Nextracker (NXT) - 2026 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The unaudited condensed consolidated financial statements for the three-month period ended June 27, 2025, show significant year-over-year growth in revenue and net income Unaudited Condensed Consolidated Balance Sheets As of June 27, 2025, the company's total assets grew to $3.39 billion from $3.19 billion at March 31, 2025 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 27, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Total Assets | $3,389,939 | $3,192,516 | | Cash and cash equivalents | $743,402 | $766,103 | | Goodwill | $444,923 | $371,018 | | Total Liabilities | $1,582,795 | $1,564,386 | | Total Stockholders' Equity | $1,807,144 | $1,628,130 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income For the three months ended June 27, 2025, Nextracker reported a 20% year-over-year increase in revenue to $864.3 million Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 FY2026 (ended June 27, 2025) | Q1 FY2025 (ended June 28, 2024) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | $864,253 | $719,921 | +20.0% | | Gross Profit | $281,726 | $237,440 | +18.6% | | Operating Income | $186,230 | $160,094 | +16.3% | | Net Income attributable to Nextracker Inc. | $157,183 | $121,700 | +29.2% | | Diluted EPS | $1.04 | $0.84 | +23.8% | Unaudited Condensed Consolidated Statements of Cash Flows For the first quarter of fiscal 2026, net cash provided by operating activities was $81.3 million, a decrease from $120.8 million in the same period last year Cash Flow Summary (in thousands) | Activity | Three months ended June 27, 2025 | Three months ended June 28, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $81,324 | $120,846 | | Net cash used in investing activities | ($98,071) | ($113,055) | | Net cash used in financing activities | ($5,954) | ($9,966) | | Net decrease in cash and cash equivalents | ($22,701) | ($2,175) | Notes to the Unaudited Condensed Consolidated Financial Statements The notes detail key accounting policies and provide further information on financial statement line items - The majority of the company's revenue ($847.3 million out of $864.3 million) is recognized over time rather than at a point in time[42] - Goodwill increased by $73.9 million during the quarter, primarily due to the acquisitions of Bentek Corporation and OnSight Technology, Inc[47] - The company is involved in several legal proceedings, including a lawsuit filed by former parent Flex Ltd. over a tax distribution and a securities class action lawsuit alleging false and misleading statements[61][62] - The company's effective tax rate for the quarter was 17.7%, slightly down from 17.9% in the prior-year period[70] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 20% year-over-year revenue growth to a 27% increase in gigawatts (GW) delivered, with strong demand in both the U.S. and international markets Results of Operations Revenue increased by $144.3 million (20%) YoY, driven by a 27% increase in GW delivered Key Operational Results (in thousands) | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $864,253 | $719,921 | 20% | | Gross Profit | $281,726 | $237,440 | 19% | | Operating Income | $186,230 | $160,094 | 16% | | Net Income | $157,183 | $124,794 | 26% | - Revenue growth was driven by a 27% increase in GW delivered, with notable strength in Latin America, the Middle East, and Europe[119] - Cost of sales was reduced by approximately $93.2 million related to 45X tax credits earned on U.S. manufactured components, compared to a $47.0 million reduction in the prior year[120] Non-GAAP Financial Measures The company uses non-GAAP measures such as Adjusted EBITDA and Adjusted Net Income to supplement its GAAP results Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) | Line Item | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | GAAP net income | $157,183 | $124,794 | | Interest, net | ($5,371) | ($1,292) | | Provision for income taxes | $33,784 | $27,152 | | Depreciation expense | $3,730 | $853 | | Intangible amortization | $2,059 | $88 | | Stock-based compensation expense | $22,310 | $21,901 | | Acquisition related costs | $1,079 | $1,480 | | Adjusted EBITDA | $214,774 | $174,976 | | Adjusted EBITDA margin | 24.9% | 24.3% | Liquidity and Capital Resources The company's principal uses of cash are funding operations and R&D - Total liquidity as of June 27, 2025, was approximately $1.7 billion[137] - Net cash from operating activities was $81.3 million, down from $120.8 million YoY[132][133] - Net cash used in investing activities of $98.1 million was primarily for the $86.8 million payment for the Bentek and OnSight acquisitions[134] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from commodity price fluctuations (especially steel), customer concentration, and foreign currency exchange rates - The company's top five largest customers accounted for 37% of total revenue in Q1 FY2026, down from 43% in Q1 FY2025. One customer represented 12% of revenue[143] - The business is subject to risk from fluctuating market prices of commodity raw materials, particularly steel, and does not enter into hedging arrangements to mitigate this risk[144] - Disruptions in logistics have increased costs and caused shipment delays, affecting revenue timing and profitability[145] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 27, 2025 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 27, 2025[149] - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[150] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal actions in the ordinary course of business - The company is party to several legal proceedings, which are further detailed in Note 7 of the financial statements[153][154] Risk Factors The company faces numerous risks, with significant recent developments in regulatory and trade policy - The newly enacted 'One Big Beautiful Bill Act' (OBBBA) on July 4, 2025, materially changes federal renewable energy incentives, notably accelerating the expiration of Section 48E and 45Y tax credits, which could reduce future project volume[181] - A new U.S. reciprocal tariff regime was announced, including a baseline 10% tariff and higher country-specific rates, alongside existing 50% tariffs on steel and aluminum, which could significantly increase production costs[197][199] - The company faces risks from antidumping and countervailing duty (AD/CVD) orders on solar cells and modules from Southeast Asia, which could increase costs for its proprietary modules and impact customer projects[202][205][206] - The company has identified new risks related to the development, adoption, and use of Artificial Intelligence (AI) in its products and business operations, including potential for flawed algorithms, data privacy issues, and an evolving regulatory landscape[255][258] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - No unregistered sales of equity securities occurred during the period[329] Other Information During the quarter, certain officers, including the CAO and CFO, adopted or terminated Rule 10b5-1 trading arrangements for the purchase or sale of the company's Class A common stock - CAO Dave Bennett terminated a Rule 10b5-1 plan on June 9, 2025, and adopted a new one on June 10, 2025. CFO Charles Boynton adopted a Rule 10b5-1 plan on June 13, 2025[332] Exhibits This section lists the exhibits filed with the Form 10-Q, including new forms of Restricted Stock Unit Award Agreements and certifications by the Principal Executive Officer and Principal Financial Officer - The report includes exhibits such as CEO and CFO certifications and forms of equity award agreements under the 2022 Equity Incentive Plan[335]