All right. Excellent. We're burning the time. Let's go. Good morning, everyone. Nice to see everyone. Rise and shine. I am joined here with my pal, Dan. Thank you so much for taking the time. Genuinely. I know, I know you like, you don't live next door, right? I appreciate you making the trek. Really, it is a pleasure to see you, and what a year. What a, I mean, what a run. I mean, post-IPO, there's no. Forget a year, right? The entire run post-IPO has been incredible. There's a lot to talk about. Dan, you are typically prescient with your commentary. Look, I'll give you the opportunity on the floor. Lead with any opening comments.
As you know, I'm not short with words either, so I will jump in as and when need. I at least at a minimum, I'll give you an opportunity to jump in here as you see fit.
Right. Well, first, Julian, thank you so much for the opportunity to participate in this conference today. It's great. We just celebrated a little over three years since we went public, which was a really fantastic experience. Something I'd never done before. You know, it provides a nice bookend for how are things going. When we went public then, we were at about $2.1 billion of backlog. Today, we're well over $5 billion. We've been able to increase our bookings, our backlog, our margin, our revenue quite steadily, and our cash flow quite steadily.
The way we've done that at Nextpower is really focus on innovation and technologies that deliver tangible value to customers, we can unpack what those things are, and then really be able to monetize those both for the customer and for Nextpower. That's going really well. I think the new thing for us in the last few years has been we've doubled down on our organic technology development. We've tripled our R&D budget over the last three years to approximately $100 million today. We've also had a very strong inorganic technology program. We've acquired nine companies in the last 18 months. That program is going very well. I would say the those teams are performing. We've had great retainage of talent, a very fast path from both our organic and inorganic technology to revenue.
As we come up with these products, we're quickly able to get into revenue. We've also seen increased prevalence of bundling of these technologies for customers on customer site. We're quite bullish on the solar market. The prior quarter, we had our earnings, I think about one month ago. We had near record bookings the prior quarter. I'll also share that since our earnings, the demand environment has remained very strong, both in the United States and abroad. We're quite last year in the calendar year, 83% of the generating capacity installed in the United States was solar and storage. We're seeing our customers also using storage, what used to be, five years ago, one hour, then went to two hour, then typically four hour. In some cases, we're seeing six and eight hour projects now.
We think that's all very healthy and complementary. We remain quite optimistic on the overall market. Our position in it has continued to strengthen as we add value.
Yeah. Wow. What, what a run. Dan, let me... Let's move this way, right? You talk about, like, market strengthening, the market backdrop. Again, against the backdrop of some of the ambiguities out there, what we've seen past tense, and certainly post -IPO, people weren't sure, like, how quickly the market would firm up. You wanna comment a little bit about what folks should be expecting? Like, we'll come back to the diversification effort in a moment, but let's just focus core on the core product, domestic, international. There's ambiguities in the market about how well it's going, right? I mean, just look at, you know, earnings adjacent. Related more directly to you made this comment very purposely a second ago, "The market is accelerating. The market's doing quite well." Do you...
If you can elaborate, expand on that, both domestically and abroad, I think that'd be really useful.
There's no ambiguity at Nextpower how things are going. We've had 14 quarters in a row of consistent growth in the run-up to the IPO. Our numbers speak for themselves. What we've seen generally is that as we've discussed this on some earnings calls, but there can be headwinds and tailwinds associated with any given project. In general, the number of participants in the market, the size of their projects, and the strength of the projects and sophistication has increased. The, you know, fundamentally, the biggest tailwind we have is the economics and the need for power. I mean, solar is the lowest cost way to generate power virtually everywhere on Earth.
I've seen some of the other fantastic IPPs that you have at this conference that many of which are valued customers. Their projects are larger and they have more larger, you know. In totality, a project may take longer, but the net result. There's more market participants. In general, we're seeing it go up. There's also been this narrative there's insufficient EPC capacity. We have not seen that. And we've seen a lot of, you know, growth both in the States and abroad. Now, we've been number one for 11 consecutive years in a row. When the data comes out for the year that just completed, we're hopeful that'll be the 12th consecutive year.
We've you know, participating in these overseas markets has also been really helpful because as a global manufacturer, you want to be able to have demand and to be able to arbitrage products across different manufacturing locations, demand centers, and so forth. What we've continued to lean into is also to build out domestic capacity in the States and the other key markets that we're a major participant in, like, India and Europe and Latin America, as well as Australia and Oceania. I'm excited about all the markets that we're participating in. We've also continued to build out our facilities and capabilities.
We have three major innovation centers now around the world, one in Silicon Valley, one in Hyderabad, India, we have a fantastic center there with a great team, and one in Latin America, in Sorocaba, Brazil, and we're in the middle of initiating another one. What that does is provides a platform to demonstrate to customers how the technology works, but also innovate within those regions. We're able to cross-pollinate those learnings to our products globally.
Nice. I mean, do you wanna talk a little bit about safe harbor trends here too, right? Like, you talk about demand and pull forward. You know, safe harbor's also played some part in the role, at least in some of the latest commentary you guys had. You want to elaborate a little bit on the U.S. side of that as well, just while we're talking on demand?
Sure. Well, there was an opportunity, I believe it was August last year, to do some additional safe harboring for our customers. We reached out to the customers in a very, very concerted campaign. I personally spoke with a number of customers. The net result. There were a few customers that moved forward with some incremental projects, but the net result was they were basically like, "We're good. We saw this coming." We've perfected many gigawatts, in some cases double-digit gigawatts, going out for three, four, five years to be able to satisfy their portfolios. That also gave us a lot of confidence that these, you know, sophisticated, discerning customers put millions of dollars per project invested to ensure that they had the ability to have certainty around the economics of those projects.
We were quite favorably surprised by the scale of that, those programs that had been done. So I'll just say for the U.S. market, that was provided a tremendous amount of confidence. Then we've seen customers move forward in executing our demand last quarter. Customers wanted product faster than we had forecast, and so, people are building quickly. It's all good, is basically where we landed on that.
Nice. Well, look, a correlated question, right? You talk about volume and margin. Folks, you know, consistently focus on margin in the space, and it's been an evolution over time. How do you think about margins here today in the market environment? You started by saying, "Look, demand is good." Conceivably, if demand is good, margins gotta be intact, again, as a concept. Do you wanna speak to that directly here, just in as much as, you know, folks constantly pepper about the space and the OEMs in the space around where margins are trending? I mean, any commentary you'd offer on that front?
Yeah. I think, absent some tariff impacts that Nextpower, you know, was subject to, the margins were quite stable and our earnings performance, our earnings increased significantly year-over-year. The major variant was this tariff impact. Some of those tariffs, due to the Supreme Court ruling, we think those will be lessened. We do have the contractual right to go get tariffs. We're somewhat discerning in how we apply those working with our customers. Yeah, I'd say the pricing and margin environment's been pretty stable. If you take the tariff thing, that happened with... I can't remember if it's reciprocal or derivative tariff. I always screw that up. One of those things really came out of the blue. No one expected that.
We're protected contractually on those, and so we're letting sort of the dust settle. We're working with customers to deal with that. The tariff aside, you know, it requires discipline in. It's different in different markets how you approach it. What we've really focused on is what really matters, which is delivering quality products that perform, that are resilient in extreme weather, that produce more energy per watt, and deliver a demonstrable LCOE advantage. Prior to us diversifying our product portfolio-We're delivering 6% or 7% advantage in the levelized cost of energy relative to, I'll just say typical trackers. With our new platform, where we're adding in other products and features, we expect the LCOE advantage with our full suite to be about 15% lower LCOE costs through a combination.
LCOE is driven by a number of factors. There's the production, how many gigawatt hours per megawatt per year the equipment's producing. The maintenance cost and operational costs of those products over time, the installation cost and the capital cost up front, and also a risk-adjusted element with how your equipment performs in extreme weather and how we can help customers lower insurance costs. In each one of these categories, we believe we're delivering a differentiated, quantifiable advantage for our customers. The more sophisticated the customer, typically the greater they appreciate that and realize that. What we've done is tried to move to, from projects to programs, from megawatts to gigawatts in these customer engagements, and that has gone quite well.
Those really focused on the customer's pain points and delivering lower LCOE, which results in higher unlevered IRRs for our customers, we've enjoyed greater share of account and greater share, which is not a goal in and of itself, but a by-product of delivering all those things.
Nice. Excellent. I mean, when you think about this business over time, I mean, let me break it down this way. Let's be more perspective. It's been an incredible growth rate in past tense, right? I mean, you think about the growth of the sector, you guys have eclipsed it. You guys have diversified the company. You've been able to gain share. You've been able to move abroad. How do you think it just the in an effort to like encapsulate the totality of all the different pieces and silos you have underway, right? How do you think about sustaining this kind of a growth rate, right? When you look at the backdrop of what people think of solar, you guys are, you know, taking that, you know, core definition and rolling with it in so many different ways.
You wanna speak to the growth rate, just high level?
Sure. Again, I'm gonna revert to how do we deliver value? Value begets growth rate.
Yep.
For example, if you look at, let's take the latest new business we launched, which is advanced frames for solar panels, starting with solar panels made in the United States. Okay. There's a problem there with the legacy frames. The frames are made of aluminum. The history of that, if you go back, you know, 30, 40 years, solar panels were physically very small. The cells were very expensive. You use an expensive material, aluminum, that was cheap to manufacture 'cause you extrusion like your, you know, you see aluminum windows using a profile. It's pretty easy to do. Those frames worked well with old small solar panels. Today's solar panels physically are, you know, five times larger than the old solar panels, and the manufacturers have thinned out the glass, thinned out the frames.
The panels in just, they're mounted on a structure. In the wind, they deflect. The cells have gone from 400 or 500 microns to about 100 microns, 125 microns. You have cell cracks. You have problems happening with glass breakage and issues because the frame is physically weak. The material is not stiff, and it's also expensive, and there's very little aluminum extrusion in the United States. We were like, "This is a major problem." What was happening is, as they increasingly thinned out the material, the problem got passed on to the folks making the structure. We said, "We need to take this on." Starting about three years ago, we started a. Give me one second.
Yeah.
We started developing an advanced frame using a special steel that's purpose-designed and built for a solar panel. There was a company, Origami Solar, that was about a year ahead of us in the market that also had a different technological solution. Our solution that we developed internally is complementary as maybe a next step, but the Origami thing was great. We acquired that company, and this provides from a customer standpoint, this provides benefits. What are the benefits? You have a more reliable solar panel, and over the long term, a solar panel provider may not be in business. The owner, the IPP, that's the principal engine driving the production. You really want that solar panel to be reliable in a world of increasingly extreme weather.
Number two, customers want domestic content, and to have non-FEOC components. We're able to produce these frames in the United States affordably versus more expensive aluminum that's produced abroad that comes in with a tariff and save logistics costs. We acquired Origami in September. A month later, we announced a major supply agreement with one of the largest and most modern solar panel manufacturing facilities in the United States. It was developed by Trina and then sold to T1 Energy in Dallas. I have a video of it on my LinkedIn site. I toured the factory with the CEO. It's a fantastic facility. Okay, well, now we can supply domestic frames, that gives customers that are trying to achieve domestic content that single thing of providing a domestic frame gives them six points of domestic content out of 40 or 45 points they're trying to achieve.
Amazing.
We've scaled that, and then, a few weeks ago, we announced another major supply agreement or contract to us, in this case from Jinko Solar U.S. Jinko is one of the top solar panel manufacturers over the last decade, fantastic company, and we're supplying their Jacksonville, Florida, facility with these frames. These are the things that beget growth, okay, these new businesses. We have a foundations business. We have a frames business. We have an electrical business. We have a software business.
In each of these, over the next few years, we expect to generate each bucket hundreds of millions of dollars of revenue and commensurate earnings to the company, delivering value to customers and further cementing the benefit of bundling these technologies in a integrated holistic design manner that lowers overall cost, reduces risk, and improves return to customers. These are our strategies, listening to customers, focusing on things we can do to add value.
Today. In fact, let me ask you to run with that quickly, yeah, please, grab some water here. As you think about transpose and its growth, look, you're an innovator. You've done innovation for a long time. The solar space is evolving. This is what I wanna ask you about. How do you think about where the sector's going, and how do you adapt to that, right? You described it in one permutation here. Let's take it to the next step. What's gonna happen to the solar sector here that allows for innovation, right? For instance, maybe a direct way to ask that is, tandem cells, multilayered cells are coming, or you talk about the flimsy cells.
If that's where the direction of travel is in the space, how do you accommodate? How do you innovate yourself around that if that's where things are going? Again, I say if because I'm presupposing a certain direction. You are unambiguously the innovator here. I'd love to hear your thoughts about maybe taking it a step further on what you were just articulating a second ago.
Yeah. Thanks for that. This is where our passions lie.
Yeah.
Different customers are focused on different parts of innovation. We conceived, invented, perfected this hail stow technology seven years ago. That was really important when all of a sudden we started seeing hail loss in the area. We had a customer come to my office seven years ago that had experienced a catastrophic damage on a hail plant in West Texas. It wasn't our system, but it could have been 'cause we weren't really thinking about hail much prior to that. We were able to come up with a technological solution to that, have patents associated with it, operationalize it, have that up and running on that customer's fleet within. Well, the first one the following quarter and then rolled out.
We were able to sit in front of the insurance industry in London last year and basically show actuarial information that said, okay, when we were there in June, we said there have been 830 times that our systems have been commanded to go to hail because hail stow because there was Doppler radar indicated there'd be a probability over X in a diameter within Y of a hailstone over Z size that plant could have potentially hail strike. We know in those 800 times that our system went to hail stow, hail fell 35 times. We called all the plant operators, in some cases 3 in in diameter like a baseball. We had zero reported hail, solar panel breakage. We were able to solve that issue through innovation in extreme weather. We've done the same thing in wind.
We have an amazing, virtually perfect record with wind, survivability in typhoons and hurricanes and so forth. We have a solution for floods, solution for hail, and so forth. We innovated in the whole category of extreme weather. We just went through the innovation we're doing on the frames to provide better solar panel reliability and domestic content. We sat down with customers, and we said, "What are your pain points?" A few years ago, they said, "We have a major issue with Electrical Balance System, getting power from the back of the solar panel to the inverter area. Not enough bankable suppliers and the durability of the equipment that is being filled is very spotty." We took that head on. We physically visited half a dozen facilities. We did inorganic M&A.
We acquired a company called Bentek, had a very reliable product with 100% test post shipment or pre-shipment. We were able to, within one quarter after buying that company, achieve record sales in the 30-year history of the company. We have professionalized, operationalized that operation, supported the team there. We have a new product family launching with our PowerMerge tech, which is going through certification and should be in market this summer and help develop real value through innovation. That's all gone great. The next thing we're taking on, the single biggest issue in solar power systems over the last well since I've been in the industry, since the '80s, has been in the inverters and power conversion. We decided to take that on a few years ago. We started incubating our own inverter internally.
We discussed at our Capital Markets Day, we showed it physically in the field to investors. We have operating alpha units, we're developing an inverter with specs that should allow to have higher reliability, higher efficiency, and lower maintenance costs than the family of products that are currently in the market. These are the things we're doing to deliver value as we go forward. Now, what's helpful is also on, I mentioned on the storage side, we've seen storage go from one hour to four, six, eight hours now in some projects due to the cost effectiveness. We think that's very helpful to solar growth as we see it roll out around the world.
All right. Let me, let me take it a couple different directions of what you just said. I hear you, diversity, cross-selling, there's a lot of different pieces to it. Folks in the room ask me is, "Bob, how do you think about like just, like higher margins here?" Like in the context of like operating leverage across, you've got this. In addition to being an innovator, consummate salesman, able to effectively ingratiate yourself across a large spectrum of the sector pretty effectively. This is not you saying it, this is your customer base saying it, right? I'm just channeling it back to you. How do you think about, you know, leveraging those relationships, cross-selling these multiple products, and effectively ending up with a platform that has higher, you know, kind of EBITDA margins, right? You think about like operating margin profile.
How do you think about that over time here? Is that what we're marching towards in aggregate here in over time?
Well, look at how our margins have progressed, all the data's public, you know, over the last five years. I'll acknowledge our CFO here, Chuck Boynton. I also wanna talk about the difference between EBITDA and cash flow.
Sure.
Chuck has been just great at really highlighting and indoctrinating that for us, and also focused on earnings per share. We've really focused on cash flow. We are generating a tremendous amount of cash at the company. Again, our track record of improving all these metrics, you can see our progression over the last three to five years. We have a lot of discipline and operational focus on it. I think with respect to customers, the key thing is really focusing on portfolios rather than projects and not chasing, you know, one-off opportunities or customers that are like disaggregating and trying to save, you know, try to micro-optimize. That usually is not gonna result in the best long-term outcome for that customer on their project.
What we're focused on, the programmatic customers tend to be better credits. They tend to have better ability, more professionalized in terms of their, the maturity of their project development process, meaning they don't have surprise pushouts of projects. You see, not one time in the last 14 quarters we've said, "Oh, we've had all these pushouts, we missed our numbers." It hasn't happened once. We're focused on these great customers. We're also have a lot of adult supervision in terms of how we manage our portfolio and our process to ensure that we build our plan to be able to handle, you know, one-off unanticipated shocks. That's resulted in us being able to meet or beat plan.
Not just for our investors, which is really important, but also all the people in our ecosystem, our suppliers, our employees, our banking partners, our... You know, everyone we touch, we wanna... What we do is we really measure every part of the company for how we touch a customer and others, and we provide feedback, customer feedback, how we're doing in the sales phase, how we're doing in the fulfillment phase, how the products are working, the packaging, the operations, our payment cycles. We even measure new employees coming to the company, how well did we do in setting them up and how was their onboarding, their IT and all that. We try to achieve operational excellence in each area. I wanna give another shout-out to our CFO, Chuck Boynton, here.
We were able to achieve investment grade status. To our knowledge, we are the first and only company, pure play, clean tech technology company that's done that, okay? That is a huge advantage for our customers because they understand, that, you know, we're a lower cost risk and we can like reduce, you know, some bonding and LCs and things like that that don't add value to the customer or us. In some cases, that provides benefit. I'll say that's a tactical thing, but just in general, those are the kind of operational excellence we wanna deliver to have further professionalize renewable power in the grid.
Let me take this, like, sorta growth angle a step further. Right. You're clean. You're not just a solar company, you're a clean tech, clean energy company in many ways. I emphasize that here because there's obviously something of a cyclicality to the space as tax credits coming in and out. How do you think about compounding growth as people say, "Well, these tax credits are gonna roll off over a five-year period," and blah. You must be thinking ahead, right? Obviously, you know, it's not like it's falling off a cliff per se either, right? Still at the same time, like, how do you think about, like, a battery adjacency and these other things that, you know, I, I see folks dabbling with across the landscape?
How do you think about what those adjacencies might look like? You guys are actively looking at adjacencies in the context of solar. How do you think about taking a step further here?
Sure. Okay. Well, I'll speak to storage first and then the post ITC world second.
Yeah.
We announced at our Capital Markets Day we're developing this power conversion family. That's for both solar and storage.
Mm-hmm.
Our tech is right in the sweet spot of what we think will be helpful for storage. We think storage is really important. We need to be at the right place in that ecosystem, and we think power conversion systems and control systems is a good place to be. With respect to how we operate in a post ITC world, well, together with the major IPPs in the space, we welcome that. We welcome a post ITC world. I'm on the board of the American Clean Power Association. A number of the major IPPs are members there, and there's a strong sentiment not to go after extending the ITC. The ITC is great, but it comes with a lot of cost. We don't need it. We don't need it.
Basically, the technology stands on its own merits. We think longer term, the industry, they did their job.
Yeah.
It's time to move on. We think we'll be in a much stronger place than seeing these subsidized other technologies like we're seeing with coal and nuclear. We wanna move to a subsidy-free environment. The technology's there. I was just sharing at an investor meeting prior to this, if you went back seven or eight years ago, we participated in the largest solar project in the Western Hemisphere at the time. It was with Enel, the large former Italian national utility that's now a global utility. They did an all-source solicitations for power in north central Mexico, okay? They responded to an all-source solicitation from the Mexican utility there. Solar won. It was a project called Villanueva. It was very famous at the time. 835 MW.
We did the structures and the foundations on that project. Yeah, the offtake they signed was $35 a megawatt hour. Again, it was the cheapest form of any energy. There were no tax credits in Mexico. At that time, solar panels were only about 350 W, okay. Today, solar panels are 600, 700 W, so the cost to install the panels is much less. Our technology costs much less. Our performance is better, and similarly in the other components in the value chain. That demonstrated seven or eight years ago the ability for solar to compete with no subsidies head-to-head with everything else that was there in the market. Since then, the technology's gotten a lot better.
We're very bullish on the ability of solar, you know, to stand on its own feet. Again, last year, 83% of the generation capacity installed in the U.S. was solar and batteries. I mean, I think we break away, continue to break away because I know everything we're doing to drive down the cost, improve the performance. It seems like the other stuff's getting more expensive because it's commodity oriented.
No, Look, it makes sense, right? I totally hear what you're saying. I mean, as you think out loud, right, you hear all these investor questions on growth and peppering you. As you look at it, like, what should folks expect from you guys in the next year, right? As far as, like, you know, where your ship is going, right? You've done a lot of things in the last year alone, right? Like, leave behind the financial performance, which has been excellent.
Thank you.
Right. I mean, just transparently. Again, I wanna try to get ahead, right? Like, what are folks not fixated on, right? I mean, you've clearly got your head wired in the next two steps. What are folks not asking about? You hear these investor meetings. What do they need to be focused on along with you on the ride?
Well, I think what we're really focused on is the kind of reliable, consistent performance that we've demonstrated. If you look back, the best way to predict the future is look at what's happened in the past, right?
I mean-
We've developed a lot of technology organically that comes to market, and we start achieving revenue and profitability. We've done inorganic, we've had a strong inorganic program with the nine acquisitions we've done. The one new thing is we announced a capital a share buyback program. That's, that's new for us. $500 million over the next three years is what the board authorized management to execute. That's a new thing for us, that's out there. We're gonna be really focused on. I think whatever we do, it's gonna be have a lot of discipline associated with it. We're in a very strong liquidity position, but cash is not burning a hole in our pocket, okay?
We're basically, anything we do, we wanna be successful, whether it's organic, inorganic, share buyback. We want it to be calibrated to add shareholder value, to add, and value to our customers and our, the ecosystem that we're dealing with. What we want is to continue this, strong vision for the company that's been successful with operational excellence to be able to continue performing.
Last little nuance. Only you, because you bring it up and highlight it, the share buyback. In some respects, you're so focused. You are like the epitome of a clean energy growth company. It's transparent that you're allowed to do it, and it's not even that much, right? If you think about over three years in some respects, like let's put this in context. At the same time, your ethos has been so focused on growth. In some respects, the question is like, are you really gonna do it? Like that, there's a question of same time, you've got so many different things I imagine you're focused on and as evidenced in the diversification effort.
Fortunately, we have the most experienced and qualified CFO in the industry, and I'll let him figure that part out 'cause I don't know much about that part. What I do know is how to deliver, how to innovate and deliver value to customers and how to build a great team that can manage things like that. You know, in the follow-up meetings, folks, take your shot at Chuck on that particular question and ask. I mean, we're fortuitous to be in this position. We thought that was an important element, and to have the flexibility to do that. We'll, you know, it's a board decision and the board's granted us the authority to do that, and Chuck's managing that.
Julian, thank you so much for the invitation to come to this conference and for all the great research you and your colleagues publish. It's a real service to the power industry.
Thank you so much. I appreciate it, Dan. Thanks everyone for the questions. Take care, everyone.