Nextpower Inc.

Good afternoon, everyone, and thank you for standing by. My name is Sierra, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to Nextracker's second quarter fiscal year 2025 earnings call. After the speaker's remarks, there will be a Q&A session. At this time, for opening remarks, I would like to pass the conference over to Mary Lai, Vice President of Investor Relations. Mary, you may begin.

Thank you, and good afternoon, everyone. Welcome to NextTracker's second quarter fiscal year 2025 earnings call. I'm Mary Lai, Vice President of Investor Relations. I'm joined by Dan Sugar, our CEO and founder, Howard Wenger, our president, and Chuck Boynton, our CFO. On today's call, we will open with brief remarks from our CEO, Dan, and then immediately transition into Q&A session. As a reminder, there will be a replay of this call posted on the IR website. along with our earnings press release and shareholder letter. Today's call contains statements regarding our business, financial performance, and operations, including our business and our industry that may be considered forward-looking statements, and such statements involve risks and uncertainties that may cause actual results to differ materially from our expectations. Those statements are based on current beliefs, assumptions, and expectations and speak only as of the current date. For more information on those risks and uncertainties, please review our earnings press release, shareholder letter, and our SEC filings, including our most recently filed quarterly report on Form 10Q and annual report on Form 10K, which are available on our IR website at investors.nexttracker.com. This information is subject to change, and we undertake no obligation to update any forward-looking statements as a result of the new information, future events, or changes in our expectations. Please note, we will provide gap and non-gap measures on today's call. The full non-gap to gap reconciliation can be found in the appendix to the press release and the shareholder letter, as well as the financial section of the IR website. And now I will turn the call over to our CEO and founder, Dan.

Thank you, Mary. And thank you all for joining our Q2 earnings call. We are very pleased with the continued strong execution by the company across the board in products, sales and operations, driving solid financial performance. Before we cover the company's performance, I'd like to offer a few comments on the upcoming election in the United States, which is our largest market. There have been questions addressed to Nextrack and our sector regarding the potential impact of the election on solar. We believe our company and industry will grow regardless of election outcome. as we have steadily grown through prior Democratic and Republican administrations. We believe we will be successful in any scenario because energy projects are less about politics and more about economics, and solar is the lowest cost form of energy in most markets. It's about the maturity of projects in development and the interconnection queue. And it's about the availability of capital to finance projects when risks are considered. In all of these areas, solar shines. The U.S. has a growing appetite for new power, and we believe solar and battery projects are best positioned to satisfy that need. Further, most of the manufacturing investments and solar power plants in the country are located in red states. and the underpinning economic value delivered to those states is significant and real, so much so that 18 Republican members of the House of Representatives sent a unified letter to Speaker Johnson in support of the IRA, demonstrating again the bipartisan support for clean energy and why we believe key elements of the Inflation Reduction Act will persist independent of the outcome of the upcoming election. In summary, we believe Nextracker will continue to grow in the U.S. under either administration. And now, let's turn to our company performance. Q2 was another quarter of strong execution, marking our seventh consecutive quarter of double-digit revenue growth year over year. Revenue for the first half of our fiscal 25 was a record with an increase of 29% year over year. We continue to see strong demand for our products globally across all regions, driven in part by a flight to quality across a range of criteria that matter to customers. We strongly believe that Nextracker offers the highest quality and most reliable product on the market with the lowest installed cost, lowest operating cost, highest production, and differentiated technology and engineering. We believe these factors will help to drive demand and enable pricing discipline. Our team is also differentiated with sector domain expertise, a robust global supply chain that delivers products on time, and a customer service ethic that measures and responds to customer requirements at each phase of the customer journey. Customers are rewarding these values with sales orders Our backlog increased significantly quarter over quarter to a new record of over $4.5 billion, and we are pleased with the margin profile of our backlog for this fiscal year and beyond. As a result of the new orders, we are raising our profit target for the full fiscal year by $20 million at the midpoint to $645 million. We are also receiving customer orders for our new product, including NX Horizon XTR 1.5, NX Horizon Low Carbon Tracker, NX Hail Pro 75, and both are new NX Foundation technologies. All of these products have been successfully deployed in the field. Most of these products resulted from focused R&D investments made by Nextracker. In Q2, we inaugurated our third global design facility, Nextracker Center of Solar Excellence in Hyderabad, India, a 13-acre facility with a 30,000-square-foot state-of-the-art laboratory. Our three global design labs incubate and commercialize PV technologies localized for regional needs and optimize products for customer requirements as we are serving projects in over 40 countries around the world. A few months ago, in response to customer demand, we accelerated to Q3 of this year the availability of our 100% domestically manufactured tracker. We received customer orders for it, which will ship later this quarter. To our knowledge, we are the only tracker manufacturer that can deliver a 100% U.S. manufactured tracker. This capability can provide tremendous benefits to U.S. customers because it enables them to achieve a much higher score on their domestic content and can enable them to capture the 10% bonus investment tax credit, or ITC. On a typical 100-megawatt system, the 10% bonus ITC can have a value to the customer of roughly $10 million, equivalent approximately to the entire cost of the tracker. Last quarter, we announced the closing of two foundation business acquisitions, which are on track to be successfully integrated by the end of the fiscal year. At the REplus North America Conference last month, we debuted our next foundation solutions business, and customer reception exceeded expectations. We have signed new bookings orders for our foundation solutions, and our NX Horizon trackers and see a robust pipeline for new business. We're excited for what our foundation solutions will do for our customers, enabling quicker, safer, and more efficient solar project development on a wide range of soil types for EPC and developer customers. In summary, it was a great first half of fiscal 25 and we remain focused on executing our plan to achieve double-digit revenue growth for the full year with a raised profitability target. Looking forward, we expect fiscal 2026 to be another growth year comprised of both our legacy products such as NX Horizon and the five new product offerings I just mentioned. The customer demand for our industry-leading products and our ability to execute and support customer success give us the confidence to achieve our growth supported by our growing backlog. We now look forward to your questions. Let me pass the call back to the operator.