Nextracker Inc. (NXT) 2025 Q1 Earnings Call Summary

Optimistic Highlights

• Strong Start to Fiscal Year 2025

First quarter saw 50% year-on-year revenue growth and record adjusted EBITDA, marking the sixth consecutive quarter of year-over-year growth.

• Healthy Demand and Backlog

Demand was strong in both US and international markets, with a backlog exceeding $4 billion.

• New Product Solutions

Launched new products like agri PV solution and NX low carbon tracker, and announced orders for solar tractor solutions with 100% U.S. domestic content capability.

• Strategic Acquisitions

Acquired Ojjo and Solar Pile International to enhance foundation design and broaden geotechnical use cases for solar.

• Domestic Content Orders

Firm orders for domestic content trackers, with some orders reaching 100% domestic content.

Pessimistic Highlights

• Project Delays

Some projects are experiencing delays due to construction permits and interconnection issues.

• Supply Chain Costs

Higher supply chain costs, including logistics and steel, impacted gross margins.

• Lengthening Project Cycles

Project life cycles are getting longer, affecting the timing of revenue recognition.

• AD/CVD Issues

Anti-dumping and countervailing duties (AD/CVD) issues are a secondary headwind, causing some project delays.

• International Mix Impact

Increased international mix expected to moderate margins in the latter half of the year.

Company Outlook

• Positive Outlook

Fiscal 2025 is off to a great start, with strong execution and a healthy market outlook.

• Visibility and Backlog

Backlog provides visibility, with 80% expected to be realized over the next eight quarters.

• Focus on Execution

The company remains focused on executing its plan and leveraging its strong market position.

• Grid-Enhancing Technologies

Opportunities in grid-enhancing technologies to help accelerate renewable energy adoption.

• Election and IRA Risks

Majority view that solar is bipartisan and fundamental to the clean energy transition, with continued investment expected despite election uncertainties.

Q & A Highlights

• Q: Domestic content and customer conversations? (Mark Strouse, JPMorgan)

A: Demand is healthy for trackers with domestic content, with firm orders ranging from 40% to 100% domestic content. Customers are not waiting for additional guidance and are placing orders. (Howard Wenger, Dan Shugar)

• Q: AD/CVD impacts and booking strength? (Philip Shen, ROTH Capital Partners)

A: AD/CVD issues are a secondary headwind, with primary impacts from construction permits and interconnection delays. Strong quarter in bookings, with a healthy market outlook. (Dan Shugar, Howard Wenger)

• Q: Guidance and EBITDA margin? (Brian Lee, Goldman Sachs)

A: Strong Q1, but increased international mix expected to moderate margins in the latter half of the year. (Chuck Boynton, Dan Shugar)

• Q: Acquisitions and attach rate? (Vikram Bagri, Citi)

A: Excited about acquisitions, with early adoption and customer excitement. Higher supply chain costs are a factor, but 45X tax credits help offset U.S. production costs. (Dan Shugar, Chuck Boynton)

• Q: Backlog realization timeline? (Praneeth Satish, Wells Fargo)

A: Project life cycles are lengthening, but backlog remains solid with minimal project dropouts. (Howard Wenger, Chuck Boynton)

• Q: Sequential decline in Q2 guidance? (Kashy Harrison, Piper Sandler)

A: Driven by customer schedules, with strong Q1 deliveries. Looking at annual growth rather than quarterly. (Dan Shugar)

• Q: Domestic content bonuses and pricing strategy? (Dimple Gosai, Bank of America)

A: Domestic content is a factor in the U.S. market, with a strong position to deliver high levels of domestic content. (Howard Wenger)

• Q: AgriPV market opportunity? (Jordan Levy, Truist)

A: AgriPV has potential in specific markets, with ongoing R&D and customer projects showing promise. (Dan Shugar)

• Q: December deadline for panel tariffs? (Joseph Osha, Guggenheim Partners)

A: AD/CVD issues are secondary, with primary impacts from construction permits and interconnection delays. (Dan Shugar)

• Q: Timing of acquisitions? (Jon Windham, UBS)

A: Strong liquidity and market need drove the timing of acquisitions, with validated technologies offering customer value. (Dan Shugar)

• Q: Customer views on election risk? (Dylan Nassano, Wolfe Research)

A: Majority view that solar is bipartisan, with continued investment expected despite election uncertainties. (Howard Wenger)

• Q: Supply chain costs and pricing adjustments? (Sean McLoughlin, HSBC)

A: Higher supply chain costs are a factor, but efforts to lock in costs and leverage 45X tax credits help mitigate impact. (Dan Shugar, Howard Wenger)

• Q: Backlog coverage and intra-year book-to-ship? (Sean Milligan, Janney)

A: Most backlog is in the two to five quarter window, with a long tail extending beyond that. (Dan Shugar)