Okay, let's get started with the next one. Up next, I have Nextracker. Howard Wenger, the President, is joining us today. So thank you for coming to our conference. Howard, you guys have had an incredible journey, going IPO not too long ago. But for the benefit of the audience, can we start with just a quick introduction of the company, what the company does, and how you go about it? Thanks.
Sure. So Nextracker, founded in 2013. We are a solar tracking company, meaning we provide all the hardware to track the sun for large-scale solar and also distributed, larger distributed generation projects. With our technology, you can produce more than 30% or up to 30% more annual energy than a fixed tilt system. We build in a lot of intelligence in software and in hardware. We were part of Flex. The company was sold to Flex in 2015, and we just spun out of Flex in January, so we're a fully independent company, and we've grown historically at a CAGR of about 30% for the last 6 years.
In our last guidance, the midpoint of our guidance was about $2.45 billion in revenue for our fiscal year 2024, which is ending at the end of this month.
Thanks, Howard. So you guys are the dominant player in the tracker market. So U.S. utility-scale solar is roughly 25 GW -30 GW a year. I'm guessing you guys have close to 50%, 45%-50% market share. I know the official numbers don't say that, but that's my. My guess is, you know, it's, it's north of 40. Let's put it that way. Does that sound about right?
Well, we can't comment on the market share. We rely on third parties. We think that we're doing well in the marketplace. We had a really good year after going public in February of 2023. We've had three reporting quarters. We've met or beat expectations every quarter, raised guidance. So things are going well. We've had a good, we've had a good run so far, Phil.
Okay, yeah. So all throughout last year, you guys booked roughly $1 billion a quarter. I know you don't, you give us information to kinda triangulate to that number, so our rough estimate is maybe $4-ish billion for bookings all throughout last year. Tell me if I'm wrong or where are we... where do we need to be nudged?
So what we talk about is how we manage the company annually, because in the large-scale solar business, projects are typically $100 million-$300 million investments each. These are really big projects that can move quarter- to- quarter in terms of when we ship. So revenue can shift quarter- to- quarter. So we really focus on annual numbers, and that includes our backlog. We have significantly over $3 billion in backlog, as reported last quarter. Sorry, $3 billion bookings in our backlog. Phil is really good, and ROTH is really good under his leadership in triangulating what our bookings are. We, we do not report that, and so we'll leave you to your own conclusions, Phil.
Okay, fair enough. Thank you. Appreciate that. Well, so the question next is, you know, what kind of, You know, we've been writing a bunch about how things are kinda slowing down, you know, for some U.S. utility-scale players out there. You know, we did a survey two weeks ago. You know, I think, a quarter of the 20 respondents said '2024 volumes or COD is gonna be lower now than they were three months ago for their same pipeline. They said 9 out of 20 respondents said for their 2025 CODs, it's lower now versus three months ago. So there's a little bit of a slowdown. So thus far, you guys have been able to avoid, you know, showing any of that slowdown.
My guess is because you may be winning some market share, but at some point, because of your market share being so big and high, the market kinda friction. I wonder might impact you guys. So what are your thoughts on that? Do you see that happening already, or do you think there is still enough share to be won, to be able to offset that? Thanks.
First of all, what we do is we pull back and look at the macro demand for solar power, and it's strong still globally in the key markets. The U.S. being the number one market in the world for large scale outside of China, and that's both in volume and also the economics are superior in the United States. And so what we're seeing is actually increased levels of development, meaning more investment from development and owners in large-scale solar. We're seeing our pipeline is actually growing over time. It's strong. There are headwinds and tailwinds we talk about. There are a number of headwinds that can cause a particular project in an owner's portfolio to move to the right and be delayed.
It can be a high voltage transformer, or switchgear, or not getting an interconnection agreement, or not getting final approval to move forward. So things can move. We've seen some projects pull forward, and for us, I guess being the market share leader, we have about 34% global market share in tracking. We have, and a third of our business is outside of the United States. We have a diversified enough portfolio that we're managing to, and so far, the results speak for themselves. We've been up and to the right and growing. We still see strong demand. It's a dynamic market. We're paying a lot of attention to the headwinds and the tailwinds.
Yeah.
We had our last call in February. We're gonna have our next call. We're targeting to May.
Yeah.
And so that'll be our annual call, where we give an annual forward look and a look back.
Because your fiscal year is ending, March-
March 31st, correct. And so there will be more color and, and since we're annually driven on our, our outlook for the, the coming months, but I hope that's been helpful.
Yeah. Thank you, Howard. So do you think, the mix of your bookings might shift to become a little bit more international if U.S. may possibly slow down a bit? Or, do you... Can you comment on that mix at all?
We're really happy. We are the leader on four continents, and we're really happy with the progress in some international markets, namely Europe, India, portions of Latin America are coming up, and Australia, where we have over half of the trackers in Australia and other parts of Oceania, are now developing projects. So there is-- we're seeing both demand being strong internationally and in the U.S. And sure, it can shift from one to the other. One more data point: we've typically been between 25% of our business international, plus or minus, and 50%. The trend in what we've signaled over the last couple of earnings calls is 1/3 international, 2/3 U.S. And what we said in our last call is we see that continuing.
Okay, that mix continuing for. Is that a bookings mix or is that revenue mix?
We talk about revenue.
Okay.
Yeah.
What do you think the bookings are?
I can't remember if I gave any color on that. But I would say it's quite consistent.
Consistent, stable.
Yeah.
Okay.
Yeah.
Thank you.
Yes.
So we've written that some EPCs have shared with us that you guys might be playing a different game in the recent years, meaning you've booked a lot of these volume commitment orders, and basically, you're pulling the demand through the EPCs, whereas some others might still be going to the EPCs direct, trying to win their business. If you've gone to the asset owner, and they then engage the EPC, then the EPC has no choice. And so what percentage of your revenue these days do you think is from the asset owner themselves?
So we're working with both, okay? We are very focused on EPCs, and we're very focused on the owners. The EPCs have a lot of say in the value chain. They're our partners. We work hand in glove with them. We train them. We have a PowerworX program. They get certified on our product. They get on our platform. We train their legions of boots on the ground on how to use our product. Thousands of construction workers work for these EPCs, and they're just an extreme focus for us, is partnering with the EPCs. And they're the company that we typically ultimately contract with on each individual project. Now, in parallel, we have focused on owners, and we've signed multi-year agreements with them, where with some of the owners, it's their entire portfolio, and it puts us in a partnership position with the owner.
And the reason why the owner wants to do this is they're getting a lot of value in terms of guaranteed supply, certainty on pricing. We, we dedicate engineering for them. We value engineer every system, so we're more like a partner to them. And we believe we have the best technology in, in tracking, in software and hardware, that it's not just about the upfront price, it's about the levelized cost of energy, and the owners are very focused on unlevered return on their investment. So we're delivering lower installed cost, and then I'll pause, lower installed O&M, operation maintenance, and higher energy yield, and that appeals to owners, and that's why there's sort of this self-selection between owners and Nextracker.
Great. And so when you think about that mix, like, do you think most of... Like, is there a majority of the either bookings or revenue are coming from owners these days, or do you think you're, is it a minority?
We'll look to provide more color in the next call-
Okay
... on that.
All right.
Sorry to be quiet. We are in a quiet period.
Yeah.
And, um-
You're still here, so we thank you.
Yeah, no, it's a pleasure to be here.
All right. So we wrote recently that Array might be lowering price. You know, they, they, you know, it took a couple of years maybe for the CEO to kind of put his cost down roadmap in place, and they're seeing some fruit of that now, and so they may have the ability to lower price and then maintain a margin. And so, you know, we wrote last year that you guys were doing a really good job and winning a lot of share, and so they wanted to keep that price high. They maybe weren't ready yet. And so, you know, we've heard from three players now, pricing is keep becoming more competitive. Have you guys started to see that on the field?
Well, first of all, we have significantly over $3 billion in backlog, okay? With locked contracts, deposits, timing on projects, specific projects. That gives us a lot of visibility and for revenue going forward, okay? We are very comfortable with our cost structure.
Yeah.
We mobilize the supply chain.
You've been consistently lowering cost structure through-
We have been
... time.
We-
'Cause you all, how many co-founders are you, five or four?
There are six.
Six. Sorry.
All six are here.
All six are still there?
Yeah.
Go ahead.
Okay, thank you. And so we're really maniacal about cost reduction, scaling up. We work with the largest steel mills in America directly. We've scaled up. Again, we have more than 15 facilities in the U.S. now that we've stood up. We can deliver up to 90% domestic content, okay, for our owner-partners to realize a 10% bonus ITC. So we feel really good about our cost structure and ability to compete. It's a competitive world. Capitalism works. And
Right, so the competition-
Is good. And it drives innovation, it drives cost reduction, and it drives price reduction, which in solar, we want over time. You look, we've reduced the price of solar 10x in the last 15 years, okay? That's why solar is the number one source of new power generation in the United States last year. It's because the cost and the price have come down. So pricing, it is competitive. It, it's a competitive field. It always has been, and we're in position to keep competing.
Okay.
But we feel good about where we're at.
Okay. Should I I can push you now, actually, 'cause we're-
Yeah, push.
We're on stage, so.
Yeah.
But my question is, on the field, in the room, like negotiation, at the negotiation table, are you hearing about some of this? "Hey, you know, Array's giving me a little bit of a better number. Can you help a brother out? You know, give us another half penny or something." Are you getting into that kind of conversation yet with some of these custom negotiations?
Pricing comes up in every conversation we've had, and there are competitors in our space, and it's, it is on the table, always. It's nothing new.
Nothing new.
Nothing new. I'm not going to comment on their strategy or what they're doing.
That's fair. Yep.
Yeah.
I'm just wondering if you've been hearing it from others, from your customers. We can leave it. It's fine. Thank you, Howard, for entertaining those questions multiple times.
Well, I want to say that there's been talk about 45X in this context t he manufacturing incentive, and how one of our competitors says: "Oh, we're giving that to our customers." I mean, I think, and we think, that's the wrong way to think about 45X. 45X is a government policy to incent companies like ours to bring in manufacturing into the United States so that it's competitive, and it bridges, bridges the gap between internationally supplied parts and U.S.-manufactured parts. That was the intent of 45X.
So you need to keep some of that or a lot of it in order to be able to be competitive.
I'm not saying how much we're keeping or not, it's just part of the COGS equation.
Yeah.
It does enable us to, to localize our product and make it competitive with the international, and then there's a benefit of it being local. Our parts are really heavy. The trackers are really heavy.
Yeah.
These tubes that are being incentivized by 45X, they're 100 lbs, 150 lbs, 200 lbs each.
Yeah.
When you stack them on a truck, you want the manufacturing local to where the projects are, and that's what we've done.
Okay.
So there are some structural enhancements by localizing it. Our logistics costs have come way down. We're not shipping these tubes from Asia.
Right. Right.
Yeah.
Yep. So this morning, there was some news. There was an 8-K that indicated that the CFO is transitioning to a Chief Accounting Officer role. We were expecting the CFO, Dave Bennett, to be here today. Unfortunately, he's not. So can you talk about the transition? The new CFO is Chuck Boynton, which I believe I know from his SunPower and 8.3 days. And so he was
That's right.
He's been in solar for many years. And so how did this come about? You know, Dave seemed great, I mean, seems great. Like, why? He's been with you for the whole IPO ride. Why did you guys need to bring in a new CFO? Thanks.
Okay, I'll start with Dave. He's fantastic. He's a great human being. He was chief accounting officer at Flex for 17 years, almost 17 years. He's gonna be in that role now going forward at Nextracker. He's completely committed to the company, and we're in great shape. What we're getting is a one plus one equals three powerhouse team with Chuck, who has 20+ years of CFO experience. As you mentioned, a lot of solar experience and large-scale solar, 8.3, which is the company he was the CEO of. Mark Widmar, the current CEO for Solar, was a 50/50 joint venture partner. It was between First Solar and, and SunPower. So Chuck is highly strategic. He brings that bet and that experience to the fore for the company, and we feel that it's just the right time for our next phase of growth to combine.
Chuck was on our board. He was on our board. He was Chair of our audit committee.
Okay.
And so Chuck has tremendous experience. We know Chuck. He's coming in. He meshes well with Dan, our CEO.
Was he recently the CFO of Logitech?
Correct.
Okay.
He just-
And so he still is like, effective, when is this CFO transition?
Well, it's been announced by both companies-
Okay
Per the SEC rules and so forth. He will join us officially on board, coming into the office in May.
In May. May 1, May 31?
Mid-May. Oh, we're not saying.
Okay.
I'm getting Mary, our IR-
Sometime in May.
... vice president is saying we're not being specific. There's a press release that gives some information, but it-
Is that in there, Mary?
Yes.
The date. Okay, so sometime-
Not a specific date, but it's May.
Yeah, you said May in the press release, the FAQ.
Yes.
Okay, great. So could be the first or mid or later. Okay,
We're excited.
Let me ask this-
We're, I mean, we think it's really good news.
What was the catalyst for this? Did it come from the board, or did Dave raise his hand and say, "Hey, you know what? I prefer the CAO role"?
I'm not, not gonna get into that. Just, it just was a natural progression. Dave coming from Flex, Chief Accounting Officer-
Yeah
hadn't been a CFO before.
Yeah.
Came in, did a great job-
I thought he did a great job.
Built the team.
Yeah.
A great job.
Yeah.
You will continue to see Dave and interact with Dave.
Oh, he'll still do IR?
He will still work in IR. If I have my say, he sure will.
Great.
He'll be in the room on our earnings call. So, Dave-
Mary, what do you have? What's your say?
He will be involved.
Okay, great.
Mary says he will be involved. Okay.
Okay, good. Any questions out there in the audience? Mark?
Yes, specifically with the AI industry and their critical needs for, you know, energy, do you have anything to announce and how much in partnership you are with any of the big AI players for building out their energy needs?
Yeah, the question had to do with AI and how that's driving power to make-
Those data centers, yes.
For data centers, it's so true. It's amazing. Data centers were typically around 50 MW each. Now they're toward 500 MW. I mean, these data centers need as much energy and power as a city now. It's quite remarkable. Even I read recently that the state of Georgia said that their power demand is gonna double because of data centers. So it's a big deal. Many of the owners that we work with serve companies that are building these data centers. There's no question that it's a driver for solar, and these high-tech companies want clean energy, and they want it economically. They can get solar power at a lower cost, and of course, it's clean, than the competing sources of energy. So it's...
In most states, you can have bilateral contracts with the owner, independent power producers that have solar power plants and sell directly to companies that own the data centers for serving those data center
What percentage of your 24 shipments do you think are going to, owners that are, that have a PPA with a data center?
Wow, that's a great question. I would venture to say I don't know the answer.
Well, let's hear the venture.
But this is just,
A rough guess.
Rough guess.
I'm guessing. Can I guess first? 30%.
Well, that's funny you say that. I was gonna say 25%.
Okay.
So we're
But then that's probably rising, right?
It's rising. There's no question, and we could be low. I, I don't know.
Then you see your pipeline for 2025 and 2026. I mean, do you see that in your mix, kind of growing higher? 'Cause this is a huge trend on the street right now, AI and the power demands that go with AI, and so this might be an interesting thing for you guys to calculate, estimate, and then talk about on your Q4.
No, no question, it's a driver.
It's looking for-
It's a, it's a driver, and we're paying attention.
Okay, Roma?
Uh, microphone.
A microphone.
Mic, please.
Thanks, or I'll repeat the question.
We have 50 seconds.
Thanks. Okay. Firstly, if you could just very shortly explain what the trackers are, how it fits in setting up a solar system. Secondly, we know that the greatest challenge today for solar is it's still too expensive for homeowners. It's an enormous amount of money.
Okay, I'll take that second one first.
Yeah.
These guys are U.S. utility-scale solar, so they don't sell directly to the homeowner.
Oh.
Most, actually, a lot of solar in the U.S. that's for residential actually is economic on a monthly basis. A lot of people can get monthly savings, and in California... Yeah. So those numbers, we can talk more about that later. As for the tracker, we have 10 seconds to explain what a tracker.
What I'll say is photovoltaics or solar power is amazing. This is a solar cell. Light hits it, power comes out, no emissions, no moving parts, no water, lasts, warranted for 30 years. Amazing technology. I've worked in it for 40 years, this field. What we do is we put these panels on a structure, and we track the sun from east to west, and we produce 30%, up to 30% more energy by tracking, and we also protect the field in case of high wind or hail, things like that. That's what we do. Our systems are generally mounted on fields that can be 10 sq mi in dimension, huge solar fields. That's what Nextracker does.
What percentage of industrial solar installations use trackers?
What percentage of industrial solar uses trackers? It's about, I would say, around 70 or 80%. It's predominantly trackers now in volume. Yeah.
In the U.S., it's gotta be 90+.
It's probably 90% in the U.S.
Yeah, yeah.
I'm talking about globally-
Yeah, globally
fixed tilt.
Thank you, Roma.
Great session. Thank you.
Thank you, Howard. Appreciate it.
Thanks,Phi l.