Array Technologies, Inc.ARRY
Array Technologies, Inc. Leases Disclosure
Leases
The Company accounts for its leases under ASC Topic 842 Leases. The Company has both operating and finance leases for certain assets. The Company has elected to apply the short-term measurement and recognition exemption, under which the right-of-use (“ROU”) assets and lease liabilities are not recognized for short-term leases.
The following table summarizes the Company’s ROU assets and lease liabilities (in thousands):
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Lease assets | ||||||||||||||
| $ | 48,791 | $ | — | |||||||||||
Operating lease ROU assets, including $26,419 and $0, respectively, from leases with related parties | 48,297 | 16,384 | ||||||||||||
| $ | 97,088 | $ | 16,384 | |||||||||||
| Finance lease liabilities, current portion | $ | 188 | $ | — | ||||||||||
Operating lease liabilities, current portion, including $592 and $0, respectively, from leases with related parties | 7,474 | 5,600 | ||||||||||||
| $ | 7,662 | $ | 5,600 | |||||||||||
| Finance lease liabilities, long-term portion | $ | 42,264 | $ | — | ||||||||||
Operating lease liabilities, long-term portion, including $26,050 and $0, respectively, from leases with related parties | 47,288 | 15,128 | ||||||||||||
| $ | 89,552 | $ | 15,128 | |||||||||||
The components of lease cost were as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Finance Leases: | |||||||||||||||||
Amortization of finance lease assets | $ | 450 | $ | — | $ | — | |||||||||||
Interest obligation under finance leases | 687 | — | — | ||||||||||||||
| Total lease costs | $ | 1,137 | $ | — | $ | — | |||||||||||
Operating Leases: | |||||||||||||||||
| Fixed operating lease costs to non-related parties | $ | 8,574 | $ | 8,262 | $ | 8,188 | |||||||||||
| Fixed operating lease costs to related parties | 1,152 | — | — | ||||||||||||||
| Variable operating lease costs to non-related parties | 1,931 | 1,838 | 1,501 | ||||||||||||||
| Short-term lease costs | 57 | 48 | 86 | ||||||||||||||
| Total lease costs | $ | 11,714 | $ | 10,148 | $ | 9,775 | |||||||||||
Future minimum lease payments as of December 31, 2025, are as follows (in thousands):
Operating Leases | |||||||||||||||||||||||||||||
Finance Leases | Related Party | Non-Related Party | Total Operating | Total | |||||||||||||||||||||||||
| 2026 | $ | 2,452 | $ | 2,451 | $ | 8,370 | $ | 10,821 | $ | 13,273 | |||||||||||||||||||
| 2027 | 3,067 | 2,525 | 6,762 | 9,287 | 12,354 | ||||||||||||||||||||||||
| 2028 | 3,173 | 2,601 | 5,410 | 8,011 | 11,184 | ||||||||||||||||||||||||
| 2029 | 3,284 | 2,679 | 3,359 | 6,038 | 9,322 | ||||||||||||||||||||||||
| 2030 | 3,399 | 2,759 | 3,480 | 6,239 | 9,638 | ||||||||||||||||||||||||
| Thereafter | 87,783 | 31,316 | 7,884 | 39,200 | 126,983 | ||||||||||||||||||||||||
| Total lease payments | 103,158 | 44,331 | 35,265 | 79,596 | 182,754 | ||||||||||||||||||||||||
| Less: Imputed lease interest | (60,706) | (17,689) | (7,145) | (24,834) | (85,540) | ||||||||||||||||||||||||
| Total lease liabilities | $ | 42,452 | $ | 26,642 | $ | 28,120 | $ | 54,762 | $ | 97,214 | |||||||||||||||||||
Other information pertaining to leases consists of the following:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Weighted average remaining lease-term | |||||||||||||||||
| Finance leases | 23.3 years | n/a | n/a | ||||||||||||||
| Operating leases | 9.8 years | 6.0 years | 5.7 years | ||||||||||||||
| Weighted average discount rate | |||||||||||||||||
| Finance leases | 7.8 | % | — | % | — | % | |||||||||||
| Operating leases | 7.5 | % | 8.3 | % | 7.9 | % | |||||||||||
Supplemental cash flow and other information related to leases are as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating cash flows from operating leases | 7,454 | 7,042 | 7,911 | ||||||||||||||
| Non cash investing activities: | |||||||||||||||||
| Lease liabilities arising from obtaining right-of-use assets, including those assumed through acquisition | $ | 81,611 | $ | 849 | $ | 10,562 | |||||||||||
In May 2024, the Company entered into a triple net lease (“NNN term lease”) with GDC Sunshine LLC (“Lessor”) for 13 1/2 years (162 full calendar months) for a new manufacturing and office facility in Bernalillo County, New Mexico (the “County”). The NNN term lease agreement allows for an extension of one consecutive period of 10 years. The new facility that is mixed use and built for general purposes will be approximately 216,000 square feet when constructed.
The Company took control of the facility in the fourth quarter of 2025, at which point the NNN term lease commenced and will be accounted for as a finance lease. Future minimum lease payments under the NNN term lease, assuming the Company executes the renewal option, are estimated to be $103.2 million, payable over the expected lease term beginning with the commencement date.
In connection with this NNN term lease and the Company’s planned acquisition of machinery and equipment related to the new facility, the Lessor and the Company entered into a series of transactions with the County related to a tax abatement plan. These transactions had no net impact to the consolidated financial statements of the Company. The tax abatement plan provides for the effective elimination of 75% of the real property taxes and 100% of the personal property taxes payable to the County by the Company and the Lessor during the term of the NNN term lease, and the abatement of 100% of the sales and use taxes that would be incurred by the Company and the Lessor related to the purchase and use of machinery and equipment.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 22, 2023 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.