of $8.1 million.</span></div><div style="text-align:justify"><span><br/></span></div><div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-style:italic;font-weight:400;line-height:125%">Goodwill</span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">In connection with the acquisition of STI, the Company had understated goodwill by $2.0 million and overstated inventory by the same amount that was sold during fiscal 2022. The Company corrected the goodwill balance during the current period resulting in an increase in goodwill and a decrease in cost of goods sold.</span></div>
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<div style="margin-bottom:6pt;text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:700;line-height:125%">Use of Estimates </span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">The preparation of condensed 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, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period.</span></div><div style="text-align:justify"><span><br/></span></div><div style="text-align:justify"><span style="color:#000000;font-family:'Arial',sans-serif;font-size:11pt;font-weight:400;line-height:125%">Actual results may differ from previously estimated amounts, and such differences may be material to the condensed consolidated financial statements; however, management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur.</span></div>
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CY2023Q1 us-gaap Amortization Of Intangible Assets
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CY2022Q1 us-gaap Amortization Of Intangible Assets
AmortizationOfIntangibleAssets
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FiniteLivedIntangibleAssetsAmortizationExpenseRemainderOfFiscalYear
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CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Next Twelve Months
FiniteLivedIntangibleAssetsAmortizationExpenseNextTwelveMonths
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FiniteLivedIntangibleAssetsAmortizationExpenseYearTwo
46970000 usd
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FiniteLivedIntangibleAssetsAmortizationExpenseYearThree
42664000 usd
CY2023Q1 us-gaap Finite Lived Intangible Assets Amortization Expense Year Four
FiniteLivedIntangibleAssetsAmortizationExpenseYearFour
38020000 usd
CY2023Q1 arry Finite Lived Intangible Asset Expected Amortization After Year Four
FiniteLivedIntangibleAssetExpectedAmortizationAfterYearFour
159604000 usd
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FiniteLivedIntangibleAssetsNet
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CY2023Q1 us-gaap Income Tax Expense Benefit
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IncomeTaxExpenseBenefit
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CY2022Q1 us-gaap Unrecognized Tax Benefits Period Increase Decrease
UnrecognizedTaxBenefitsPeriodIncreaseDecrease
0 usd
CY2023Q1 us-gaap Unrecognized Tax Benefits Period Increase Decrease
UnrecognizedTaxBenefitsPeriodIncreaseDecrease
0 usd
CY2023Q1 us-gaap Unrecognized Tax Benefits Period Increase Decrease
UnrecognizedTaxBenefitsPeriodIncreaseDecrease
0 usd
CY2022Q1 us-gaap Unrecognized Tax Benefits Period Increase Decrease
UnrecognizedTaxBenefitsPeriodIncreaseDecrease
0 usd
CY2023Q1 us-gaap Other Long Term Debt
OtherLongTermDebt
42138000 usd
CY2022Q4 us-gaap Other Long Term Debt
OtherLongTermDebt
51951000 usd
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DebtInstrumentCarryingAmount
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28329000 usd
CY2023Q1 us-gaap Preferred Stock Accretion Of Redemption Discount
PreferredStockAccretionOfRedemptionDiscount
12484000 usd
CY2022Q1 us-gaap Preferred Stock Accretion Of Redemption Discount
PreferredStockAccretionOfRedemptionDiscount
11606000 usd
CY2022Q4 us-gaap Debt Instrument Unamortized Discount Premium And Debt Issuance Costs Net
DebtInstrumentUnamortizedDiscountPremiumAndDebtIssuanceCostsNet
30383000 usd
CY2023Q1 us-gaap Long Term Debt
LongTermDebt
740209000 usd
CY2022Q4 us-gaap Long Term Debt
LongTermDebt
759043000 usd
CY2023Q1 us-gaap Long Term Debt Current
LongTermDebtCurrent
34382000 usd
CY2022Q4 us-gaap Long Term Debt Current
LongTermDebtCurrent
38691000 usd
CY2023Q1 us-gaap Long Term Debt Noncurrent
LongTermDebtNoncurrent
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CY2022Q4 us-gaap Long Term Debt Noncurrent
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PercentageOfVariableWeightedAveragePriceOfTemporaryEquity
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CY2023Q1 us-gaap Contract With Customer Asset Net Current
ContractWithCustomerAssetNetCurrent
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ContractWithCustomerAssetNetCurrent
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CY2023Q1 us-gaap Contract With Customer Liability
ContractWithCustomerLiability
151343000 usd
CY2022Q4 us-gaap Contract With Customer Liability
ContractWithCustomerLiability
178922000 usd
CY2023Q1 us-gaap Contract With Customer Liability Revenue Recognized
ContractWithCustomerLiabilityRevenueRecognized
125200000 usd
CY2023Q1 arry Contract With Customer Liability Revenue Recognized Percentage
ContractWithCustomerLiabilityRevenueRecognizedPercentage
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CY2023Q1 us-gaap Revenue Remaining Performance Obligation
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CY2023Q1 us-gaap Revenue Remaining Performance Obligation Percentage
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CY2023Q1 us-gaap Revenue Remaining Performance Obligation Expected Timing Of Satisfaction Period1
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P12M
CY2023Q1 us-gaap Net Income Loss
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26132000 usd
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NetIncomeLoss
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CY2023Q1 us-gaap Net Income Loss Available To Common Stockholders Basic
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13648000 usd
CY2022Q1 us-gaap Net Income Loss Available To Common Stockholders Basic
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CY2023Q1 us-gaap Weighted Average Number Of Shares Outstanding Basic
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CY2023Q1 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
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CY2022Q1 us-gaap Incremental Common Shares Attributable To Share Based Payment Arrangements
IncrementalCommonSharesAttributableToShareBasedPaymentArrangements
0 shares
CY2023Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
151795000 shares
CY2022Q1 us-gaap Weighted Average Number Of Diluted Shares Outstanding
WeightedAverageNumberOfDilutedSharesOutstanding
148288000 shares
CY2023Q1 us-gaap Earnings Per Share Diluted
EarningsPerShareDiluted
0.09
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EarningsPerShareDiluted
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CY2022Q1 arry Incremental Common Shares Attributable To Anti Dilutive Effect Of Share Based Payment Arrangements
IncrementalCommonSharesAttributableToAntiDilutiveEffectOfShareBasedPaymentArrangements
654277 shares
CY2023Q1 us-gaap Other Borrowings
OtherBorrowings
42100000 usd
CY2023Q1 us-gaap Allocated Share Based Compensation Expense
AllocatedShareBasedCompensationExpense
3300000 usd
CY2022Q1 us-gaap Allocated Share Based Compensation Expense
AllocatedShareBasedCompensationExpense
4400000 usd
CY2023Q1 us-gaap Employee Service Share Based Compensation Nonvested Awards Total Compensation Cost Not Yet Recognized Share Based Awards Other Than Options
EmployeeServiceShareBasedCompensationNonvestedAwardsTotalCompensationCostNotYetRecognizedShareBasedAwardsOtherThanOptions
32800000 usd
CY2021 us-gaap Number Of Operating Segments
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1 segment
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CY2023Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
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CY2022Q1 us-gaap Revenue From Contract With Customer Excluding Assessed Tax
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CY2023Q1 us-gaap Gross Profit
GrossProfit
101179000 usd
CY2022Q1 us-gaap Gross Profit
GrossProfit
26587000 usd

Files In Submission

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arry-20230331_cal.xml Edgar Link unprocessable
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