Greetings. Welcome to Array Technologies' transaction announcement call. At this time, all participants are in a listen-only mode, and there will not be a question-and-answer session. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Sheppard, Investor Relations at Array. Please go ahead.
Thank you. I would like to welcome everyone to Array Technologies' conference call concerning our recently announced proposed acquisition of APA Solar. I am joined on this call by Kevin Hostetler, our CEO, Keith Jennings, our CFO, and Aaron Gablenick, our Chief Strategy and Technology Officer. Today's call is being webcast via our investor relations site at ir.arraytechinc.com, including audio insights. In addition, the press release and the presentation detailing our acquisition have been posted on the website. As a reminder, the matters we are discussing today include forward-looking statements regarding the proposed acquisition of APA, the anticipated benefits, including synergies and increased competitive advantages, the anticipated impact of the acquisition on our business and future financial and operating results, and other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made on this call.
For details, please see the information at the beginning of this presentation material. As always, we refer you to the documents we file with the SEC for a discussion of risks that may affect our future results. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements to conform these statements to actual results, except as required by law. I'll now turn the call over to Kevin.
Thank you. Good morning, everyone. I appreciate you joining us on short notice today to discuss this transformative announcement, marking a significant milestone for Array as we expand our product portfolio beyond the tracker. Let's begin on slide four. This morning, we announced that we have signed a definitive agreement to acquire APA Solar, a leading U.S. provider of engineered foundation solutions and fixed-tilt racking systems for utility-scale and commercial solar projects. The transaction is valued at approximately $179 million, factoring in expected tax benefits, with an expected closing in the third quarter of this year, which remains subject to regulatory approval and customary closing conditions. The transaction is expected to be accretive to Array's adjusted EPS in year one before synergies.
Thanks to our dedicated focus on maximizing a profitable cash-generative business, we are able to fund this acquisition with cash on hand while still maintaining an appropriate level of liquidity for our operations. Let's continue on slide five. I want to start with an explanation of our investment thesis and the underlying why of this acquisition. First of all, we believe it gives us a competitive advantage. As many of you know, we've consistently focused on delivering high-performance solar tracking systems that maximize energy yield and project economics for our customers. As the market evolves, so do our customers' requirements. Developers and EPCs are increasingly looking for integrated solutions that reduce complexity, mitigate risk, and improve project timelines. Foundations are a critical part of that equation. They directly impact tracker performance, installation efficiency, and long-term reliability.
By bringing APA into the fold, we will be able to offer a fully integrated tracker-plus foundation solution, one that's engineered to perform even in the most challenging soil conditions. What makes APA's A-frame engineered foundation even more compelling is its incredibly easy installation process. Unlike competing offerings in the market, this A-frame foundation does not require any specialized equipment for installation while being offered at a competitive price point. Additionally, APA's U.S.-based manufacturing footprint and domestic content alignment will further optimize our eligibility for 45X tax credits under the current version of the Inflation Reduction Act. While the exact magnitude will depend on final IRS guidance and project mix, we believe this represents meaningful upside for Array and promotes our focus on profitability. Secondly, this acquisition increases our share of wallet opportunity.
By adding fixed-tilt and engineered foundations, we increase our addressable market by nearly 40% and can now serve a broader range of project types. APA is already a top-tier player in this space, particularly in the fixed-tilt and tracker-compatible foundation segments. This acquisition will allow us to capture a larger share of wallet while also enhancing the competitiveness of our core tracker offering. Most importantly, becoming a provider of both fixed-tilt and tracker-based solutions provides our EPCs and developers a one-stop shop to discuss their project options. Thirdly, this acquisition will provide significant cost and revenue synergies. Cost synergies will materialize through sourcing efficiencies, leveraging larger volumes, as well as streamlining and regionalizing our manufacturing processes while effectively managing corporate costs.
Revenue synergies will also come naturally through our integrated tracker and foundation offerings, increased channel access to utility-scale clients for APA, and there will be no incremental sales costs required. The final point of our thesis is that this acquisition just makes good financial sense. We've signed this deal at an attractive valuation multiple, one that will only look more compelling as the earnout is achieved, and it is immediately adjusted EPS accretive to Array even before we pursue planned revenue and cost synergies. We will also retain APA's leadership and expertise through its founders, who are incentivized to deliver financial results and contribute to Array's future success. Finally, we expect to realize tax advantages as a result of this transaction. All things considered, the sound strategic and financial benefits will create a convincing value proposition that we expect to deliver value to both our customers and our shareholders.
Moving to slide six, I want to detail a bit about APA's history. Founded in 2008 by CEO Josh Bondalen and Chief Operations Officer Joe Bondalen, APA is headquartered in Ohio and a notable employer of around 250 hardworking employees. Its family-owned nature promotes an organization culture focused on collaboration and innovation that we believe will incorporate well into Array's values. APA has long maintained a strong reputation in the Northeast United States and across the industry for its outstanding customer service, in-house manufacturing capabilities, and reliable product performance. The APA team delivered $129 million in revenue and $25 million in EBITDA in 2024. With a highly profitable business model and well-run operations, we expect it will integrate well into Array's existing execution framework.
Prior to its expansion into engineered foundations for tracking, APA began its journey providing fixed-tilt racking through the development of its popular Ready Rack and TITAN offerings that can accommodate numerous module formats and site conditions. While Array has long focused on the tracking segment of the market, adding fixed-tilt solutions will help us to support the commercial and industrial, or C&I, space that we expect to benefit from relevant megatrends like U.S. data center growth and manufacturing onshoring efforts. Moving on to slide seven, I want to showcase a few examples of recent projects that utilize APA's innovative products to address their unique needs. The selected images show APA's A-frame solution across both Array and other tracker providers, as well as its TITAN Duo fixed-tilt racking with a number of different foundation systems.
What I hope you gather from these site images is that APA's solutions address varied conditions across many different geographies, much like our Array suite of products. We're thrilled to be able to continue APA's legacy of excellence and to have them as part of Team Array as we move to the next chapter of our story. With that, I will turn it over to Dr. Aaron Gablenick, our Chief Strategy and Technology Officer, to further discuss the importance of APA's product offerings and the value they bring to Array.
Thanks, Kevin. Let's turn to slide eight. As you look at the future of solar deployment, one thing is clear: engineered foundations are becoming essential. APA's A-frame systems are purpose-built for the kinds of soil conditions we're seeing more of: frost-prone, rocky, or otherwise unsuitable or uneconomic for traditional H-piles. Unlike these traditional H-piles, APA's engineered alternatives do not require large, expensive pre-drilling or other cementing work and install easily at an economically viable pace and a highly dependable rate, which saves time and money for its customers while also reducing project risk. APA's product portfolio includes a range of foundation types: helical, screw, C-pile, and more, designed to meet the needs of increasingly complex project sites. These solutions are ideal for the evolving solar landscape, where complex subsurface conditions are becoming a more significant challenge. APA's presence is especially strong in regions where traditional pile-driven systems fall short.
As the solar industry continues to expand into more diverse geographies, the demand for engineered foundation solutions will only grow. Moving to slide nine, I want to highlight areas where frost heave and hard soils have historically presented challenges for the viability of solar projects. With advancements in foundation technology like APA's A-frame system, the total addressable market for potential utility-scale solar sites is rapidly increasing. With engineered foundations, solar is increasingly moving north and southwest, and difficult subsurface conditions are becoming more of the norm for solar projects. These solutions unlock project viability in areas previously unserviceable. Let's turn to slide ten. This acquisition will also support our broader strategic goals and our structural balance of systems strategy. First, it will strengthen our position in the U.S. market, where we've seen increased competition but also renewed momentum.
Second, it will enhance our ability to serve a wider range of project types, including fixed-tilt systems, which remain relevant in certain geographies and applications. While we remain strong advocates for the value proposition of trackers, we recognize that flexibility is key. With APA, we will be able to offer customers the right solution for their specific site conditions, whether that's a tracker, fixed-tilt system, or a hybrid approach. Third, APA's foundation system integrates seamlessly with our trackers, which will enable us to deliver a more complete, optimized solution to our customers by reducing installation risk, improving performance, and enhancing project economics. Moving to slide 11, it is important to discuss the impact on our share of wallet. By adding fixed-tilt and engineered foundations, we will increase our addressable market by over $1.2 billion, and we will be able to serve a broader range of project types.
Fixed-tilt will offer an additional market segment that Array has not historically competed in, and APA is already a prominent player in this space. APA's products will also carry attractive contribution margins on incremental sales, as we expect this will allow our sales team to generate higher average order sizes. We expect to continue to enhance dialogue with our customers and ensure that our integrated offerings drive value through streamlined product design and efficient installation. All around, we believe the integration of Array and APA will be a win-win for us and our stakeholders. Let's turn to slide 12. Once we integrate APA into the Array family, we expect to be doing so from a position of strength by leveraging the core capabilities that have made Array a leader in the solar industry. First, our technical and engineering expertise.
Array has long been recognized for its industry-leading design capabilities, which drive improved energy yield and project returns. By combining our tracker technology with APA's engineered foundations, we expect to optimize system design and will be able to deliver even greater value to our customers. Second, manufacturing optimization. Our new state-of-the-art facility in Albuquerque, New Mexico, set to open in early 2026, will provide enhanced flexibility and cost control. Together with APA's existing footprint, we expect to reduce logistics costs and improve delivery timelines for our customers while reducing business continuity risk. Third, our domestic and global supply chain leadership. We have built an efficient, resilient supply chain that supports both procurement efficiency and IRA tax credit optimization. By applying our best practices in vendor management systems to APA's operations, we expect to capture additional margin and improve scalability. Finally, our strong customer relationships.
With decades-long partnerships across the utility-scale solar ecosystem, we will be well-positioned to introduce APA solutions to a broader customer base, unlocking new opportunities and accelerating growth. Together, these strengths will enable us to deliver greater value to our customers and shareholders as we expand our presence in the structural balance of systems market. Now, I'd like to turn the call over to our CFO, Keith Jennings, who will talk a bit more about the details of the transaction and the strategic rationale.
Thank you, Aaron. Let's turn to slide 13 for a brief overview of the transaction terms. The total purchase price agreed between the parties is $210 million, subject to customary adjustments. 80% will be paid in cash at closing, with 20% deferred and payable in two equal installments on the first and second anniversary of the closing. These deferred payments are linked to the employment status of key employees at the end of the respective periods. Both of these payments can be paid in cash or common stock at Array's discretion. There's also an earnout with an initial value of $40 million, payable in stock, tied to APA achieving certain EBITDA targets over the next three years.
Importantly, we expect to receive a tax step-up in basis on APA's assets and other tax attributes from the transaction, which are expected to generate approximately $31 million in present value tax savings, enhancing the financial attractiveness of the deal. As Kevin briefly mentioned, we expect to close in the third quarter following HSR approval and other customary closing conditions. On slide 14, I want to briefly highlight APA's financials and the earnout structure. These earnouts were designed to incentivize APA's continued growth trajectory by capturing synergies and promoting collaboration across the organizations to create value for all investors. Moving to slide 15, I want to reiterate the strategic rationale and benefits of this deal to Array. APA will provide us with a significant platform for growth.
Engineered foundations are the future in utility-scale solar projects and paired with Array's existing suite of products designed to address various terrains, irregular site boundaries, and weather conditions. We believe we will be uniquely positioned as a best-in-class partner to address our customers' project needs. This acquisition makes us more diversified, as acquisition of APA also represents a move into fixed-tilt systems, which will increase our total addressable market and further differentiate our portfolio. Hybrid utility-scale projects, or projects utilizing both tracking and fixed-tilt, are becoming more commonplace, and fixed-tilt is also uniquely positioned to support both data center growth and manufacturing onshoring trends. Finally, the financial profile of this deal is notable. The attractive valuation, immediate profitability, inherent tax advantages, and significant opportunity for bilateral commercial synergies leave us confident that we will deliver great value for our stakeholders in return for this investment.
To close, I'd like to quickly note that there is no change to our Array standalone 2025 full-year guidance at this time. We will update our full-year outlook to reflect APA's contribution after the transaction closes. With that, I'll turn it back over to Kevin for some closing remarks.
Thank you, Keith. To wrap up, this acquisition will be a strategic extension of our core business and a financial win for Array. It will strengthen our product portfolio, expand our market reach, and enhance our ability to deliver integrated, high-value solutions to our customers. It is a move that supports our long-term growth, margin expansion, and shareholder value creation. I want to thank the APA team for their collaboration throughout this process. APA's team, technology, and track record are a strong fit with our culture and vision. We are excited to welcome them to the Array family and look forward to the value we will create together. Thank you again for joining us today.
Thank you. This does conclude today's conference. You may disconnect your lines at this time. Enjoy the rest of your day.