• Q3 Revenue: $679 million, a 7% sequential improvement over Q2.
• Year-to-Date Revenue: $2 billion, reflecting a 15% growth year over year.
• Adjusted EBITDA: $186 million in Q3, an 11% increase year over year, with a margin of 27%.
• Adjusted Free Cash Flow: $135 million in Q3, more than doubling from $62 million in the same period last year.
• Total Cash: $694 million at the end of Q3.
• Total Debt: $145 million with no significant maturities until fiscal 2028.
• Total Liquidity: $1.6 billion at the end of Q3.
• Adjusted Gross Margins: 36%, roughly in line quarter over quarter.
• Backlog: Greater than $4.5 billion, a new record.
• Full Year Fiscal '25 Revenue Guidance: $2.8 billion to $2.9 billion.
• Full Year Fiscal '25 Adjusted EBITDA Guidance: $700 million to $740 million.
• Full Year Fiscal '25 Adjusted Diluted EPS Guidance: $3.75 to $3.95 per share.

• Warning! GuruFocus has detected 2 Warning Sign with NXT.

Release Date: January 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• NEXTracker Inc (NASDAQ:NXT) reported a 15% year-over-year revenue growth, reaching approximately $2 billion year to date.
• The company's backlog hit a new record, significantly exceeding $4.5 billion, providing excellent visibility and confidence in future growth.
• NEXTracker Inc (NASDAQ:NXT) expanded its R&D facilities in the US, Brazil, and India, and partnered with UC Berkeley to advance solar technology.
• The company achieved a strong adjusted EBITDA of $186 million in Q3, marking an 11% increase year over year.
• NEXTracker Inc (NASDAQ:NXT) generated $135 million in adjusted free cash flow during Q3, more than doubling from the same period last year.

Negative Points

• The solar industry faces risks and uncertainties that may cause actual results to differ materially from expectations.
• Pricing and costs vary by region, customer, project size, and other factors, which can impact profitability.
• International markets are more competitive and sensitive to upfront costs, potentially affecting margins.
• The company faces potential risks from tariffs and changes in domestic content rules, which could impact supply chain dynamics.
• Project timing can be unstable, with some projects accelerating and others pushing out, affecting revenue recognition.

Q & A Highlights

Q: Can you provide more details on the backlog, which you mentioned is significantly above $4.5 billion? A: Howard Wenger, President, confirmed that the backlog has been increasing every quarter since going public. The book-to-bill ratio continues to be greater than 1, and the math supports that they exceeded $1 billion in bookings for the quarter.

Q: How do you view potential risks in your supply chain, particularly regarding steel and tariffs? A: Daniel Shugar, CEO, stated that Nextracker has strong relationships with US steel mills and has set up manufacturing facilities near these mills. They are producing all US tubes with 100% US steel, which has a cleaner manufacturing mix. Internationally, they have built supply chains in India and other markets, allowing them to produce locally or export as needed.

Q: Is the US market growing faster than expected, and do you see the 75-25 US to international mix holding into next year? A: Howard Wenger noted that the US demand is strong with record bookings this quarter. The mix is typically 60% to 70% US, and this is expected to hold, indicating growth both domestically and internationally.

Q: Can you discuss the backlog conversion rate and any changes in pricing? A: Howard Wenger explained that 87% of the backlog is expected to be realized over the next eight quarters, with the majority in the next four quarters. Pricing is stable globally, and the company continues to invest in innovation to reduce costs and increase energy yield.

Q: Have you seen any changes in quoting activity following the new domestic content rules? A: Daniel Shugar mentioned that the updated rules simplify achieving the bonus 10% ITC for customers and highlight Nextracker's strong US supply chain position. Howard Wenger added that more customers are requesting 100% domestic content, which may come with a modest price premium.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.