Nextracker (NXT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NextTracker achieved record revenue of $924 million in Q4, representing a 26% year-over-year increase, and full-year revenue reached approximately $3 billion, an 18% increase over fiscal '24 [19][21] - Adjusted EBITDA for Q4 expanded to a record $242 million, a 52% increase year-over-year, with an adjusted EBITDA margin of 26% [20][21] - Adjusted diluted EPS for fiscal '25 was $4.22, up 38% year-over-year, while Q4 adjusted EPS was $1.29, a 34% increase compared to the prior year [21] - The company closed the year with $766 million in cash, no debt, and approximately $1.7 billion in total liquidity [23] Business Line Data and Key Metrics Changes - The backlog increased significantly from $2.1 billion at IPO to over $4.5 billion, indicating strong bookings growth momentum [7][19] - The company sold over 9 gigawatts of Hail Pro series trackers and 17 gigawatts of XTR trackers during the year, reinforcing its leading position in terrain following [16] Market Data and Key Metrics Changes - The geographic revenue mix for the full year was 69% from the U.S. and 31% from the rest of the world, with international business accounting for 30% to 40% of total business [19][39] - Contracts were signed in 17 different countries in Q4, with strong performance noted in Europe, particularly in Spain, and solid gains in Latin America led by Brazil [13][14] Company Strategy and Development Direction - NextTracker is transitioning from a pure play tracker company to a solar power technology platform supplier, acquiring adjacent technologies to create a complete solar power platform [9][10] - The company plans to increase OpEx as a percentage of revenue by approximately 100 basis points and CapEx to approximately $100 million in FY '26, while generating over $450 million in free cash flow [25][26] - The acquisition of BendTech Corporation is expected to enhance the company's offerings and enable integrated solutions that reduce system costs [10][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current policy uncertainties due to a geographically diversified order backlog and a healthy balance sheet [8][27] - The company anticipates revenue for FY '26 in the range of $3.2 billion to $3.4 billion, with adjusted EBITDA between $700 million and $775 million [24][27] Other Important Information - The company reached a record of 1,220 patents, reflecting its focus on engineering excellence and innovation [15] - Management highlighted the importance of customer feedback in driving product development and the need for more manufacturing in the U.S. [70][71] Q&A Session Summary Question: Insights on the House tax bill and its workability - Management noted that there are favorable aspects in the reconciliation bill, but areas needing improvement include transferability provisions and timing of tax credits [32][35] Question: International business and margin outlook - Management confirmed that international business remains consistent, with lower margins but healthy overall margins expected [39] Question: Quantifying impacts of new provisions in the House draft bill - Management indicated that the impact of policy changes would be more significant in the intermediate term, with a healthy pipeline and secure projects in the U.S. [47][49] Question: Revenue outlook and contribution from new businesses - Management stated that a third of the business is expected to come from non-tracker revenue in five years, with more details to be provided at the upcoming Analyst Day [57][78] Question: Durability of structural gross margins - Management expressed confidence in the visibility of pricing and margins for FY '26, with most of the work already contracted [85] Question: Market share and manufacturing capacity of BendTech - Management indicated that BendTech is among the top suppliers in the U.S. and has the potential for growth with NextTracker's support [89] Question: Pipeline and bookings visibility for 2028 - Management confirmed that there is a strong pipeline extending beyond 2026, with many projects already greenlit [90] Question: eBOS revenue scaling and go-to-market strategy - Management noted that there is real demand for eBOS solutions, and benefits from the acquisition of BendTech could be realized in FY '26 [105]