Q1 2025 Nextracker Inc Earnings Call

Unknown Executive, Howard Wenger, David Bennett, Daniel Shugar

Unknown Executive: These industries 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 these written materials, please review our earnings press release, shareholder letter, and our SEC filings, including our most recently filed Form 10-K, which are available on our website.

Speaker Change: Those statements are based on current beliefs, assumptions, and expectations, and speak only as of the current date.

Speaker Change: For more information on those written expertise, please review our earnings press release, shareholder letter, and our SEC filings, including our most recently filed Form 10-K , which are available on our website.

Unknown Executive: This information is subject to change, and we undertake no obligation to update any following statements as a result of new information, future events, or changes in our expertise. Please note, we will provide gap and non-gap measures on today's call. The full Non-Gas-to-Gas Reconciliation can be found in the appendix to the press release and the shareholder letter, as well as in the financial section of the IRS website.

This information is subject to change and we undertake no obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations.

Please note, we will provide GAAP and non-GAAP measures on today's call. The full non-GAAP to GAAP reconciliation can be found in the appendix to the press release and the shareholder letter, as well as the financial section of the IRM website. And now, I will turn the call over to our CEO and founder, Dan.

Dan: Thank you, Mary. Welcome to Nextracker's first quarter fiscal 2025 earnings call. I would like to extend a warm welcome to our new Chief Financial Officer, Chuck Boynton, who joined Nextracker several months ago and will be participating in our question and answer session today. Our fiscal year is off to a strong start with another quarter of solid execution. Our first quarter had a 50% year on year growth in revenue and Record Adjusted EBIT.

Unknown Executive: And now, I will turn the call over to our CEO and founder, Dan. Thank you, Mary.

Dan: Thank you, Mary. Welcome to Nextracker's first quarter fiscal 2025 earnings call.

Speaker Change: I would like to extend a warm welcome to our new Chief Financial Officer, Chuck Boynton, who joined Nextracker several months ago and will be participating in our questions and answers session today.

Dan: It was our sixth consecutive quarter of year-over-year growth and double-digit revenue growth. In Q1, we saw healthy demand in both the US and international markets. Our backlog increased quarter over quarter, and it's over $4 billion.

Speaker Change: Our fiscal year is off to a strong start with another quarter of solid execution.

Chuck Boyden: Our first quarter had a 50% year-on-year growth of revenue and record adjusted EBITDA.

Chuck Boyden: It was our sixth consecutive quarter of year-over-year growth.

Chuck Boyden: of year-over-year double-digit revenue growth.

Dan: In the quarter, we also shared new product solutions, such as our Agri-PV solution and our NX Low Carbon Tracker, and celebrated several factory expansions with our manufacturing partners. And today, we announce we're taking orders for solar tracker solutions with 100% U.S. domestic content capability with an expected shift date in early calendar 2025. We are also thrilled to welcome the teams from OJO and SolarPile International to Nextracker. We have extensive experience with foundation design, supply chain, and installation, and the technologies we acquired broaden the geotechnical use cases for solar.

Chuck Boyden: and our NX Low Carbon Tracker.

Chuck Boyden: And today, we announce we are taking orders for Solar Tracker solutions with 100% U.S. domestic content capability with an expected shift date in early calendar 2025.

Dan: We believe there is value for our customers in combining tracker systems and foundations to form an integrated solution. With these two acquisitions, we can provide a holistic integrated solution for a broad range of soil conditions for utility scale projects globally.

Speaker Change: We believe there is value to our customers in combining tracker systems and foundations to form an integrated solution. With these two acquisitions, we can provide a holistic, integrated solution for a broad range of soil conditions for utility-scale projects globally.

Dan: I'm so proud of our team. Fiscal 2025 is off to a great start, and we remain focused on executing our plan. As the world transitions to renewable energy, we are well positioned with our culture, Strategy, Team, and Market Position. This concludes my comments. We now look forward to your questions. Let me pass the call back to the operator.

Chuck Boyden: I'm so proud of our team. Fiscal 2025 is off to a great start, and we remain focused on executing our plan. As the world transitions to renewable energy, we are well positioned with our culture,

Speaker Change: This concludes my comments. We now look forward to your questions. Let me pass the call back to the operator.

Operator: We will now begin our question and answer session. At this time, if you'd like to ask a question, please press the star followed by one. In the event that you would like to remove your question, please press star followed by two. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We would also like to ask that all questions be limited to one. Our first question comes from Mark Strouse with the company J.P. Morgan. Mark, your line is now open.

Speaker Change: We will now begin our question and answer session. At this time, if you would like to ask a question, please press star followed by 1.

Speaker Change: Our first question comes from Mark Strouse with the company J.P. Morgan. Mark, your line is now open.

Mark Strouse: Yes, good evening. Thank you very much for taking our questions and appreciating the new investment.

Mark Strauss: Yes, good evening. Thank you very much for taking our questions and I appreciate the new invest.

Mark Strouse: So, I wanted to start with kind of the domestic content. Can you talk about how your customer conversations are shaping up? If you're seeing firm orders yet, just kind of talk about maybe the pipeline activity. Are things kind of firing on all cylinders yet? Are customers kind of waiting? That's language to be finalized. Are they waiting for the election?

Speaker Change: [inaudible]

Mark Strauss: So, I wanted to start with kind of the domestic content.

Mark Strouse: Just any update there. And I've got a quick follow-up. Thank you. Hey, Mark, this is Howard Wenger.

Mark Strauss: That language to be finalized, are they waiting for the election, just any update there, and then I've got a quick follow-up. Thank you.

Howard Wenger: I'm going to start, and then Dan is going to finish. So demand is healthy for trackers and for trackers with domestic content. We'll start there. We have firm orders for domestic content, in a wide range of domestic content, typically between 40% all the way up to 100%. Now we're taking orders, and we actually have an order for a 100% domestic content tracker. And customers are not equivocating with respect to placing those orders. They're not waiting for additional guidance. The guidance came out from Treasury. It's very clear. It's favorable for trackers and for Nextracker.

Speaker Change: Hey Mark, this is Howard Wenger. I'm going to start and then Dan is going to finish.

Speaker Change: In a wide range of domestic content, typically between 40% all the way up to 100% now we're taking orders, and we actually have an order for a 100% domestic content tracker.

Dan: And we, as we've discussed previously, stood up over 20 facilities with manufacturing partners to deliver domestic content with an annual capacity of over 30 gigawatts. So we're really in a very good position to deliver. Dan?

Speaker Change: As we've discussed previously, we've stood up over 20 facilities with manufacturing partners to deliver our domestic content with an annual capacity of over 30 gigawatts. So we're really in very good position to deliver. Dan?

Dan: Mark, thanks for asking about Mr. Mapp's content. Building on Howard's answer, it was very helpful when Treasury came out with the new safe harbor table. Their original rules can still be elected by customers, but what's helpful here is that they call out specific components. Torque Tubes, Fasteners, Slew Drives, Dampers, Motors, Controllers, Rails, and if you can build those components to that guideline, then there's an additional credit comes in with the production labor.

Speaker Change: Mark, thanks for asking about Mr. Mapp's content. Building on Howard's answer, it was very hopeful when Treasury came out with

Speaker Change: The USA Farmer table, their original rules still can be elected by customers, but what's helpful here is they call out

Speaker Change: Specific Components

Dan: Customers do value that. We stood up and had these public factory openings at eight factories, including our electronic controller. We had an event in Silicon Valley with a partner, and it's very tangible. Customers understand it, and we're getting great feedback.

Speaker Change: Thanks, Mark.

Operator: Our next question comes from Philip Shen with the company Roth Capital Partners. Philip, your line is now open.

Speaker Change: Our next question comes from Philip Shen with the company Roth Capital Partners. Philip, your line is now open.

Philip Shen: Hey guys, thanks for taking my questions. To what degree are you guys dealing with the Southeast Asia ADCVD impacts and the potential for that to be slowing the market down? Our work, as you may know, suggests a 2025 slowdown. Have you seen some projects push out?

Philip Shin: Hey guys, thanks for taking my questions.

Philip Shin: To what degree are you guys dealing with the Southeast Asia ADC-VD impacts and

Speaker Change: The potential for that to be slowing the market down, our work as you may know suggests a 2025 slowdown. Have you seen some projects push out? Our checks also suggest that you guys are winning a substantial amount of money.

Philip Shen: Our checks also suggest that you guys are winning a substantial amount of share as well. So just curious if you'll be able to offset the challenges with the tariff and maybe some other uncertainty with the share gain. And then from a booking standpoint, do you expect that the strength in the book to bill to continue to be above one in the coming quarter?

Dan Sugar: Phil, Dan Sugar here. I'll take the first half of your question, dealing with the ABCBD, and Howard will then comment on booking. We read your reports, which are always great. And your team is, you know, very comprehensive.

Dan Shugar: Bill, Dan Sugar here. I'll take the first half of your question dealing with the ABCBD and Howard will then comment on bookings.

Dan Sugar: And actually, we tested some of those questions with our commercial team. We would characterize the ABCVD issues as a secondary headwind. There It could be an issue on some projects, being happening later than the customer would otherwise want them to. We think the primary impact on the schedule of projects relates to construction permit or ear connection delays. And our perspective is that it is taking longer for projects to be fulfilled in real life.

Speaker Change: We would characterize the ABCVD issues as a secondary headwind.

Speaker Change: there it could be an issue on some projects

Howard Wenger: being happening later than the customer would otherwise want them to.

Howard Wenger: We think the primary, or we've seen the primary impact.

Speaker Change: [inaudible]

Speaker Change: Construction Permits

Speaker Change: And our perspective is, it is taking longer for projects to...

Dan Sugar: Due to those factors, secondarily for the project we've chatted with customers about. ABCBD issues and so it is a factor, but we've seen those other issues be larger factors. Howard, do you want to comment on his bookings? Sure.

Speaker Change: be fulfilled in real life.

Speaker Change: that we've chatted with customers about ABCVD issues and

Speaker Change: So it is a factor, but we've seen those other issues be larger factors.

Howard Wenger: So we had a really strong quarter in execution and delivered $720 million in revenue for Q1. So we're off to a great start, as Dan mentioned in his remarks, and with that, we will increase our backlog, quarter to quarter. And so it continues to be over 4 billion; that gives us a lot of visibility. One of the things we noted in the shareholder letter, which we encourage everybody to read; it's online, gives a lot more detail.

Howard Wenger: Howard, do you want to comment on his bookings? Sure.

Howard Wenger: quarter over quarter. And so it continues to be over $4 billion. That gives us a lot of visibility. One of the things we noted in the shareholder letter, which we encourage everybody to read, it's online, gives a lot more detail,

Howard Wenger: One of the things we noted is that

Howard Wenger: 80% of that backlog is expected to be realized over the next eight quarters.

Howard Wenger: One of the things we noted is that 80% of that backlog is expected to be realized over the next eight quarters, and so it gives us a lot of visibility. We did have a strong corridor in bookings once again, and we do not provide guidance on bookings and backlog. But the color is that the market continues to be healthy and we're getting at least our fair share of the market. Thanks, Phil.

Howard Wenger: And so it gives us a lot of visibility. We did have a strong

Howard Wenger: quarter in bookings once again.

Speaker Change: We do not provide guidance on bookings and backlog, but the color is that the market continues to be healthy.

Speaker Change: We're getting at least our fair share of the market. Thanks, Bill.

Operator: Our next question comes from Brian Lee with the company Goldman Sachs. Brian, your line is not open.

Speaker Change: Next question, please.

Speaker Change: Our next question comes from Brian Lee with the company Goldman Sachs. Brian , your line is now open.

Brian Lee: Hey, guys, good afternoon. Thanks for taking the questions and kudos on the solid start to the year. I guess in that context, I was just curious, if I look at the guidance for the year, you had a strong start here in fiscal Q1, but the adjusted EBITDA midpoint, you know, 22% of sales, that's remaining unchanged. You just did 24 in Q1.

Brian Lee: Hey guys, good afternoon. Thanks for taking the questions and kudos on the solid start to the year. I guess in that context, I was just curious, if I look at the guidance for the year, you know, you had a strong start here in fiscal Q1, but the adjusted EBITDA midpoint,

Speaker Change: Can you kind of speak to what's driving that? Is it price? Is it mix? Is it maybe some conservatism you're baking in? Just curious as to what's driving that cadence. And then in the shareholder letter, which is great, I think, Dan, you mentioned the grid enhancing technologies, which I know is getting a lot more focus. Is there an opportunity for you guys to directly participate in that? Is that part of your sort of M&A wheelhouse, if at all? Just would be curious.

Speaker Change: and Dan or Howard can take a second. Brian , good to hear from you. So as we look at the strong Q1, really, really strong both gross margin and EBITDA margin.

Speaker Change: And, you know, we're proud of those results. As you look out to the back half of the year, there's going to be a lot more international mix. Our expectation is, and again, it's hard to look at it one quarter because we look at this on an annual basis or even multi-year basis.

Speaker Change: But we look at the year

Speaker Change: and we expect to see a stronger revenue contribution from our international markets.

Brian Lee: So it does imply some moderation moving through the year. Can you kind of speak to what's driving that? Is it price? Is it mix? Is it maybe some conservatism you're baking in? Just curious as to what's driving that cadence.

Speaker Change: And as you know, the margin profile in the U.S. is really, really strong. And so overall, you know, we're off to a great start.

Speaker Change: We do see the timing, you know, things move in, they move out. And Q1 really was a real tailwind for us. And we expected a strong year, but it's going to be a bit more balanced with our international mix. In the shareholder letter,

Speaker Change: We outline our expectation of approximately two-thirds U.S., one-third international, and in Q1 it was more like 71-29. Thank you, Brian .

Unknown Executive: And then in the shareholder letter, which is great, Dan, you mentioned the grid-enhancing technologies, which I know are getting a lot more focus. Is there an opportunity for you guys to directly participate in that? Is that part of your sort of M&A wheelhouse, if at all? Just would be curious if that's something you can help the industry out with directly. Thanks, guys.

Speaker Change: Okay, Brian , thanks for the question about the grid enhancing technologies.

Unknown Executive: Great. I'll take the first part, and Dan or Howard can take the second.

Unknown Executive: Brian, good to hear from you. So as we look at the strong Q1, really, really strong both gross margin and EBITDA margin, and we're proud of those results. As you look out to the back half of the year, there's going to be a lot more international mix. Our expectation is, and again, it's hard to look at in one quarter because we look at this on an annual basis or even a multi-year basis.

Unknown Executive: But we look at the year, and we expect to see a stronger revenue contribution from our international markets. And, as you know, the margin profile in the U.S. is really, really strong. And so overall, you know, we're off to a great start. We do see the timing, you know, things move in, they move out. And Q1 really was a real tailwind for us.

Unknown Executive: And we expected a strong year, but it's going to be a bit more balanced with our international mix. In the shareholder letter, we outline our expectation of approximately two-thirds U.S., one-third international. And in Q1, it was more like 71-29.

Speaker Change: So.

Speaker Change: When we look at

Speaker Change: Such a strong percentage of the interconnection queue being solar and solar plus storage.

Dan: Thank you, Brian. Okay, Ryan, thanks for the question about grid-enhancing technology. So, when we look at such a strong percentage of the interconnection queue being solar and solar plus storage, we've covered on previous calls that over 7,000 projects have applied to the interconnected grid since 2000.

Speaker Change: We've covered on previous calls over 7,000 projects.

Speaker Change: have applied to be interconnected to grid.

Dan: Gigawatts, much more than the interconnected capacity of the entire U.S. grid today, with 80% of the queue being dominated by solar and solar plus storage. The biggest single issue governing those those projects is connection. And so, if you look historically, it takes a long time to build a transmission line. I started my career as an electrical engineer as a transmission planner working for Pacific Gas and Electric Company in the very distant past, in the 1980s. But it's a big deal to build a new line. You need to get rights away; there's eminent domain, folks don't like that.

Speaker Change: [inaudible]

Speaker Change: Much more than the interconnected capacity of the entire U.S. grid today. Eighty percent of the queue being dominated by solar and solar plus storage.

Speaker Change: The biggest single issue governing those projects is connection to the grid.

Speaker Change: And so.

Speaker Change: It takes a long time to build a transmission line.

Dan: Long Transmission Lines Bill. There are three grid-enhancing technologies that have become commercialized. Over the years, that can you can use the existing lines or the existing corridors of transmission often with the same transmission towers to get vastly more power transmitted in the same corridor. And those relate to using dynamic thermal rating, where you put a device on the line to actually measure the temperature of the line in real time. If the wind is blowing perpendicular across the line, the line's coolers can transmit vastly more power on that line. There are new conductors where you can take the same tower and just put a new wire on the line that's the same diameter and get 50 to 100% more power on the same corridor.

Speaker Change: There are three grid enhancing technologies that have become commercialized over the over the years that can you can use the existing lines or the existing corridors of transmission often with the same transmission towers to get

Speaker Change: vastly more power transmitted in the same corridor.

Speaker Change: And those relate to using dynamic thermal rating, where you put a device on the line to actually measure the temperature of the line in real time, if the wind is blowing.

Speaker Change: perpendicular across the line. The line's coolers can transmit vastly more power on that line.

Speaker Change: There's new conductors where you can take the same tower and just put a new wire on the line that's the same diameter and get 50 to 100% more power on the same corridor.

Dan: The US has lagged international adoption of these technologies. We've seen India and Europe really taking off with these technologies. We think there's a tremendous opportunity. Recently, I spoke at a major conference, I was there with some US utility executives, and we were engaged. There's a tremendous push for this from the Federal Energy Regulatory Commission, the US Department of Energy, we're seeing some utility commissions pushing for it, and some leading utilities are starting to lean in and do this work.

Speaker Change: The U.S. has lagged international adoption of these technologies. We've seen India and Europe really taking off on these technologies.

Speaker Change: We think there's a tremendous opportunity. Recently I spoke in a major conference.

Speaker Change: I was there with some U.S. utility executives, we were engaged, there's a tremendous push on this from the Federal Energy Regulatory Commission.

Speaker Change: The U.S. Department of Energy, we're seeing some utility commissions pushing on it, some leading utilities starting to lean in and do this work.

Dan: And we think it's right for the ratepayer. And it definitely can help really accelerate renewables. We featured all this in our shareholder letter because it's something that hasn't been sort of focused on, but in the renewable industry, we think it's very important. And it could provide a big part of the solution to getting these projects connected quicker. Thanks for your questions, Ryan. Next question, please.

Speaker Change: And we think it's right for the ratepayer and it definitely can help really accelerate renewables. We featured all this in our

Speaker Change: shareholder letter because it's something that has been sort of not focused on but in the renewable industry we think it's very important and it could provide a big part of the solution to getting these projects connected quicker.

Speaker Change: Thanks for your questions, Ryan. Next question, please.

Operator: Our next question comes from Vikram Bagri with the company City. Vikram, your line is not open.

Vikram Bagri: Good afternoon, everyone. I wanted to talk about the acquisitions that you guys did. You obviously have a much stronger footing with these two acquisitions, SolarPile and Audio, in this space. I was wondering, what's the attach rate of these two companies combined with your systems? What do you see that attach rate going forward? And if you can share the philosophy around acquisitions also. The letter says that the acquisitions will be accretive over time.

Speaker Change: I was wondering, what's the attach rate of these two companies combined with your systems? What do you see that attach rate going forward? And if you can share the philosophy around acquisitions also, the letter says the acquisitions will be...

Vikram Bagri: I was wondering, like, how much time and what you think the acquisition multiple will be over that time period once the full potential of these acquisitions is shown in your financials? And then I had one housekeeping question. The letter mentioned gross margin being impacted by higher costs. I imagine gross supply chain costs, if you can quantify that too. Thank you.

Daniel Shugar: I was wondering like in how much time and what do you think is the acquisition multiple over that time period once the full potential of these acquisitions is shown in your financials? And then I had one housekeeping question. The letter mentioned gross margin was impacted by higher costs.

Speaker Change: I imagine food supply chain costs, if you can quantify that too. Thank you.

Dan: Thank you, Vikram. We're very excited about the acquisitions of Ojo and SolarPilot International because they increase the geotechnical and difficult soil areas where solar can be practical to be installed. And we're seeing an increase in the prevalence of difficult sites, for these OJOs, have very unique Needs and Methods and Intellectual Property and Machines to Address Hard Rock Type Applications SolarPilot International is more on the softer soils and the frost keys, so freezing and thawing type places, etc.

Speaker Change: Thank you, Vikram.

Speaker Change: We're very excited about the acquisitions of Ojo and SolarPilot International because they increase

Speaker Change: The geotechnical and difficult soil

Speaker Change: has very unique

Dan: As solar has proliferated from California and the Southwest to other areas in the U.S. and overseas, other places, we've seen a higher percentage of these types of difficult soil conditions, and we've heard from our customers the same thing. Now, we're not speaking to a catchphrase.

Speaker Change: proliferated from California in the southwest to other areas in the U.S. and overseas, other places, we've seen a higher percentage of these types of difficult soil conditions.

Speaker Change: And we've heard from our customers the same thing. Now, we're not speaking to a catch rate.

Dan: But what I can share is both of these technologies are fairly early in the adoption curve for these in the market. Nextracker, when we first saw the Yojo technology years ago, we did, lean in. We supported them.

Dan: We became the first UL-certified tracker of the Ojo Foundation technology, and we participated in some of their early projects. What I will say is Howard and I sat down with a number of customers, and there was a lot of excitement about the combination. Ojo has fantastic technology, but the company was not well capitalized. They saw Nextracker being able to significantly support the company, and the comfort factor of customers was a lot stronger. But with both.

Speaker Change: There was a lot of excitement about the combination. Ojo has fantastic technology. The company was not well capitalized. They saw Nextracker being able to significantly

Chuck Boynton: Ojo and SolarPanel International. We have really vetted and validated these technologies, both in our test facilities that we have, joined with our headquarters and other locations, as well as with full-scale projects with customers out in the real world. And so we were very confident about the ability of these technologies to perform and to be able to expand the range of where solar makes sense. Chuck, can you handle the next question, please?

Speaker Change: We have really vetted, validated these technologies, both in our test facilities that we have.

Speaker Change: And so we were very confident about...

Chuck Boynton: Yes. Vikram, on the cost side for the supply chain, the backdrop is that the revenue that we recognized in Q1 was booked many, many quarters ago in some cases. These are generally long projects, and the costs that you've seen in transport, freight, logistics, containers have gone up in the last three quarters. The Suez Canal created an issue where shipping rates went up, and fast boat costs have gone up. We contemplate the cost of steel, and generally that is kind of hedged with our customers. But a lot of supply chain costs can be variable. And so this quarter, as opposed to last quarter, there was a slight increase in costs. Thank you.

Speaker Change: And the costs that you've seen in transport, freight, logistics, containers.

Speaker Change: has gone up in the last three quarters. Suez Canal created an issue where shipping rates went up, fast boat costs have gone up.

Speaker Change: We contemplate generally the cost of steel, and generally that is...

Speaker Change: kind of hedged with our customers. But a lot of the supply chain costs can be variable. And so this quarter, as opposed to last quarter, there was a slight increase in costs. Thank you. Next question, please.

Operator: Our next question comes from Praneeth Satish with the company Wells Fargo. Praneeth, your line is now open. Thanks.

Speaker Change: Our next question comes from Praneeth Satish with the company Wells Fargo. Praneeth, your line is now open.

Praneeth Satish: Thanks. Let me just say I'm a big fan of this new format in the expanded Q&A.

Praneeth Satish: Thanks. Let me just say I'm a big fan of this new format in the expanded Q&A. So anyway, my question, I guess I just wanted to clarify one thing on your backlog.

Praneeth Satish: So anyway, my question. I guess I just wanted to clarify one thing about your backlog. You mentioned that approximately 80% of the backlog will be recognized over the next eight quarters. Is that a shift at all from the prior commentary where I think you've said the backlog will be realized within eight quarters as some of the deals got elongated at all? And then how long will it take to realize that remaining 20%?

Praneeth Satish: You mentioned that approximately 80% of the backlog will be recognized over the next eight quarters. Is that a shift at all from the prior commentary where I think you've said the backlog will be realized within eight quarters as some of the deals got elongated at all? And then how long will it take to realize that remaining 20%?

Howard Wenger: Thanks for the question, Praneeth. This is Howard Wenger.

Praneeth Satish: Thanks for the question, Praneeth. This is Howard Wenger. It is a bit of a shift, honestly. The project life cycles are getting...

Howard Wenger: It is a bit of a shift. Honestly, the project life cycles are getting a little bit longer. Dan mentioned that permitting and interconnection are now the drivers for the long pole in the tent for getting projects perfected.

Praneeth Satish: That has, it's taking more time than it did two years ago, three years ago.

Praneeth Satish: Things like module availability, which is a secondary or maybe even a tertiary issue. Project cycles are moving somewhat to the right.

Howard Wenger: That is taking more time than it did two years ago, three years ago. And so, in addition to things like module availability, which is a secondary or maybe even a tertiary issue, project cycles are moving somewhat to the right. The flip side is that we're getting even more visibility, longer-term visibility, which is good for the company.

Praneeth Satish: The flip side is that we're getting even more visibility, longer-term visibility, which is good for the company. That backlog is still solid. Projects are not dropping out.

Chuck Boynton: That backlog is still solid; projects are not dropping out. In fact, we did a review of our projects internally. We literally had one project drop out in the last 12 months. So it's a very, very solid backlog. And of course, we talked about the, we have a high bar for what goes into our backlog. So, yes, project cycles are lengthening to a degree. We factor that into our outlook and feel really good about it.

Praneeth Satish: We factor that into our outlook.

Chuck Boynton: Chuck, did you have something you wanted to add? No, well said, Howard. I think one project is less than 3%, so it's one out of hundreds and hundreds of projects. Yeah, yeah, just for context. Yeah, well, less than 1%. Okay, thank you for the question, Praneeth.

Speaker Change: Yeah. Yeah, just for context. Yeah, it's less than 1%. It's much less than 1%. Okay, thank you for the question, Praneeth.

Operator: Absolutely. Our next question comes from Kashy Harris with the company Piper Sandler. Kashy, your line is now open.

Speaker Change: Next question.

Speaker Change: Absolutely. Our next question comes from Kashy Harris with the company Piper Sandler. Kashy, your line is now open.

Kashy Harris: Good afternoon, and thanks for taking my question. You know, just a quick one on the guidance. You know, Q1 was quite strong relative to your expectations, but I think the mid-single-digit growth in Q2 implies a sequential decline. And I was just wondering if you could speak to the driver of the sequential decline into Q2, whether it's conservatism or if there's something else going on there. Thank you.

Kashy Harris: Good afternoon, and thanks for taking my question. Just a quick one on the guidance. Q1 was quite strong relative to your expectations, but I think the mid-single-digit growth in Q2 implies a sequential decline.

Unknown Executive: I'd say first and foremost that we're a customer-driven company. We want to deliver on our customers' schedules. They had a lot of scheduled deliveries they wanted in Q1, and deals got pulled into Q1. And that's the real driver.

Speaker Change: They had a lot of scheduled deliveries they wanted in Q1, and deals got pulled into Q1. And that's the real driver. We're not pushing to drive an outcome with our customers. We're listening to them and driving to what our customers want.

Unknown Executive: We're not pushing to drive an outcome with our customers. We're listening to them and driving to what our customers want. And that's why you can't just look at one quarter. Q1 was a fantastic quarter. Q2, we're guiding mid-single-digit growth year over year. We still see growth, but it's driven by customer schedules, supported by strong backlog. And looking at this really on an annual basis.

Praneeth Satish: And that's why you can't just look at one quarter. Q1 was a fantastic quarter. Q2, you know, we're, you know, guiding mid-single-digit growth year over year. We still see growth, but it's driven by customer schedules.

Operator: Thank you. Next question. Our next question comes from Dimple Kasai with the company Bank of America. Dimple, your line is not open.

Praneeth Satish: Our next question comes from Dimple Gossi with the company Bank of America. Dimple, your line is now open.

Operator: Our next question comes from Dimple Kasai with the company Bank of America. Dimple, your line is now open.

Dimple Kasai: So, you know, from a pricing power perspective or sharing benefits, can you speak a little bit more on that?

Howard Wenger: This is Howard Wenger. It's a factor in the US. Of course, that's two-thirds of our business. It's the most attractive market in the world for Nextracker from a pricing and margin perspective and just the strength of our relationships in the size of the market. It's a factor having domestic content. We made the decision actually during the pandemic when there were all those delays in logistics that still costs were going up overseas. We made the decision to reshore onshore manufacturing, and it turned out to be a good decision because IRA came along and we accelerated this transition to now having over 20 factories.

Dimple Kasai: This is Howard Wenger. It's a factor in the U.S. Of course, that's two-thirds of our business. It's the most attractive market in the world for Nextracker.

Dimple Kasai: from a pricing and margin perspective.

Dimple Kasai: and just strength of our relationships in the size of the market. It's a factor, having domestic content. And we made the decision, actually during the pandemic, when we there are all those delays in logistics.

Dimple Kasai: Steel costs going up overseas.

Dimple Kasai: We made the decision to reshore onshore manufacturing. Turned out to be a good decision because IRA came along and we accelerated.

Howard Wenger: And so we believe we are in a very good position. We think we're differentially able to offer high levels of domestic contact, and we're proud to be the first company to be able to deliver in early 2025 a 100% domestic contact product. Appreciate the question. Thank you. Our next question comes from Jordan Levy with the company Truist Jordan. Your line is now open.

Dimple Kasai: this transition to now having over 20 factories.

Dimple Kasai: We are in very good position. We think we're differentially

Dimple Kasai: We are differentially able to offer high levels of domestic content and we're proud to be the first company to be able to deliver in early 2025 a 100% domestic content product.

Dimple Kasai: Appreciate the questions. Thank you.

Operator: Our next question comes from Jordan Levy with the company Truist. Jordan, your line is now open.

Speaker Change: Our next question comes from Jordan Levy with the company Truist. Jordan, your line is now open.

Jordan Levy: Afternoon, all. I appreciate all the commentary. I know you've done work in the agri-PV space before, and I appreciate that.

Jordan Levy: and everything you put in the shareholder letter about that, nice to see a specific product set. I wanted to get a sense of how you're thinking about the size and market opportunity there and the value you can bring.

Dan: Hey, Jordan, thanks for that. We've been passionate about Agri-TV since founding the company at our Center of Solar Excellence in Fremont, which you visited once. So, thank you for that.

Speaker Change: Hey Jordan, thanks for that.

Speaker Change: We've been passionate about Agri-PV since founding the company, actually, at our Center of Solar Excellence in Fremont, which you visited once, so thank you for that. You know, you saw at that time, we've been growing

Dan: You know, you saw at that time, we've been growing crops amidst the solar panels there. And I think the amount of uptake of agri-PV is going to be very market specific. Some markets, it could be a negligible percent, and some markets, it could be a dominant percent.

Speaker Change: growing.

Speaker Change: Crop.

Speaker Change: Amidst the solar panel there.

Speaker Change: And I think the amount of uptake of Agri-PB is going to be very market specific.

Speaker Change: Some markets it could be a negligible percent and some markets it could be a dominant percent.

Dan: One of our customer projects, the Mammoth Solar Project, which was developed by Doral. It's in Indiana, where there was a conference last month. They won the Agri-Pd Project of the Year. On that particular project, it's a combination of ranching and agriculture. They have, for example, 1,500 sheep at that project doing vegetation management, and they are commencing a program to grow produce there with local farmers. What we've seen is, depending on where you are, much greater community acceptance, and it can provide a dual income stream to existing communities that might be involved in agricultural ranching, and Weave has developed a number of projects in multiple countries on multiple continents with that.

Speaker Change: One of our customer projects, the Mammoth Solar Project, which was developed by Doral, it's in Indiana.

Speaker Change: There was a conference last month.

Speaker Change: They won the Agri-PV project of the year. On that particular project, it's a combination of ranching and

Speaker Change: Agriculture, they have, for example, 1,500 sheep at that project doing vegetation management, and they are commencing a program to grow produce there with local farmers.

Speaker Change: The what we've seen is there can be depending on where you are

Speaker Change: Much greater community acceptance and it can provide a dual income stream to existing communities that might be involved in agriculture or ranching.

Speaker Change: and Weave.

Speaker Change: Developed a number of projects.

Speaker Change: on multiple, in multiple countries, on multiple continents with that.

Dan: We, Nextracker, have a very robust R&D program in solar. We have, In addition to our headquarters R&D center, we have a very extensive Center Solar X in Brazil, and we have an extensive agri-PV R.D. program that's been conducted there for several years.

Speaker Change: In addition to our headquarters R&D center, we have a very extensive

Speaker Change: Center of Solar Excellence in Brazil and we have a extensive Agri-PV

Dan: We're measuring things like yield per square area for different crop types, the amount of irradiance, how to optimize the operation of the solar power system in conformance with needs for crops, and so forth. So it's early days for Agri-PV. We think it's a great use case, and we think our architecture, with unimpeded roads to be able to navigate through the systems without a mechanical impediment, facilitates more adoption in the agri PV area. So we're excited about the prospects here, and we'll be reporting on them over time as we learn from our customers and introduce new technologies in this area.

Speaker Change: How to optimize the operation of the solar power system in conformance with needs for crops and so forth. So, it's early days for Agri-PV.

Speaker Change: facilitates

Operator: Our next question comes from Joseph Osha with the company Guggenheim Partners. Joseph, your line is now open.

Speaker Change: Our next question comes from Joseph Osha with the company Guggenheim Partners. Joseph, your line is now open.

Joseph Osha: Hi there, hi Chuck, congratulations on being part of such a great team. I did, I wanted to ask, I guess, a question related to what Phil asked.

Joseph Osha: I did, I wanted to, I guess a question related to what Phil asked. I think we all know that we have this December deadline.

Joseph Osha: I think we all know that we have this December deadline looming for panels brought in under the tariff exclusion. I'm curious as to whether any of your customers are talking to you about, you know, potential complexities related to, you know, modules that aren't put in by that December deadline. Thank you.

Dan: Thanks for your thanks for your shout out for Chuck, Joe. We're thrilled to have Chuck join our amazing finance and accounting team, which I will say won the Adam Smith Awards last quarter as a testament to the amazing work done by our Treasury Department. Again, on the panel, the ABCD situation, and this end of year deadline. We have spoken to customers, and we engaged our commercial team in preparation for this investor call. We've just seen that as a secondary factor where, you know, that's impacted, that our customers are concerned about or talking to us about. The larger factors have been construction permitting and Inter-Electrical Interconnection. So those, we just haven't seen that be a primary factor.

Speaker Change: that's impacted, that our customers are concerned about or talking to us about.

Speaker Change: So those, we just haven't seen that be a primary factor. It's also, I will say, very gratifying to see.

Dan: It's also, I will say, very gratifying to see the ramping up of quite a few solar panel manufacturing operations in the United States with both legacy producers in the U.S. and new producers, and we encourage more of that. And we're doing everything we can to help them as they validate the product on trackers and things like that. Thank you. Thank you, Joe.

Joseph Osha: The ramping of quite a few solar panel manufacturing

Joseph Osha: And we're doing everything we can to help them as a, you know, validate the product on trackers and things like that. Thank you. Thank you, Joe. Next question, please.

Operator: Our next question comes from John Windham with the company UBS. John, your line is now open.

John Windham: Perfect. I'll reiterate.

John Windham: I like the format and the extra time for questions. My question would be this: on the two acquisitions, the strategic rationale makes sense. Why now? would be my question.

John Windham: I can't help but notice that the total acquisition spend lines almost perfectly with the cumulative 45x tax credit that you have received to date. Should we view it that way, that the 45x tax credits have given you a little bit of dry powder? Thanks for taking the question.

Joseph Osha: Now, and so we have also the ability to execute those strategic acquisitions. I will say we're very

Dan: Yeah, so the rationale, look, we went public a year and a half ago, and we were, we completed our spin out. Hi, you know, just a few quarters to a quarter and a half ago.

Dan: We have our liquidity is in a growing and strong place. We mentioned the shareholder letter. We upsized our revolver.

Dan: Now, and so we also have the ability to execute those strategic acquisitions. I will say we're very disciplined. We're very diligent, we approach things from a customer value standpoint, and we want to see things tested in the field. We have a long history with both.

Joseph Osha: We're very diligent. We approach things from a...

Dan: Ojo, and with SolarPile International. And in the case of those two technologies, we've just seen an increased prevalence of these very difficult geotechnical site conditions. These two technologies offer real value to customers by lowering cost and having less uncertainty on the project. In the case of also the OJO technology, it's light on land, meaning that in some of the areas where solar is getting deployed, there's concern around vehicular traffic on the site, both disturbance to sites that have, and there's concern about the environmental aspects of the site.

Joseph Osha: Hojo

Speaker Change: to have less uncertainty on the project. In the case of also the OJO technology, it's light on land.

Speaker Change: In some of the areas where solar is getting deployed, there's concern around vehicular traffic on the site.

Dan: So if you have, with the OJO technology, one you pass up, a machine can do the job that two to three legacy type machines would do. And so for all these reasons, there's a market need, we validated it, and we're in a position where we can actually transact at value to customers. So that was that those are the factors that built on our strategic rationale.

Joseph Osha: There's concern about the environmental aspects of the site. So if you have, with the OJO technology, one

Joseph Osha: You pass of a machine can do the job that two to three legacy type machines would do. And so for all these reasons, there's there's a market need. We validated it. We're in a position where we can actually.

Dan: John, thank you. Next question. Our next question comes from Dylan Naceno with the company Wolf Research. Dylan, your line is now open. Hey, good afternoon.

Operator: Our next question comes from Dylan Naceno with the company Wolf Research. Dylan, your line is now open.

Speaker Change: Our next question comes from Dillon Nasono with the company Wolf Research. Dillon, your line is now open.

Dillon Nasono: Hey, good afternoon. So I know you guys have shared your views in the past on just IRA risks and election risks, but just curious in your conversations with your customers.

Dillon Nasono: you know specifically how did they view the election risks and you know is there any way that it would impact their timelines or as they wait certainty? Thank you.

Howard Wenger: This is Howard Wenger. There's Of course, you're going to get some differences in views. But I would say the majority is a shared view that solar is bipartisan, that from a manufacturing and jobs perspective, where the projects are going, where the manufacturing is taking place, is predominantly or majority in the red, so-called red states, Republican-controlled states. And so it actually benefits both parties. We as a company have done well in all administrations. We did well in the Obama administration and in the Trump administration previously.

Howard Wenger: This is Howard Wenger.

Joseph Osha: There's

Speaker Change: Of course you're going to get some differences in views, but I would say the majority is a shared view that solar is bipartisan.

Speaker Change: That, from a manufacturing and jobs perspective, where the projects are going, where the manufacturing is taking place, is predominantly, or majority, in the so-called red states.

Speaker Change: Republican-controlled states. And so it actually benefits both parties.

Speaker Change: We, as a company, have done well in all administrations. We did well in the Obama administration, the Trump administration.

Howard Wenger: So there's the fundamental belief, because it's reality, that solar is the lowest cost form of energy on the planet. And that's going to be the driver, in addition to it being clean power, which if you look at the demand that's increasing for electric power in the US, It's being driven very much by server farms that are supporting AI, data centers, and electric vehicles. And so it's part of the electric and clean power revolution that's taking place in the United States, which is needed, and is the fundamental premise and underpinning for the Inflation Reduction Act. Dan mentioned that tax credits, and particularly the 30% ITC, are the fundamental pillar of the Inflation Reduction Act. I mean, and tax credits historically have not been repealed. In fact, that would be unprecedented.

Joseph Osha: previously. So there's the fundamental belief, because it's reality, that solar is the lowest cost form of energy on the planet.

Joseph Osha: And that's going to be the driver, in addition to it being clean.

Joseph Osha: Power, which, if you look at the demand that's increasing, the electric demand that's increasing in the U.S.

Joseph Osha: It's being driven very much by server farms that are supporting AI, data centers.

Joseph Osha: electric vehicles. And so it's part of the the electric and clean power revolution that's taking place in the United States, which is needed, and is a fundamental premise and underpinning for the Inflation Reduction Act.

Joseph Osha: And so Dan mentioned that tax credits, and particularly the 30% ITC, is the fundamental pillar of the Inflation Reduction Act. I mean, and tax credits historically have not been repealed.

Speaker Change: In fact, that would be unprecedented.

Howard Wenger: Um, so the vast majority, from the customer perspective, are continuing to develop their pipeline. They're continuing to invest millions, tens of millions, hundreds of millions of dollars. You're seeing more money actually going into development and Power Plant Ownership. And so, as we mentioned before, the demand for our products is still very healthy in the U.S., even with the election upcoming. Appreciate the question. Next question, please.

Joseph Osha: So...

Speaker Change: The vast majority, from the customer perspective, they're continuing to develop their pipelines.

Speaker Change: They're continuing to invest millions, tens of millions, hundreds of millions of dollars. You're seeing more money actually going into development.

Speaker Change: and Power Plant Ownership. And so, as we mentioned before, the demand for our products is still very healthy in the U.S., even with the election upcoming. Appreciate the question.

Operator: Our next question comes from Maheep Mandloi with the company Mizuho. Maheep, your line is now open.

Speaker Change: Next question please. Our next question comes from Maheep Mandloi with the company Mizuho. Maheep, your line is now open.

Maheep Mandloi: Hey, thanks for the questions and apologies for some background noise here, if any, and just on the Ojo and the Tracker Foundation acquisitions, could you talk about the market share over there? I'm trying to think if there's any antitrust concerns with that acquisition. And separately, in the prepared remarks or in the We have also talked about other technologies, other great technologies. Is that kind of directing new acquisitions or like the direction in which you would move or any guidance on that would be useful?

Maheep Mandloi: Hey, thanks for the questions and apologies for some background noise here.

Speaker Change: And just on the Ojo and the Tracker Foundation acquisitions...

Maheep Mandloi: Please talk about the market share over there. I'm trying to think if there's any antitrust concerns with that acquisition. And separately, in the prepared remarks or in the...

Speaker Change: We kind of talked about other technologies, other great technologies. Is that kind of directing new acquisitions or like a direction in which you would move or any guidance on that would be useful. Thanks.

Dan: Thanks for your question, Maheep. With respect to the market share of Ojo and the SolarPile International acquisitions in the foundation market, it's a very, very small percentage, a de minimis percentage in those markets.

Speaker Change: Hi, thanks for your question, Maheep.

Speaker Change: With respect to the market share of...

Speaker Change: Ojo and the SolarPile International acquisitions in the foundation market. It's a very, very small percentage, a de minimis percentage.

Speaker Change: in those markets. As we noted in the OJO press release,

Dan: As we noted in the Ojo press release, we do plan to continue to make that technology available to other trackers that have been qualified to use that technology going forward. We think it can help, really broaden the range of applications for which solar can be used, you know, out in the market. And so we're very excited. Very excited about that.

Speaker Change: We do plan to continue to make that technology available to other trackers that have been qualified to use that technology on a go forward. We think it can help

Speaker Change: Really broaden the range for that solar can be used, you know, out in the market. And so we're very excited.

Speaker Change: very excited about about that. And I'm sorry the second half of your question? Can I interrupt? Both of these deals are closed so they're you know we looked at them and there's there's no no issue there. Thank you.

Chuck Boynton: Both of these deals are closed. So they're, you know, we looked at them, and there's no issue there. Thank you. Yeah, so thanks for that question. Appreciate it. Um, Sean? Oh, I'm sorry, next question, uh, operator.

Speaker Change: Yeah, so thanks for that question. Appreciate it.

Speaker Change: Sean, I'm sorry, next question. Operator.

Operator: Our next question is from Sean McLaughlin with the company HSBC. Sean, your line is now open.

Sean Mclaughlin: Thank you. Good afternoon. Appreciate the time to ask questions. A compliment on another barnstorming set of numbers.

Speaker Change: Our next question is from Sean McLaughlin with the company HSBC. Sean, your line is not open.

Sean Mclaughlin: Thank you, good afternoon, appreciate the time to ask questions.

Sean Mclaughlin: I had a two-part question, if I may. Firstly, you talk about higher supply chain costs. I mean, where is cost inflation concentrated? And how do you think about your ability to pass these costs? And secondly, how do I square that with the price reduction? Is this a temporary adjustment? Are you working with suppliers and customers to factor in gains from tax credits? Is this related to international volumes, or am I missing something? Thank you. Hey, I appreciate the question.

Sean Mclaughlin: And a compliment on another barnstorming set of numbers. I had a two-part question, if I may. Firstly, you talk about higher supply chain costs. I mean, where is cost inflation concentrated and how do you think about your ability to

Speaker Change: Transcribed by https://otter.ai

Unknown Executive: Okay, I appreciate the question. We'll have a two-part.

Speaker Change: Okay, appreciate the question. We'll have a two-part. I'll first speak to the supply chain situation, and then Howard will speak to the commercial aspects of it.

Unknown Executive: I'll first speak to the supply chain situation, and then Howard will speak to the commercial aspects of it. I'd like to, again, go back a little. Four to five years ago, what happened was we saw, at unprecedented speed, probably since World War Two, the biggest disruption in the supply chain. We saw logistics triple in less than two quarters in cost. And we saw steel roughly double at that time period.

Speaker Change: I'd like to again go back a little flashback four to five years ago what happened was we saw

Speaker Change: in an unprecedented speed.

Howard Wenger: Probably since World War II, the biggest disruption of the supply chain. We saw logistics triple in less than two quarters in cost.

Howard Wenger: And we saw steel roughly double at that time period.

Unknown Executive: Nextracker was largely protected then due to our mature sourcing experience with how we think about placing orders in a back-to-back way with customer orders, but the really the logistics piece caught us and, you know, most companies really off guard. And so we developed this hybrid strategy for building out a significant supply chain within Key Markets. We speak a lot on these calls about the U.S., but we've done a similar thing in India, where we built out 10 gigawatts of traffic capacity in India for that market, and in other markets around the world, where we can either supply the local market with locally produced materials, or we can export or do a hybrid of that. And so this is hard stuff. Okay, it was very difficult for us to achieve 100% domestic content in the United States. Bye!

Nextracker: Nextracker was largely protected then due to our mature sourcing experience with how we think about placing orders in a back-to-back way with

Nextracker: with customer orders. But really, the logistics piece caught us in

Speaker Change: you know, most companies really off guard. And so we developed this hybrid strategy for building out significant supply chain within

Speaker Change: markets. We speak a lot on these calls about the U.S., but we've done a similar thing in India where we've built out

Speaker Change: 10 gigawatts of traffic capacity in India for that market.

Speaker Change: And in other markets around the world, we can either supply the local market with locally produced materials, or we can export or do a hybrid of that. And so this is hard stuff.

Speaker Change: Okay, it was very difficult for us to achieve 100% domestic content in the United States.

Unknown Executive: It's for deliveries that are happening, you know, early in the calendar year, but that's what that did was it provided us with a natural hedge on logistics because we also optimized the location of our manufacturing partners with the market, as we saw, and we set up multiple vendors. So we feel we're in a very strong position on that and to be able to give customers confidence and certainty and not have to go back with changes if your contracts are being executed.

Speaker Change: [inaudible]

Speaker Change: It's for deliveries that are happening, you know, early in the calendar year. But that's what that did was that provided us a natural hedge.

Speaker Change: on logistics, because we also

Speaker Change: of our manufacturing partners with the market as we saw it, and we set up multiple vendors.

Howard Wenger: We're in a very strong position on that, and to be able to give customers confidence and certainty, and not have to go back with changes after contracts are being executed. Howard, can you speak to the commercial aspects of that question, please?

Unknown Executive: Howard, can you speak to the market, the commercial aspects of that question? Yeah, I just want to add also that when we reference higher supply chain costs, the 45 Acts. Manufacturing Credit for U.S. production is intended to put U.S. production more competitive and on par with international imports. That's the purpose of it.

Howard Wenger: Yeah, I just want to add also that

Howard Wenger: When we reference higher supply chain costs, it's...

Howard Wenger: The 45X.

Howard Wenger: Manufacturing Credit for the U.S. production is intended to put U.S. production

Howard Wenger: more competitive and on par with international imports. That's the purpose of it. So we do have higher

Howard Wenger: So we do have higher costs in the U.S., and the 45X serves to offset that. So that's important in the context of that language in the shareholder letter. Next slide, please. Chuck did mention that logistics costs. They picked up some in the quarter.

Howard Wenger: Coff

Howard Wenger: in the U.S., and the 45X serves to offset that. So that's important in the context of that language in the shareholder letter.

Howard Wenger: There's quarter by quarter variability in some of the supply chain costs, but we work very hard to lock in our supply chain costs with our customers because we're sharing visibility of their pipeline with our team, and we're able to then forecast and lock in costs. And on a commercial basis, we've proven that over time. Through cost reduction efforts, through design efforts, through R&D, we can reduce steel while still providing a high reliability, high quality product that we can stand behind, lowering costs, lowering prices, increasing PAM, and enabling the company to scale and drive costs down and open up the market more for solar to the point now where, for the last two or three years, solar has been the number one source of new power generation in the world.

Howard Wenger: Chuck did mention that logistics costs

Chuck Boyden: They picked up some in the quarter. There's quarter by quarter variability in some of the supply chain costs, but we work very hard to.

Howard Wenger: Lock in our supply chain costs with our customers because we're sharing visibility of their pipeline with our team and we're able to then forecast and lock in costs.

Howard Wenger: So and on a commercial basis we've proven that over time

Speaker Change: We can, through cost reduction efforts, through design efforts, through R&D, we can reduce steel while still providing a high-reliability, high-quality product that we can stand behind

Speaker Change: Lowering costs, lowering price, increasing PAM and enabling the company to scale, and drive costs down and open up the market more for solar, to the point now where, for the last two or three years, solar's been the number one source of new power generation.

Howard Wenger: So the formula is working. We're part of that as the market leader. We're pleased to celebrate our ninth year of market leadership. And we have time for one more question, and I appreciate your question, Sean. One more question, please.

Speaker Change: in the world.

Speaker Change: So, the formula is working. We're part of that as the market leader. We're pleased to celebrate our ninth year of market leadership.

Speaker Change: And we have time for one more question and appreciate your question, Sean. One more question, please.

Operator: Our next question comes from Sean Milligan with the question "Accompany Janie." Sean, your line is now open.

Speaker Change: Our next question comes from Sean Milligan with the company Janie. Sean, your line is now open.

Sean Milligan: Hey, thanks everyone for taking the question today. I was looking at the backlog commentary of over 4 billion and 80% over eight quarters and kind of thinking that maybe there was a little bit less coverage than I had previously thought, kind of in the near term. I was just curious if you could comment historically or kind of expected sort of entry year book to ship, what that maybe looks like, because it seems like, on any given year, you're also like booking and shipping a lot of revenue, and just was trying to get a sense for what that could be.

Sean Milligan: Hey, thanks everyone for taking the question today. I was looking at the backlog commentary that over $4 billion and 80% over eight quarters.

Sean Milligan: Kind of thinking that...

Sean Milligan: Maybe there was a little bit less coverage than I thought previously, kind of in the near term. I was just curious if you could comment historically or kind of expected sort of entry year book to ship, what that maybe looks like, because it seems like

Speaker Change: You know, on any given year, you're also like booking and shipping a lot of revenue and just was trying to get a sense for what that could be.

Unknown Executive: Yeah, as we talked about in previous calls, most of the backlog is in the 2 to 5 quarter window, and then the remaining above 5 quarters, we're giving slightly different colors where 80% is over the next 8 quarters. You can still think of it as a long tail to the backlog. So as you get further out, in 6, 7, 8, 9, 10, quarters out, it's a much lower percentage.

Speaker Change: Yeah, as we talked about in previous calls, most of the backlog is in the 2 to 5 quarter window, and then the remaining above 5 quarters, we're giving slightly different color, where 80% is over the next 8 quarters.

Speaker Change: You can still think of it as a long tail to the backlog. So as you get further out in 6, 7, 8, 9, 10 quarters out, it's a much lower percentage. So that should address your question.

Unknown Executive: So that should address your question. Great. Hey, I'd like to thank you. Okay, great. And thank you. Thank you for that. I really appreciate all the shareholder or all the positive feedback on our shareholder letter. Our team worked really hard on this, going to this new format to give us more time for questions and provide better resolution, we think, for folks to understand our business. We're excited about, you know, what's coming this year. And we look forward to advancing the clean energy transition with customers and partners. Thank you for joining us on this call today. Mary. Thank you.

Speaker Change: Great. Hey, I'd like to thank...

Speaker Change: Okay, great. And thank you. Thank you for that.

Speaker Change: Really appreciate all the positive feedback on our shareholder letter. Our team worked really hard on this, going to this new format to give us more time for questions and provide better resolution, we think, for folks to understand our business.

Speaker Change: We're excited about what's come this year and we look forward to advancing the clean energy transition with customers and partners. Thank you for joining our call today.

Unknown Executive: Mary? Thank you. This concludes our earnings...

Speaker Change: Mary. Thank you. This concludes our earnings call.

Operator: That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.

Mary: Thank you.

Speaker Change: That will conclude today's conference call. Thank you for your participation, and enjoy the rest of your day.