Nextpower Inc. (NXT) Earnings

Management highlights

### Strategic Positioning & Market Demand - Management identifies a structurally growing global demand for clean electricity, driven by data center expansion, economy-wide electrification, and industrial growth. The IEA forecasts 3.6% annual global electricity demand growth to 2030, with solar projected to account for over 60% of all new global generation capacity added between 2025 and 2030 (~3,000 gigawatts AC). - Middle East geopolitical conflict has created a structural tailwind for solar: 20% of global LNG supplies have been impacted by Strait of Hormuz constraints, driving LNG prices up 30-50% in Europe and Asia, and making low-cost fast-deployed solar even more economically competitive. - NextPower exited FY26 with a record backlog of over $5.25 billion, up from $2.1 billion at the company's IPO two and a quarter years prior, all backlog is comprised of only firm signed orders with no inclusion of provisional awards or late-stage negotiations. ### Platform Strategy Expansion - The company is executing on an "everything but the panel" complete integrated solar power plant platform strategy to meet customer demand for simplified procurement, faster installation, and improved system performance/reliability. - Traction for the expanded platform is strong: early bundled orders for multiple platform components (trackers, foundations, eBoss, software) are already being secured, and customer net promoter scores are at all-time highs driven by a focus on reliability and operational excellence. - The company announced a definitive agreement to acquire ready-to-ship power conversion product lines to accelerate entry into this critical market segment, complementing internal next-generation power conversion development. The acquisition includes a planned U.S. manufacturing footprint that will serve as a launchpad for both the acquired products and internally developed technology, and is subject to Spanish government FDI approval and customary closing conditions. ### Operational & Product Milestones - Reduced installation time for the flagship NX Horizon tracker by 20% year-over-year per a third-party engineering study, and NX Hail Pro trackers achieved a 99.99% module survival rate across 57 severe hail events with hail up to three inches in diameter in FY26. - Signed a new multi-year gigawatt-scale agreement with Jinko Solar for U.S.-manufactured steel module frames, which are engineered for better performance and robotic installation compared to traditional aluminum frames. - The acquired power conversion platform supports solar, battery storage, and data center applications, with 4.5 MVA ratings for solar and 5.2 MVA for storage/data center use. Units are in late-stage UL and IEC certification, expected to be completed next quarter, and a conditional 100+ megawatt letter of intent has already been secured with a key customer. - The company achieved an investment-grade credit rating during FY26 and ended the quarter with $1.1 billion in cash and no debt, maintaining a fortress balance sheet. ### Capital Allocation - Prioritization is 1) organic growth investments, 2) disciplined platform-strengthening M&A, 3) capital return to shareholders. A $500 million share repurchase authorization is active, with initial repurchases already completed in Q4.

Guidance

- NextPower increased its fiscal year 2027 guidance above prior Capital Markets Day targets, with a new revenue range of $3.8 billion to $4.1 billion, and adjusted EBITDA range of $825 million to $900 million. - Geographically, FY27 revenue is expected to be ~high 70% U.S. and ~low 20% rest of world, with high single-digit core tracker revenue growth on a reported basis (pro forma growth excluding the non-consolidated Middle East JV is meaningfully higher). - Non-tracker revenue is expected to grow more than 40% year-over-year in FY27, reaching approximately 15% of total company revenue. - Q1 FY27 revenue is expected to grow low single digits sequentially, with gross margins projected to remain in the low 30% range, reflecting ongoing elevated freight and logistics costs from Middle East supply disruptions, which have been fully incorporated into guidance. - Operating expenses are expected to be elevated in FY27 at 10.5-11.5% of revenue due to planned investments in power conversion expansion; as the business scales, management expects operating leverage to bring OPEX back to the long-term target of 8-9% of revenue. - Total planned investment in the new power conversion business is ~$130 million for FY27: $50 million in incremental COGS and OPEX, and up to $80 million for the asset purchase agreement. Power conversion is expected to contribute small, immaterial revenue in FY27, with meaningful revenue and margin growth starting in FY28. - Capital expenditures for FY27 are projected to be $75 million to $100 million, focused on scaling foundation, frame, and power conversion capabilities, and the company's ERP transformation. Adjusted free cash flow is guided to $450 million to $500 million for FY27. - Management confirmed it now expects to exceed its previously disclosed 2030 revenue outlook following the power conversion acquisition, with updated granular targets to be presented at a Capital Markets Day later in 2027. - The acquired power conversion business has an existing supply agreement with 1 gigawatt per year of current capacity, which can be easily ramped to 3 gigawatts per year to meet growing demand, and management plans to scale as quickly as prudently possible without sacrificing quality or reliability.

Segment performance

NextPower reports segment results grouped by core tracker and non-tracker platform products. For full fiscal year 2026, total consolidated revenue was $3.56 billion, representing 20% year-over-year growth. Core tracker business remains the largest segment, driving the majority of revenue, with over 50 gigawatts of cumulative sales for the XTR terrain-following tracker line and over 30 gigawatts of NX Hail Pro solutions. Non-tracker products represent approximately 11% of total FY26 revenue, with strong growth momentum: the combined eBoss (Bentec acquisition) business achieved 40% year-over-year bookings growth, tracker plus foundation products hit an annualized bookings run rate exceeding $100 million at multi-gigawatt scale, and TrueCapture control system revenue hit a record in FY26. Geographically, 79% of FY26 bookings came from the U.S., and 21% from rest of world regions, with Europe delivering record FY26 bookings. Financially for Q4 FY26, total revenue was $881 million, down 3% sequentially (a 300 basis point reduction attributable to the non-consolidation of the new Middle East JV), adjusted EBITDA was $202 million (23% margin), full year FY26 adjusted EBITDA was $854 million, adjusted free cash flow was $154 million for Q4 and $514 million for the full year.

Risks & headwinds

- Geopolitical conflict in the Middle East has elevated freight and logistics costs, which have impacted Q4 gross margins and are expected to continue pressuring results in FY27. - The planned power conversion acquisition is subject to regulatory approval (Spanish government FDI review) and other customary closing conditions, creating uncertainty around transaction timing and completion. - Early-stage expansion into the new power conversion segment will modestly pressure near-term profitability as the business scales, and early low production volumes will result in lower margins initially compared to the mature core tracker business. - While overall project timing variability remains consistent with historical levels, individual projects may experience acceleration or delay, and tax equity market constraints have been rumored, though management has not observed material widespread delays to date. - Intense competition exists in the power conversion market, and the company's success in this new segment depends on its ability to deliver on promised reliability and performance improvements to gain market share.

Analyst Q&A

• Q: Brian Lee (Goldman Sachs) asked to confirm if high single-digit year-over-year core tracker revenue growth implied by FY27 guidance is a reasonable baseline, and to break down U.S. versus international growth expectations for tractors. /

  A: CFO Chuck Boynton confirmed the high single-digit baseline is appropriate, noting the company enters FY27 with record bookings and backlog and is optimistic about overall tracker market demand, with particular excitement for the 40+% non-tracker growth projection. President Howard Wenger added that the U.S. market remains very strong driven by structural electricity demand tailwinds, while Europe delivered record FY26 bookings and demand pipelines remain strong across Europe, Australia, India, and the Middle East, with only modest project delays observed to date. Boynton also noted that reported growth is reduced by the non-consolidation of the new Middle East JV, so pro forma growth is meaningfully higher than the reported figure.

• Q: Brian Lee followed up asking Dan Sugar to quantify how the new power conversion acquisition impacts the previously laid out 2030 electrical business target of 10% of revenue and $530 million in sales. /

  A: Sugar confirmed that the acquisition accelerates entry into the power conversion market and will lift the company's 2030 overall revenue target, but declined to provide specific revised numbers ahead of the upcoming Capital Markets Day later this year, when full granularity on updated targets will be shared.

• Q: Christine Cho (Barclays) asked when power conversion deliveries and bookings will begin, and how the company ranks the size of the opportunity across core solar, battery storage, and data center end markets. /

  A: Sugar responded that bookings will begin in the near term, with small revenue recognition expected later in FY27, and the business will ramp prudently as U.S. manufacturing capacity is built out. Wenger added that the product is in late-stage UL/IEC testing, with a conditional 100+ megawatt order already secured from a leading independent power producer, and management confirmed revenue will be recognized in FY27. Management declined to rank the end market opportunities, noting more detail will be shared at Capital Markets Day.

• Q: Philip Shen (Roth Capital Partners) asked if the near-record Q4 bookings run rate can be sustained or accelerated in coming quarters, and how customer vendor diversification efforts impact NextPower's market share trajectory. /

  A: Wenger confirmed management expects bookings growth to continue in FY26, and clarified that the 79%/21% U.S./rest-of-world split shared in prepared remarks applies to full year FY26 bookings. Sugar responded that NextPower maintains market share growth by focusing on delivering high value, exceptional reliability, and low levelized cost of energy, noting that record backlog growth over the past two years proves the company is consistently earning customer trust. Management added that it will not compromise on quality, safety, or reliability to win incremental business, and its track record of strong performance in extreme weather speaks for itself.

• Q: Benjamin Kalo (Baird) asked if the power conversion acquisition is focused on accelerating time to market, expanding geography, or adding complementary technology, and who the key competitors in this new segment are. /

  A: Sugar explained the acquisition is primarily focused on accelerating time to market, with the acquired platform being complementary to the company's internal next-generation development. The acquisition gives the company an immediate foothold focused on the U.S. market, with a platform that supports global applications, 1500V design (scalable to 2000V), and suitability for repowering applications for older plants. Sugar emphasized that the company's core differentiator will be a focus on unmatched reliability, which is the top customer priority for power conversion to improve plant availability and reduce LCOE, and the company will deliver the same high-quality customer experience including spare parts and service that it provides for its core tracker business.