Brian Lee

Brian Lee followed up on NdPr pricing, asking for a potential normalized price range in a fair market and the timeframe for its materialization, and inquired about the implications of policy initiatives like Project Vault and Section 232 on MP Materials' business discussions and pricing.

Answer

CEO James Litinsky stated that in a truly free market, NdPr prices would be materially higher, into the hundreds of dollars, driven by the capital required for projects and accelerating demand from physical AI. He noted that while policy initiatives like Project Vault and Section 232 are in various stages of development, they are expected to be beneficial for MP Materials, though no tangible guidance can be provided yet.

Brian Lee asked for insights into a potential 'normalized' NdPr pricing level in a free market and the timeframe for its materialization, as well as the implications of policy initiatives like Project Vault and Section 232 on MP Materials' business and pricing.

Answer

CEO James Litinsky stated that in a truly free market, NdPr prices would be 'way higher than today, into the hundreds of dollars' to incentivize capital, with physical AI expected to drive further price increases. He noted that while policy initiatives are in early stages, they are expected to be beneficial for MP Materials, though nothing tangible has materialized yet.

Brian Lee inquired about the underlying drivers for Sunrun's 2026 Cash Generation guidance, questioning why it remained stable despite potential upside, and sought clarity on the expected mix of the asset sales model for 2026.

Answer

CFO Danny Abajian explained that while positive factors like ITC percentage and storage attachment rates are present, these are offset by lower net volume (due to affiliate contraction), reduced ITC pricing expectations, higher insurance costs, and increased equipment prices from a domestic supply chain shift. Regarding asset sales, Abajian noted the mix would decrease from 50% in Q4 but remain a significant part of the diversified funding strategy, including the new Hannon Armstrong joint venture.

Brian Lee from Goldman Sachs inquired about the drivers behind Sunrun's 2026 Cash Generation guidance, comparing it to 2025, and sought clarification on the evolving mix and volume trends of the asset sales model, including the HASI joint venture.

Answer

CFO Danny Abajian explained that 2026 Cash Generation is impacted by a net negative volume effect from modest direct growth and affiliate contraction, lower ITC pricing expectations, higher insurance costs, and increased equipment prices. Regarding asset sales, Abajian noted a decline from the 50% mix in Q4 but confirmed it remains a meaningful part of the diversified funding strategy, alongside the new Hannon Armstrong joint venture.

Brian Lee from Goldman Sachs questioned the drivers behind the significant increase in net value creation guidance and why it wasn't translating to a higher cash generation outlook for the year. He also asked about the financing needs for the ITC safe harbor plan.

Answer

CFO Danny Abajian attributed the higher value creation to increased volume, a richer product mix with higher battery attachment, and significant cost efficiencies. He explained the cash generation outlook remains the same due to working capital investments, like inventory, and timing in capital markets, with cash flow expected to be back-half weighted.

Brian Lee inquired about Sunrun's sourcing strategy amid new tariffs, questioning the second-half 2025 impact on the gap between aggregate subscriber value and contracted net value creation, and the timeline for closing this gap.

Answer

CFO Danny Abajian confirmed the tariff impact is weighted to the second half of the year as safe-harbored inventory is used. He clarified that current guidance includes these costs but excludes potential mitigating actions like price increases or go-to-market adjustments. Abajian also noted that the trend of onshoring manufacturing and the potential for tariff reductions could offset some of the impact.

Brian Lee asked how 'derisked' Sunrun's 2025 cash generation guidance is following the recent election, focusing on the potential impact to the Inflation Reduction Act (IRA) and its associated Investment Tax Credit (ITC) adders. He also inquired about the drop in the pro forma asset-level cost of capital to 7.1% in Q3 and the outlook for 2025.

Answer

CEO Mary Powell stated that an outright repeal of the IRA is 'highly unlikely,' citing bipartisan support for residential solar and historical precedent. She expressed strong confidence in the 2025 cash generation guidance. CFO Danny Abajian added that the guidance is based on a 45% weighted average ITC and that current financing is funding against all adders. Regarding capital costs, he explained the 7.1% rate in Q3 was due to a temporary dip in base rates, and the current mark-to-market rate is back around the 7.5% assumed for 2025.

Brian Lee inquired about the specifics embedded in the increased rare earth basket price (from $300+ to $500+ per ton), particularly how the mix of scandium's value contribution has changed from its previous 60% share, and the new role of gallium. He also asked if the flow sheet changes would delay the Brook Mine's commercialization beyond the anticipated 2028 startup.

Answer

Michael Woloschuk, EVP of Critical Mineral Operations, stated that the $500+ basket value includes assumptions for capturing 5% of the high purity alumina market at 4N purity, without high purity quartz, suggesting further upside. He anticipates gallium could challenge scandium in equivalent production, with scandium potentially less than 40% of revenue despite a double-digit increase in its recovery. Jeremy Sussman, CFO, confirmed that internal projections show material increases in incremental revenue and free cash flow. Michael Woloschuk also confirmed that the flow sheet changes would push out the overall project schedule, including the commercialization timeline, by a few quarters.

Brian Lee from Goldman Sachs asked for a breakdown of the increased RE basket price (from $300+ to $500+ per ton) on Slide 12, specifically how the mix and value contribution of scandium and gallium have changed under the new flow sheet compared to previous estimates. He also inquired if the roughly one-year delay in pilot plant timing would similarly push back the overall 2028 startup timeframe for the Brook Mine.

Answer

Michael Woloschuk, EVP of Critical Mineral Operations, explained that the increased basket value includes assumptions for high-purity alumina and potential for high-purity quartz, with gallium expected to challenge scandium's contribution (scandium potentially below 40%, gallium in the 30s). Jeremy Sussman, CFO, noted the 50%+ increase in the dollar per ton figure. Woloschuk also confirmed that the pilot plant delay would similarly push out the overall Brook Mine project schedule.

Brian Lee inquired about the seasonality in Array Technologies' Q4 2025 and Q1 2026 revenue, visibility into the implied pickup in the second half, and the role of M&A in the company's capital allocation strategy.

Answer

CEO Kevin Hostetler attributed seasonality to the North American build season and the industry-wide pause due to 2025 regulatory uncertainty, expecting acceleration in Q2, Q3, and Q4 2026. He emphasized M&A focus on technical integration for increased customer value, citing APA as an example.

Brian Lee asked about the drivers behind Array Technologies' Q4 and Q1 seasonality, the visibility on the implied pickup into Q2 and the second half of 2026, and the extent to which the $2.2 billion backlog covers the guide. He also questioned Array's M&A strategy regarding diversification into other parts of the stack and providing holistic solutions.

Answer

CEO Kevin Hostetler attributed seasonality to the historical North American build season (Q2/Q3) and the industry-wide pause in contracting last year due to regulatory uncertainty, which is now leading to an acceleration in Q2, Q3, and Q4 2026. He stated that Array's M&A approach focuses on technical integration rather than pure commercial bundling, aiming to increase value through interoperable engineering. The APA acquisition, integrating foundations with trackers, is a prime example of this strategy, reducing components and offering engineered foundations at near-standard prices.

Brian Lee of Goldman Sachs asked if the updated revenue guidance was driven more by volume or price, and questioned if the implied second-half gross margin represents a sustainable run-rate into 2026.

Answer

CFO Keith Jennings clarified the revenue guidance increase was approximately 80% volume-driven. He confirmed no further legacy VCA shipments in 2025 and suggested the implied H2 2025 gross margin of 29-30% is a reasonable baseline for H1 2026. CEO Kevin Hostetler added that tariff pass-throughs create a 'denominator math' drag on the margin percentage.

Brian Lee asked about the impact of rising steel prices on Q3 and Q4 results and whether recent price increases are reflected in new bookings. He also inquired about the forward momentum for bookings, given the solid Q1 performance despite industry uncertainty.

Answer

CEO Kevin Hostetler confirmed that higher steel prices are translating to higher ASPs in new bookings, but the P&L impact won't be significant until Q4 2025 or 2026. Regarding momentum, he said it's 'too early to tell,' as high quoting activity is hampered by customer uncertainty around non-tracker component costs and the IRA, which could lead to a lull in bookings before a sharp acceleration once clarity is achieved.

Brian Lee from Goldman Sachs asked for several numerical clarifications, including the expected gross margin trajectory for 2025, the gross bookings number versus the net, and the amount of 'go-get' business assumed in the annual guidance.

Answer

CEO Kevin Hostetler clarified that Q1 gross margin would be in the mid-20s before stabilizing higher, with the dip caused by a low-margin legacy contract. He stated the 'go-get' assumption in the 2025 forecast is conservatively below 10%. While declining to give a gross bookings figure, he noted that de-bookings from Brazil in Q4 exceeded $50 million.

Brian Lee questioned the composition of the "strong double-digit growth" outlook for 2025, seeking details on the U.S. versus international mix and pricing assumptions. He also asked if the Q4 2024 gross margin run rate is representative of 2025.

Answer

CEO Kevin Hostetler declined to provide specific 2025 guidance but reiterated that the growth is visible in the existing backlog with consistent price points from recent bookings. He clarified that the expected sequential dip in Q4 2024 gross margin is an anomaly caused by a single, large, low-margin VCA project from 2021 and is not representative of the run rate for 2025.

Brian Lee (Goldman Sachs and Co.) inquired about the U.S. bookings ASP of $0.364 per watt, specifically asking about the contribution of adders, the expected entitlement level for future U.S. bookings, and visibility on the pricing environment. He also asked about the implied component gross margin in the guidance and the path to returning to high teens or 20% gross margins seen in 2024.

Answer

CEO Mark Widmar clarified that adders contributed about 2.5 to 3 cents to the $0.364 ASP, noting that not all bookings included the CuRe adder. He expressed confidence in current pricing but sees potential for better pricing due to ongoing policy catalysts like Solar IV announcements. CFO Alex Bradley explained that the ex-45X gross margin is about 7%, detailing how tariffs, underutilization, and warehousing costs impact it, and outlining a path to 20% gross margin by 2027/2028 through reduced warehousing, adjusters, and incremental volume. Mark Widmar added that the ASP is influenced by domestic content and that international-only deals would likely clear at a lower price, also mentioning cost headwinds from international glass imports.

Brian Lee inquired about the ASP for U.S. bookings, specifically the contribution of adders to the $0.364 per watt, expected pricing levels for the rest of the year, and visibility on the forward pricing environment. He also asked about the gross margin, seeking clarification on when the company expects to return to high teens/20% component gross margins seen in 2024 and the bridges to achieve this.

Answer

CEO Mark Widmar clarified that adders contributed about $0.025 to $0.03 to the $0.364 ASP, noting that not all bookings included the adder. He expressed confidence in current pricing but sees potential for better pricing due to catalysts like Section 232, FEOC restrictions, and Solar IV announcements. He also clarified that the $0.364 ASP is largely influenced by domestic content, and international-only deals would be closer to $0.30. CFO Alex Bradley explained that the implied 7% gross margin (excluding 45X credits) for 2026 is impacted by $165 million in tariffs, $135 million in underutilization, and $200 million in warehousing costs. He outlined a path to 20% gross margin by reducing these costs and realizing adjusters in 2027/2028, while acknowledging the interconnectedness of U.S. manufacturing costs and 45X credits. Mark Widmar added that insufficient U.S. glass supply and associated international imports (with tariffs and higher freight) are also creating a cost headwind.

Brian Lee from Goldman Sachs inquired about the recent surge in bookings, specifically the 2+ gigawatts in July, and the drivers behind the increased pricing of $0.32-$0.33 per watt, asking if it was due to trade policy, FIOC rules, or domestic content demand.

Answer

CEO Mark Widmar explained that the recent bookings were driven by a combination of factors, including customers needing to safe harbor projects for 2029-2030 delivery and replacing volume from a Chinese supplier who had reneged on a commitment. He stated that First Solar is still in a 'price discovery' phase but is encouraged by the momentum and sees potential for further price increases.

Brian Lee sought clarity on the guidance strategy, asking if the high-end forecast assumes First Solar absorbs the 10% tariff on Southeast Asian modules or passes it on. He also asked about the assumed volume from U.S. finishing capacity this year and the potential timeline and cost to expand it.

Answer

CFO Alex Bradley clarified that the high-end guidance currently models First Solar absorbing the 10% tariff cost for simplicity, but the actual strategy will involve negotiations with customers. CEO Mark Widmar added that some U.S. finishing is already occurring this year and could be expanded. He estimated a 9-12 month timeline to establish a new finishing line once a decision is made, but that decision is gated by the outcome of the budget reconciliation process.

Brian Lee inquired about the 2025 guidance, questioning its dependency on selling unsold international volume and the potential for customers to 'safe harbor' modules amid policy uncertainty.

Answer

CEO Mark Widmar explained that while many customers have already safe-harbored projects, the current policy uncertainty discourages further immediate action. CFO Alex Bradley clarified the 18-20 GW shipment guidance includes a 1.4 GW dependency on new book-and-bill sales for international product and noted the year is back-end loaded, adding risk. Mark Widmar added that the risk of selling the India-specific volume is low due to market mechanics.

Brian Lee from Goldman Sachs asked about the future production mix of the India facility between the U.S. and domestic markets, the timeline to reallocate that volume, and the level of risk associated with the record-high implied Q4 sold volume guidance.

Answer

Executive Mark Widmar explained that re-tooling the India factory for U.S. tracker products is a nimble process, taking only a few days. He anticipates most India production will ship to the U.S. in the near term. Regarding Q4 guidance, he acknowledged risks but stated the company is enforcing contracts and shipping to warehouses if customers face delays. Executive Alexander Bradley added that the ramp of new CuRe technology and potential external events like weather pose additional risks to achieving the high Q4 volume target.

Brian Lee asked for a breakdown of Shoals' 2026 top-line guidance, specifically how much growth is driven by new markets like CC&I and international, and how much is pure market share gain, given expectations for modest utility-scale volume growth. He also followed up on the tariff impact, asking about the portion related to IEEPA and potential margin recapture if tariffs relax.

Answer

CEO Brandon Moss explained that growth is driven by addressing previously untapped market segments, citing new customers contributing $140 million to BLAO, 11% solar business growth, $13 million international revenue in 2025 with $90 million international BLAO, rapid C&I growth, and 47% OEM growth in 2025. CFO Dominic Bardos noted the complexity of tariff impacts, distinguishing between pass-through costs and absorbed costs, and the potential benefit if tariffs are reduced in the second half. Brandon Moss clarified that IEEPA tariffs are no longer collected, refunds are not baked into plans, and new Section 122 tariffs (15% plus 232 tariffs) will apply to future imports, while current inventory still carries capitalized tariff expense.

Brian Lee asked for a breakdown of the top-line guidance beyond BESS, specifically how much growth is driven by new markets like CC&I and international, and pure market share gains. He also sought clarification on the tariff impact, including IEEPA and Section 122, and potential margin recapture.

Answer

CEO Brandon Moss highlighted that Shoals has addressed two-thirds of the previously unattacked 30% market, evidenced by significant backlog from new customers. He noted 11% solar business growth, $13 million in international revenue in 2025 (with $90 million international BLAO), rapid CC&I growth, and 47% OEM growth. CFO Dominic Bardos detailed the complex tariff situation, explaining that some are pass-through, while others (like aluminum Section 232s) impact COGS. He confirmed IEEPA tariffs are no longer collected, but refunds are uncertain, and new Section 122 tariffs (15%) are in addition to 232s.

Brian Lee of Goldman Sachs questioned the drivers behind the increased revenue guidance and asked why the adjusted EBITDA guidance was not also raised, probing into the impact of product mix, gross margins, and operating expenses.

Answer

CEO Brandon Moss attributed the revenue strength to winning new customers rather than project pull-ins. CFO Dominic Bardos explained that margins were impacted by promotional pricing used to attract a diverse customer mix, some of whom use lower-margin solutions. He also noted that elevated legal expenses related to ongoing litigation are affecting operating expenses.

Brian Lee from Goldman Sachs asked for a quantitative assessment of competitors' exposure to China tariffs and market share, and questioned how customer conversations reflect Shoals' U.S. manufacturing advantage. He also requested a bridge from current gross margins back to the company's long-term 40%+ target.

Answer

CEO Brandon Moss emphasized Shoals' long-standing investment in U.S. manufacturing, positioning the company favorably against competitors with import exposure, but stressed that customer engagement is driven by service improvements, not just tariffs. CFO Dominic Bardos explained the path to higher margins involves improved product and customer mix, contributions from new accretive products, and internal efficiencies, while also noting a focus on total operating profit dollars.

Brian Lee of Goldman Sachs asked for the specific drivers behind the projected 40/60 first-half/second-half revenue split for 2025. He also inquired about the margin drivers for the second half, particularly the contribution from new products and markets.

Answer

CFO Dominic Bardos attributed the unusual seasonality to a declining backlog in 2024, normal Q1 winter effects, and project timing being skewed to the latter half of the year. CEO Brandon Moss explained that second-half margin expansion will be driven by significant operating leverage from higher volumes and a favorable mix from new, accretive products in the CC&I, OEM, and BESS segments.

Brian Lee asked for clarification on the ITC patent case timeline and review deadline, and inquired about the momentum of bookings in the fourth quarter.

Answer

CEO Brandon Moss confirmed the ITC review deadline was imminent but stated a review would not be unusual, expressing confidence in the final outcome. CFO Dominic Bardos noted that Q4 bookings had started strong, with record quoting activity and new customer wins following the initial ITC ruling, suggesting sustained momentum.

Brian Lee (Goldman Sachs) inquired about the current bottlenecks and future visibility for Universal Display's phosphorescent blue material in 2026, and later asked about the trend in developmental blue revenues as a leading indicator. He also questioned inventory trends in China, expected seasonality for 2026, and the implications of the Q4 2025 cumulative catch-up payments.

Answer

Brian Millard (CFO, Universal Display) stated that the company remains on track with blue material development, collaborating with multiple customers on various architectural approaches for commercialization, with progress largely in customer hands. He noted that developmental blue revenue, while an interesting data point, isn't the sole measure of progress, and expects it to remain around recent levels for 2026. Millard also indicated that tariff-related inventory buying in China has largely worked through, expecting a return to historical second-half-weighted seasonality in 2026. He explained that the Q4 cumulative catch-up was due to recent revisions in third-party market research forecasts.

Brian Lee asked about the current bottlenecks and visibility for phosphorescent blue material commercialization, the trend of developmental blue revenue as a leading indicator, inventory trends in China, seasonality expectations for 2026, and the implications of the Q4 2025 cumulative catch-up adjustment.

Answer

Brian Millard, Chief Financial Officer and Treasurer, stated that Universal Display is on the right path with phosphorescent blue, collaborating with multiple customers on various architectural approaches, with commercialization progress largely dependent on customer timelines. He noted that developmental blue revenue, while a data point, doesn't fully reflect progress, and modeling around recent levels for 2026 is reasonable. Regarding inventory, he indicated that tariff-related buying in China has largely worked through, and 2026 is expected to return to historical seasonality with a stronger second half. The Q4 cumulative catch-up was attributed to recent revisions in third-party market research forecasts.

Brian Lee questioned the full-year revenue guidance, which implies a flat second half despite a strong first half, and asked about seasonality. He also probed into China's strong Q2 performance, asking about potential inventory build-up and pull-forward from Q3.

Answer

CFO Brian Millard acknowledged the strong first half but noted the full year is tracking to original plans, leading to a raised lower-end of guidance. He mentioned some tariff-related buying in Q2 was mostly an intra-quarter pull-in. He reiterated that Chinese customer ordering patterns are historically variable and that they have limited inventory visibility but are receiving consistent forecasts.

Brian Lee questioned the timeline for the commercialization of phosphorescent blue, asking for clarity on the "months, not years" phrasing. He also inquired about the expected revenue seasonality for 2025 and the current status of customer inventory levels.

Answer

CFO Brian Millard clarified that the "months, not years" delay for blue phosphorescent commercialization is measured from the end of 2024. He also stated that the 2025 revenue plan anticipates a stronger second half, though macro uncertainties could alter this. Millard noted that customer inventory levels currently appear normal.

Brian Lee asked about the crystallization of the AI data center opportunity, including the timeline for product beta, qualification cycles with customers, and manufacturing logistics for commercialization.

Answer

CEO Shuki Nir explained that NVIDIA's 800-volt DC architecture is targeted for 2027, with initial data centers designed for it. He discussed engaging with ecosystem partners, positive feedback on SolarEdge's 34.5kV to 800V DC conversion with over 99% efficiency, and plans for prototype testing. He reiterated no revenue before 2027, with industry ramp-up in 2028, highlighting SolarEdge's mass production experience as a key advantage. Brian Lee also inquired about the company's guidance and Safe Harbor, specifically regarding the absence of significant pull-forward revenue in Q4 and Q1, contrasting it with peers, and asking about go-to-market strategy and potential share shifts. CEO Shuki Nir clarified that while no significant Safe Harbor revenue was recognized, many deals were signed based on the Physical Work Test, which defers revenue recognition until product delivery. CFO Asaf Alperovitz added that this approach provides better visibility, optimizes the supply chain, and benefits customers by avoiding large upfront payments.

Brian Lee inquired about the crystallization of SolarEdge's AI data center opportunity, seeking details on the timeline for product beta, qualification cycles with potential customers, and the envisioned manufacturing strategy for commercialization.

Answer

Shuki Nir, CEO of SolarEdge Technologies, highlighted NVIDIA's 2027 target for 800-volt DC architecture, discussing hybrid vs. Solid-State Transformer (SST) solutions. He noted engagement with ecosystem players, positive feedback on SolarEdge's 99% efficient 34.5kV to 800V DC conversion technology, and anticipated prototype testing. Nir emphasized SolarEdge's mass production experience as a key advantage for scaling. Regarding Safe Harbor, Shuki Nir and Asaf Alperovitz, CFO, clarified that while significant deals based on physical work tests have been signed, revenue is not recognized until product delivery, providing better visibility and customer flexibility without significant pull-forward revenue in guidance.

Brian Lee asked for a breakdown of the expected revenue growth drivers in the Q3 guidance between the U.S. and European markets. He also questioned the implied gross margin leverage, asking about the drop-through rate and current factory utilization levels.

Answer

CFO Asaf Alperovitz explained that U.S. growth is driven by the TPO shift and C&I opportunities, while European growth depends on market share gains offsetting a weak macro environment. He quantified the fixed cost infrastructure in COGS at approximately $90-95 million, stating that higher revenue improves absorption of these costs, which is the primary driver of margin leverage.

Brian Lee asked for an explanation for the lower ASP per watt despite higher megawatt shipments in Q1 and sought an outlook for ASPs for the rest of the year. He also requested details on the company's battery strategy, including the Samsung NMC contract and future LFP sourcing plans.

Answer

CFO Asaf Alperovitz attributed the Q1 ASP and volume dynamic to a higher-than-usual amount of deferred revenue from shipment timing, but did not provide forward-looking ASP guidance. CEO Yehoshua Nir reiterated that the company does not break down tariff impacts by product and that the supply chain team is focused on finding the best sourcing solutions for all components, with the provided margin guidance reflecting this holistic effort.

Brian Lee asked about SolarEdge's free cash flow outlook for Q1 and the full year 2025, the strategy for its upcoming debt maturity, and the timeline for aligning sell-in revenue with the higher sell-through rate.

Answer

CFO Ariel Porat confirmed expectations for positive free cash flow in Q1 and for the full year 2025 but did not provide specific figures. He reiterated the plan to pay the zero-coupon convertible debt from the balance sheet. CEO Yehoshua Nir added that the gap between sell-in and sell-through is due to European channel inventory, which he expects to normalize by the end of Q2 2025, at which point revenues should converge with demand.

Brian Lee of Goldman Sachs Group, Inc. inquired about the impact of recent steep price reductions on the company's previous 2025 revenue outlook, the expected cadence of revenue recovery into 2025, and the role of market share loss in recent performance declines.

Answer

Interim CEO Ronen Faier responded that market volatility, particularly in Europe and the post-election U.S., makes it difficult to commit to the previous $550 million revenue target for late 2025. He clarified that Q1 is not expected to be lower than Q4, anticipating stabilization or an increase as price reductions take effect. Faier noted it's hard to distinguish between market share loss and overall market contraction in Europe but expects channel clearing to accelerate due to the new pricing.

Brian Lee asked about the new guidance framework for the Westinghouse business, seeking clarity on the financial impact of individual projects, particularly two-packs, and potential projects in Bulgaria, Poland, and Canada. He also inquired why the 2026 average realized uranium pricing outlook appeared flat year-over-year despite a general uptrend in recent years.

Answer

Grant Isaac, President and Chief Operating Officer, explained that Westinghouse's guidance prudently includes only projects at Final Investment Decision (FID), but highlighted significant upside from potential projects in the U.S., Canada, Poland, Bulgaria, Slovenia, Slovakia, and Czechia. He provided a framework of $400 million-$600 million EBITDA per reactor (multiplied by two for two-packs) for engineering and procurement. Regarding uranium pricing, Mr. Isaac emphasized Cameco's disciplined strategy of not layering in large contract volumes below replacement rates, preserving pounds for future stronger pricing as more demand enters the market.

Brian Lee inquired about the new guidance framework for the Westinghouse business, seeking clarity on the financial impact of individual reactor projects, particularly given the 2026 guidance includes one U.S. project. He also asked for color on potential projects in Bulgaria, Poland, and Canada. Additionally, Lee questioned why the average realized uranium pricing outlook for 2026 appeared relatively flat year-over-year despite a general uptrend in pricing.

Answer

Grant Isaac, President and Chief Operating Officer, explained that Westinghouse has significant upside with numerous gigawatt-scale Gen III reactor opportunities globally, including potential projects in the U.S., Canada, Poland, Bulgaria, Slovenia, Slovakia, Czechia, and the Middle East. He noted that the guidance only includes projects at Final Investment Decision (FID) and provided a framework of $400 million-$600 million EBITDA per reactor (typically built in two-packs) for the engineering and procurement scope. Regarding uranium pricing, Isaac emphasized Cameco's disciplined strategy of not layering in large volumes at current prices, preserving pounds for when more demand enters the market and drives stronger price appreciation, as the industry is still well below replacement rate contracting levels.

Brian Lee from Goldman Sachs inquired about the drivers of the strong EBITDA in the uranium segment, specifically the low-cost inventory drawdown, and asked about the gating factors for new nuclear projects to reach FID.

Answer

Executive VP & CFO Grant Isaac attributed the performance to Cameco's strategic supply discipline. SVP & Deputy CFO Heidi Shockey added that a significant portion of higher-cost purchased pounds are expected in the second half of the year, which will balance out the unit cost. On new projects, President & CEO Tim Gitzel noted overwhelming global interest, while Grant Isaac highlighted that Central and Eastern European nations have an advantage due to state support, identifying standardization and sequencing as the keys to success.

Brian Lee from Goldman Sachs asked about HASI's involvement and potential returns from the emerging prepaid lease product in the residential solar market, given its strong presence in traditional PPA leases. He also inquired about the impact of recent tightness in tax equity markets, particularly due to policy uncertainty like Foreign Entity of Concern (FIOC) guidance, on HASI's marketplace and opportunities.

Answer

Jeff Lipson, President and CEO of HASI, highlighted residential solar as a success story for HASI. Marc Pangburn, Chief Revenue and Strategy Officer, stated that while HASI has seen prepaid leases historically, they haven't evaluated current transactions using that structure but would consider them, likely preferring traditional lease/TPO products. On tax equity, Mr. Pangburn noted an increased use of transferability structures, partly due to simplicity and partly driven by the market's desire for clarity on FIOC and other policy uncertainties, citing recent Sunrun and Pattern transactions as examples.

Brian Lee asked about the implications of the emerging prepaid lease product in the residential solar market for HASI's financing opportunities and returns. He also inquired about the impact of tightness in tax equity markets, potentially due to policy uncertainty like Foreign Entity of Concern (FEOC) guidance, on HASI's marketplace and business.

Answer

Jeff Lipson, President and CEO, highlighted residential solar as a long-term success story for HASI. Marc Pangburn, Chief Revenue and Strategy Officer, stated that HASI has not yet seen transactions using the prepaid lease structure to evaluate but would consider them. Regarding tax equity markets, Marc Pangburn noted an increased deployment of transferability structures, partly due to simplicity and the market's desire for clarity on tax equity items like FEOC, citing the Sunrun and Pattern transactions as examples.

Representing Brian Lee, an analyst asked for the company's latest outlook on the timing of potential changes to the IRA and for details on its exposure to storage projects given tariff concerns.

Answer

Chief Client Officer Susan Nickey stated that the industry expects the legislative process to begin soon but remains confident the IRA's core components will not be repealed. President and CEO Jeffrey Lipson added that while most solar projects include a storage component, the investments in their 12-18 month pipeline are for projects already constructed or near-operational, insulating them from immediate tariff impacts.

Represented by Tyler Bisset, Brian Lee of Goldman Sachs asked about the notable shift in the investment pipeline towards Grid Connected projects and away from Behind-the-Meter (BTM) assets, questioning if there was a specific driver for this change.

Answer

President and CEO Jeffrey Lipson explained that the pipeline composition can be 'lumpy' from quarter to quarter, particularly because Grid Connected transactions are often larger in scale. He advised that this short-term shift should not be interpreted as a long-term strategic change.

Brian Lee asked about the drivers behind Watts Water Technologies' strong 2026 top-line outlook (2-6% organic growth, effectively higher excluding 80/20), which appears to outperform many water peers, and whether it's due to price, geography, or specific end markets.

Answer

President and CEO Bob Pagano attributed the performance to a combination of factors, including leveraging the institutional and data center markets, favorable pricing, steady repair and replacement growth, and new solutions like Nexa and electrification products (e.g., Aegis heat pump), all benefiting from R&D investments.

Brian Lee asked about the 2026 top-line outlook, noting Watts Water Technologies' growth ahead of water peers (2-6% organic, effectively 2 points higher without 80/20), and inquired about the specific drivers of this performance, such as price, geography, or end markets. He also asked about the margin guidance, specifically the 50 basis points of acquisition dilution, and how the recapture of this margin is expected in out years, aligning with typical annual margin expansion targets.

Answer

President and CEO Bob Pagano attributed the strong top-line performance to a combination of factors, including leveraging the institutional and data center markets, price, growing repair and replacement activity, and new solutions like Nexa and electrification products (e.g., Aegis heat pump), all supported by R&D investments. Regarding margin guidance, Bob Pagano stated that the goal is 30-50 basis points improvement in operating income annually, achieved through the One Watts Performance System, factory automation, productivity initiatives, and higher-priced solutions, expressing confidence in recapturing acquisition dilution in future years.

Brian Lee inquired about the conversion of the 36 GWh data center pipeline into backlog, the expected timing for bookings and P&L impact, details on the $20 million incremental costs from two projects, and the potential for upside to Fluence Energy's 2026 guidance.

Answer

Julian Nebreda, President and CEO of Fluence Energy, confirmed no new data center projects have converted to backlog yet, as it's a new market segment, but anticipates some conversion in calendar Q3/Q4. Ahmed Pasha, CFO of Fluence Energy, explained the $20 million costs were due to scope and schedule changes in two non-US projects, which are expected to be recovered. Nebreda reiterated the company's commitment to meeting its 2026 guidance, with a focus on driving stronger visibility and opportunities for 2027.

Brian Lee inquired about the conversion of the 36 GWh data center pipeline to backlog, if any of the $750 million bookings included data center projects, and the outlook/timing for data center projects to impact bookings and P&L. He also asked for details on the $20 million incremental costs from two non-U.S. projects and the plan for recovery, as well as the upside potential to the 2026 guidance.

Answer

Julian Nebreda (President and CEO, Fluence Energy) clarified that the 36 GWh data center opportunities are new use cases (behind-the-meter or dedicated lines) and none have converted to backlog yet. He noted it's a new market segment, making conversion predictions difficult, but expects some conversion in Q3 or Q4 of the calendar year, emphasizing rapid growth and Fluence's competitive advantage. Ahmed Pasha (CFO, Fluence Energy) explained the $20 million costs were due to scope and schedule changes in two non-U.S. projects, which Fluence expects to recover from customers. Julian Nebreda added that Fluence is committed to meeting 2026 guidance and aims for stronger visibility for 2027 through better order intake, rather than exceeding current 2026 guidance.

Brian Lee inquired about the sizing of the data center market opportunity, asking for clarification on the total addressable market (TAM) given the 30 gigawatt-hours in the pipeline and Fluence's potential market share. He also asked about the P&L timing and impact of this data center pipeline, specifically if any revenue is embedded in the fiscal year 2026 guidance and if these projects are expected to yield higher margins.

Answer

President and CEO Julian Nebreda stated that the TAM for data centers is significantly higher than previous estimates, potentially 10 times the earlier $8 billion figure. He explained that Fluence addresses three key data center needs: interconnection flexibility (the biggest driver), backup power (reducing diesel generator reliance), and power quality, with SmartStack being well-positioned due to its density, safety, and cybersecurity. He clarified that half of the 30 GWh pipeline is for FY26 order intake and half for FY27, with no revenue expected in FY26 and unclear timing for FY27. While confident in creating significant value for customers, he did not provide specific margin details for this new segment.

Brian Lee inquired about the total addressable market (TAM) for data centers, Fluence Energy's potential market share, and the P&L timing and margin impact of the data center pipeline.

Answer

President and CEO Julian Nebreda indicated the data center TAM is significantly larger than previous estimates, potentially 10x the $8 billion. He identified interconnection flexibility and backup power as key drivers, with power quality being less critical. He stated that half of the 30 GWh data center pipeline is expected as 2026 order intake, with no revenue anticipated in fiscal 2026. He expressed confidence in creating significant value for data center customers, implying favorable margins.

Brian Lee from Goldman Sachs inquired about the drivers for the lower implied Q4 gross margin, the margin outlook for the 2026 backlog, and the company's strategy for navigating Foreign Entity of Concern (FEOC) restrictions related to its AESC partnership.

Answer

President and CEO Julian Nebreda explained that Q4 margins are impacted by approximately $30 million in tariff costs on existing U.S. contracts. He stated that the 2026 backlog margin is in line with the 10-12% target. Regarding FEOC, Nebreda asserted that Fluence views the domestic content push as a confirmation of its strategy, not a threat, and is working with partners on compliance without needing to raise additional equity. CFO Ahmed Pasha confirmed the new 80-90% backlog coverage for future guidance is to ensure higher confidence.

Brian Lee from Goldman Sachs Group, Inc. inquired about the specifics of the AESC capacity ramp, questioning how two 3.5 GWh lines result in 12 GWh of volume. He also asked about the economic viability of blending domestic and imported cells under high tariffs and the potential margin impact on the $700 million of delayed revenue once it is re-contracted.

Answer

CEO Julian Nebreda clarified that the 12 GWh figure is achieved by blending domestically produced cells with imported cells, assuming a 50/50 mix, to meet the 40% domestic content requirement for IRA incentives. CFO Ahmed Pasha added this allows them to sell more volume while giving customers the desired incentive. Nebreda stated that even with current high tariffs, this blended strategy is about 10% cheaper than using all-imported Chinese cells. He emphasized that the current issue is market uncertainty, not long-term viability, and that Fluence's contracts are structured to align interests with customers to find a profitable path forward once tariff clarity emerges.

Brian Lee questioned the margin profile of new and delayed bookings, asking if the pressure is temporary or structural, and sought to understand the margin differences between U.S. and international markets.

Answer

President and CEO Julian Nebreda characterized the margin pressure as temporary, expecting the new product platform to restore margins to the mid-point of the 10-15% range in fiscal 2026. He confirmed competitive pressure is significantly stronger internationally, while U.S. margin impact is primarily from a $10 million tariff hit.

Brian Lee questioned the fiscal 2025 revenue guidance, asking why fiscal 2024 missed its initial midpoint and what provides confidence this won't recur. He also asked for the geographic mix of late-stage deals and the reason for a wider gross margin guidance range.

Answer

President and CEO Julian Nebreda stated that a key difference for FY25 is a $1.5 billion pipeline of contracts in late-stage negotiations, providing a clearer path to the target. CFO Ahmed Pasha added that this pipeline is split evenly between the U.S. and Asia. Regarding the 10-15% gross margin range, Pasha explained it is consistent with prior long-term guidance and will be updated as more contracts are signed.

Brian Lee inquired about Wolfspeed's updated go-to-market strategy for aerospace & defense, grid modernization, and AI data centers, including required organizational changes and timelines. He also asked about potential interest rate step-ups on the first lien debt and any contemplated strategic financing maneuvers for the first lien and convertible notes.

Answer

CEO Robert Feurle explained the pivot from an EV-centric focus to an application-oriented go-to-market strategy across automotive, industrial & energy, and aerospace & defense, emphasizing progress in AI data centers and the implementation of a new sales and channel strategy. CFO Gregor van Issum addressed the balance sheet, confirming initial steps taken post-Chapter 11 emergence and the first lien paydown. He acknowledged further work on the convert area and other options, noting the upcoming interest rate step-up on the first lien and the high cost of capital, committing to actively explore refinancing options in a structured way.

Brian Lee with Goldman Sachs inquired about Wolfspeed's strategy for diversifying revenue into new key segments like Aerospace & Defense, grid modernization, and AI data centers, including changes to their go-to-market approach and associated timelines. He also asked about the balance sheet, specifically regarding any expected interest rate step-up on the first lien debt and potential strategic maneuvers for the first lien and convertible notes given current equity trading.

Answer

Robert Feurle, CEO of Wolfspeed, explained the pivot from an EV-centric focus to an application-oriented go-to-market strategy across automotive, industrial & energy, and aerospace & defense, highlighting progress in AI data centers and the implementation of a new sales organization and channel strategy. Gregor van Issum, CFO of Wolfspeed, confirmed active exploration of options for the convertible notes and other refinancing opportunities for the L1 debt, acknowledging a high cost of capital and upcoming interest rate step-ups, while emphasizing a disciplined approach to capital allocation and working capital management.

Brian Lee of Goldman Sachs inquired about the demand environment, particularly concerning the EV slowdown narrative, and sought to understand the company's confidence in medium-to-long-term demand for its Mohawk Valley fab. He also asked about the competitive impact of 200-millimeter SiC wafer capacity emerging from China.

Answer

Executive Chairman Tom Werner acknowledged slowing EV growth but noted that specific customer models are ramping ahead of schedule. CFO Neill Reynolds added that EV revenue grew 92% year-over-year and is expected to grow 20-30% sequentially in Q3. Regarding competition, Werner asserted that Wolfspeed is the only volume producer of 200mm wafers, giving them a significant technology and credibility advantage, and confirmed they are actively sampling with key partners.

Brian Lee of Goldman Sachs asked about the potential impact of the recent U.S. election results on CHIPS Act funding and inquired about the status of the wafer supply agreement with customer Renesas.

Answer

CEO Gregg Lowe stated that the CHIPS Act has strong bipartisan support as it addresses national security by repatriating the semiconductor supply chain, a U.S.-led technology. He expressed confidence that the election results do not change this priority. Regarding Renesas, Lowe described them as a great partner and noted that as they are new to silicon carbide, it's normal for demand to fluctuate. He confirmed they continue to work with Renesas on supply plans for both 150mm and 200mm substrates.

Brian Lee inquired about the impact of the 5% reciprocal tariff on margins, seeking an update on the company's ability to offset it by Q2 2026, and also asked about the scaling of the IQ9 commercial inverter against its $400 million total addressable market.

Answer

Badri Kothandaraman, President and CEO, explained that the 5% reciprocal tariff is distributed across microinverters, batteries, and accessories, and the strategy to offset it relies on innovation, specifically the IQ9 microinverter and the 5th-generation battery, which are designed for higher gross margins. For the IQ9 commercial inverter, Mr. Kothandaraman confirmed Q1 bookings are in the $5 million-$10 million range and expressed confidence in achieving a similar market share as residential in the small commercial market over a three-year timeframe.

Brian Lee asked about the impact of reciprocal tariffs on gross margins, specifically if the 5% impact is stabilizing and if the target to fully offset it by Q2 2026 is still on track. He also inquired about the IQ9 commercial inverter's $400 million total addressable market (TAM), its initial bookings activity, and scaling expectations for the year.

Answer

Badri Kothandaraman (President and CEO, Enphase Energy) confirmed the 5% reciprocal tariff impact is distributed across microinverters, batteries, and accessories, noting there's no 'safe place' without tariffs. He explained that innovation, particularly the IQ9 microinverter (higher power, higher production tax credit, better gross margins) and the 5th-generation battery (50% higher energy density, 40% lower cost), will be key to offsetting this impact. Regarding the IQ9 commercial inverter, Kothandaraman confirmed Q1 bookings are approximately $5 million-$10 million and expects to achieve similar market share as residential in the small commercial market over a three-year timeframe, driven by quality, reliability, FEOC compliance, and domestic content.

Brian Lee asked about the dynamics of non-U.S. revenue, particularly in Europe, noting it's at its lowest since 2021 and questioning if company-specific factors or market share shifts are at play, and what the recovery path looks like. He also sought clarification on the Q4 2025 non-GAAP gross margin guidance, bridging the gap from Q3's higher margin, and the expected margin decline for the Q1 2026 revenue outlook.

Answer

President and CEO Badri Kothandaraman detailed European market challenges in the Netherlands and France, emphasizing the shift to solar-plus-battery solutions and new partnerships like Essent. He acknowledged competition but stressed innovation with the 5th-generation battery and IQ9 microinverters to drive cost reductions and value. Mr. Kothandaraman clarified that Q4 gross margin reflects a more normal product mix and a 5% reciprocal tariff impact, while Q3's margin was elevated by microinverter safe harbor shipments.

Brian Lee inquired about the significant decline in Enphase Energy's non-U.S. revenue, particularly in Europe, asking if it was company-specific or market-driven, and sought clarity on the expected recovery path. He also questioned the Q4 2025 non-GAAP gross margin guidance of 43.5%, which is lower than Q3's 49%, and asked about the expected margin decline for Q1 2026.

Answer

Badri Kothandaraman, President and CEO, attributed the non-U.S. revenue decline to seasonality and challenging market dynamics in the Netherlands (net metering sunset, battery retrofit opportunity with Essent), France (VAT cut limitations, reduced export incentives), and Germany (weak market, stable performance due to partnerships). He emphasized innovation, including the 5th-generation battery and IQ9 microinverters, as key to future recovery. Regarding gross margins, Mr. Kothandaraman explained that Q4's 43.5% reflects a more normal product mix compared to Q3's elevated margin due to microinverter-heavy safe harbor shipments. He noted the Q4 guidance includes a 5% reciprocal tariff impact, which would otherwise place it at 48.5%, and declined to provide Q1 2026 margin guidance.

Brian Lee questioned the implementation timeline and potential incremental costs associated with Enphase's strategic initiatives, such as facilitating TPO financing for long-tail installers and lead generation. He also asked whether pricing actions would be part of the strategy to mitigate the expected 2026 market contraction.

Answer

President & CEO Badri Kothandaraman responded that he does not anticipate major changes to operating expenses to facilitate these initiatives, as they are designed to be lucrative for TPO partners. Regarding pricing, he emphasized that the company's strategy is rooted in innovation, not reactive price cuts. He explained that next-generation products like the fifth-gen battery and IQ9 microinverters will fundamentally lower costs and improve margins, providing flexibility for value-based pricing.

Brian Lee asked about the outlook for battery shipment volumes in the second half of 2025, considering potential price increases from tariffs. He also sought more detail on the cadence of battery gross margin recovery to the ~35% target by Q2 2026.

Answer

President and CEO Badri Kothandaraman expressed confidence in continued battery shipment growth, noting the new 4th-generation battery's lower total installed cost will be a key driver. On margins, he reiterated the tariff impact would be 6-8% in Q3 but would gradually improve each subsequent quarter, reaching zero by Q2 2026 as the company transitions to non-China cell suppliers.

Brian Lee asked for clarification on the Q1 2025 guidance, specifically how to interpret the $50 million in safe harbor revenue and its impact on baseline revenue and seasonality. He also inquired about the growth outlook for battery storage, the transition to the fourth-generation battery, and expectations for sequential volume growth throughout 2025.

Answer

President and CEO Badrinarayanan Kothandaraman explained that the $95 million safe harbor deal should be viewed as approximately $12 million in core revenue per quarter over eight quarters. This adjustment aligns the Q1 guidance with a typical 15% seasonal decline. He confirmed ongoing discussions for more safe harbor deals. Kothandaraman also affirmed expectations for sequential battery growth in 2025, driven by the new 'FlexPhase' battery in Europe and the upcoming fourth-generation battery in the U.S., which features a smaller footprint and lower installation costs, with pilots beginning in March.

Brian Lee asked for a breakdown of the headwinds impacting the Q4 revenue guidance, specifically quantifying the effects of battery destocking, Europe's slowdown, and the SunPower bankruptcy.

Answer

President and CEO Badri Kothandaraman confirmed the SunPower bankruptcy represents a $10-15 million headwind for the quarter and acknowledged the impact of lower battery shipments post-restocking. He clarified that while there are no broad price increases, the new domestic content product has a price adder. He stated that an expected increase in microinverter sell-through should offset these headwinds, resulting in a flat sequential revenue guide at the midpoint.

Brian Lee asked about the attractiveness of Pentair's M&A pipeline today compared to last year, considering current valuations. He also requested details on the revenue and margin profile of the residential flow business and the expected timeline for realizing synergies from the resegmentation, specifically if the impact would be immediate or extend beyond the 2026 outlook.

Answer

CEO John Stauch noted that the quantity of M&A opportunities is emerging, with a focus on quality, bolt-on deals, and adjacencies that create shareholder returns. He stated that the financials for the residential flow business are provided in the deck, and when combined with residential water solutions, these businesses are on the lower side of Pentair's overall contribution, indicating significant future return on sales potential. The synergies are expected to be realized over several years.

Brian Lee asked about the current attractiveness of Pentair's M&A pipeline compared to last year, considering prevailing valuations. He also sought clarification on the revenue and margin profile of the residential flow business and the expected timeline for realizing synergies from the recent resegmentation.

Answer

CEO John Stauch noted that while the quantity of M&A opportunities is emerging, Pentair is focused on the quality of bolt-on deals that fit current strategies, balancing M&A with buybacks. He directed to the deck for residential flow financials (2023-2025), stating that the combined residential flow and water businesses are on the lower side of Pentair's average contribution, indicating significant future ROS potential, with synergies expected over the next several years.

Brian Lee from Goldman Sachs Group, Inc. requested a breakdown of the raised Pool segment guidance, seeking to understand the contribution from pricing versus underlying volume demand. He also asked about the potential outlook for the 2026 pool construction cycle if interest rates remain elevated.

Answer

President and CEO John L. Stauch detailed that the 6-7% Pool guidance consists of roughly 2 points from acquisitions, 5 points from price, and a slight decline in volume. Regarding 2026, EVP and CFO Bob P. Fishman stated it was too early for a specific forecast but emphasized that the strategy remains focused on increasing product content per pool through innovation and automation, which is a key growth lever independent of new construction rates.

Brian Lee asked for clarification on the pricing assumption within the 2025 Pool segment outlook. He also questioned whether potential tariffs on EU competitors could create a market share opportunity for Pentair, depending on how the global tariff situation unfolds.

Answer

CFO Bob Fishman clarified that the pricing assumption for the Pool segment is 1.5% to 2%, consistent with the overall company guidance. President and CEO John Stauch deemed it difficult to speculate on hypothetical market share shifts from potential EU tariffs but emphasized that as a large global player, Pentair has the manufacturing footprint and capabilities to react accordingly to any changes in the trade landscape.

Brian Lee asked if Nextpower would update its fiscal 2027 outlook given the strong fiscal 2026 performance, and inquired about the decrease in IRA credits despite a higher U.S. revenue mix, questioning if it's timing-related or due to credit sharing and pricing dynamics.

Answer

Chuck Boynton, CFO, clarified that IRA credits are roughly in line with the prior quarter, with the perceived decrease being a blending effect of increased tariff impact ($44 million this quarter vs. $33 million last quarter) due to a full quarter of new tariffs. He stated that the fiscal 2027 outlook provided at the Capital Markets Day a couple of months prior remains unchanged, expressing confidence in the business's strength and strong backlog for the upcoming year.

Brian Lee sought an update on Nextpower's fiscal 2027 outlook, considering the stronger fiscal 2026 results. He also questioned the accounting for IRA credits, which appeared lower despite a higher U.S. revenue mix.

Answer

Chuck Boynton, CFO, confirmed that the fiscal 2027 outlook provided at the Capital Markets Day remains unchanged, expressing confidence in the business's strength for the upcoming year. He clarified that IRA credits were in line with the prior quarter, and the perceived decrease was due to the full quarter impact of tariffs, which increased from $33 million to $44 million.

Brian Lee inquired about the cadence for the current fiscal year, specifically if the strong first half indicates a pull-forward due to U.S. policy changes, and requested insights into the bookings mix between tracker and non-tracker products, as well as U.S. and non-U.S. regions.

Answer

CEO and Founder Dan Shugar attributed the strong first half to excellent operations and on-time delivery, noting a smoother, more linear business cadence. He confirmed a raised outlook and anticipated Q4 to be larger than Q3. President Howard Wenger detailed the platform strategy, highlighting record bookings for e-bus, advanced foundations, and robotic inspection, driven by acquisitions and R&D. He mentioned strong U.S. revenue growth (49% YoY) and continued international expansion, with backlog exceeding $5 billion.

Brian Lee inquired about the fiscal year's revenue cadence, specifically the strong first half and any potential pull-forward due to policy changes, and requested insights into the bookings mix between tracker/non-tracker and U.S./non-U.S. segments.

Answer

Dan Shugar, CEO and Founder, acknowledged the strong first half and raised outlook, noting a smoother, more linear business cadence compared to prior years. Howard Wenger, President, detailed record bookings for e-bus and foundations, new customers for robotic inspection, and significant U.S. revenue growth (49% year-over-year), alongside continued international expansion.

Brian Lee from Goldman Sachs sought confirmation of quarter-over-quarter backlog growth, implying bookings near $1 billion, and asked about any customer pauses or pull-forwards due to policy uncertainty. He also questioned the significant increase in the IRA 45X credit's impact on gross margin.

Answer

President Howard Wenger confirmed the backlog grew for the 15th consecutive quarter and characterized project timing shifts as normal operational course of business. CFO Chuck Boynton explained the higher 45X impact included a one-time 150 basis point benefit from historical vendor reconciliations. He guided for the 45X benefit to be 9-10% of total revenue going forward, driven by strong demand for U.S. products.

Brian Lee requested a breakdown of the fiscal 2026 revenue guidance by new products and pricing, and an explanation for the implied year-over-year decline in EBITDA margin guidance.

Answer

CEO Dan Shugar deferred a detailed product revenue breakdown to the upcoming Analyst Day. CFO Chuck Boynton explained that fiscal 2026 is a year of investment for multi-year growth, with increased OpEx and CapEx. He characterized the guided low 30s gross margin and low 20s EBITDA margin as a good baseline for running the business, following a 'stellar' fiscal 2025 that benefited from several tailwinds.

Brian Lee asked if the U.S. market is growing faster than expected, whether this is driven by market share gains, and if the 75% U.S. revenue mix is expected to hold into the next year.

Answer

Howard Wenger, President, explained that the typical mix is 60-70% U.S., indicating that both domestic and international segments are growing. He confirmed strong U.S. demand with record bookings but noted that market share data lags significantly, making it difficult to monitor accurately in real-time. He affirmed the company feels it is performing well in the marketplace.

Brian Lee from Goldman Sachs asked about the TrueCapture software business, inquiring about its attach rate, the quantifiable margin uplift it provides, and the primary reasons some customers choose not to adopt it.

Answer

CEO Dan Shugar explained that the attach rate for TrueCapture has increased significantly as markets mature and customers recognize its value. He noted revenue is recognized upon system commissioning, which caused a catch-up in Q2. CFO Chuck Boynton added that while software has a high gross margin, it comes with higher R&D OpEx, which the company is increasing to drive future value.

Brian Lee from Goldman Sachs pressed for quantification of potential liability from the 80 CBD/Oxen case and a hypothetical funding strategy, sought further detail on Canadian Solar's FEOC compliance for U.S. manufacturing, and asked for anticipated asset sales volume and deleveraging potential for 2026.

Answer

Dr. Shawn Qu, Chairman and CEO, declined to speculate on 80 CBD liability or funding, reiterating that no reserve is currently deemed necessary. He emphasized that OBBBA FEOC compliance is achieved by adhering to clear percentage rules through structural adjustments. For 2026 asset sales, Dr. Qu stated that specific volumes are pending board approval of the AOP, but confirmed a strategic shift to increase project ownership sales to recycle more cash and manage debt, leveraging existing high-quality operational projects.

Brian Lee from Goldman Sachs pressed for further details on the potential financial impact of the 80 CBD/Oxen case, asking for a quantification of liability and a hypothetical funding strategy if a reserve were required. He also sought more specific insights into Canadian Solar's FEOC compliance strategy for U.S. manufacturing, requesting details on customer conversations and the steps taken to justify investments. Finally, he inquired about the anticipated volume of asset sales (MW/MWh) in 2026 and their expected impact on deleveraging, noting a shift from the IPP model.

Answer

Dr. Shawn Qu, Chairman and CEO, reiterated that based on legal and audit advice, Canadian Solar does not currently believe a reserve is necessary for the 80 CBD/Oxen case, declining to speculate on hypothetical liabilities or funding. Regarding FEOC compliance, Dr. Qu explained that the OBBBA rules are clear on percentage ownership from non-FEOC entities, and Canadian Solar is making structural adjustments to meet these requirements. For 2026 asset sales, Dr. Qu confirmed a strategic shift towards increased monetization to recycle cash and manage debt, given market conditions, but stated that specific volumes and deleveraging potential would be detailed after the board approves the 2026 Annual Operating Plan in February.

Tyler Bisset, on behalf of Brian Lee from Goldman Sachs, asked for details on the tariff assumptions embedded in the updated 2025 storage volume guidance and the pricing differentials for flexible sourcing options. He also inquired about expectations for shipment growth in China for the next year.

Answer

President of CSI Solar Yan Zhuang explained the 7-9 GWh storage guidance range already incorporates various tariff uncertainties. Chairman and CEO Dr. Shawn Qu added that significant sourcing flexibility from non-China suppliers will be available in 2026, causing some customers to defer 2025 deliveries. Regarding China, Yan Zhuang expects a weak second half of 2025 pending policy clarification but anticipates healthy demand for high-quality storage projects next year.

Brian Lee from Goldman Sachs Group, Inc. followed up on margins, asking for quantification of the AD/CVD tariff impact in Q1 and its expected level by year-end. He also questioned the apparent shift in e-STORAGE margin targets from ~20% to mid-teens and inquired about the cash implications of retroactive AD/CVD tariffs.

Answer

CFO Xinbo Zhu noted that higher U.S. prices partially offset tariffs, keeping module margins stable. CEO Shawn Qu explained the e-STORAGE margin outlook was adjusted due to new 25% tariffs on Chinese imports, which are being negotiated with customers. He also stated that AD/CVD deposits are booked as costs on the P&L, and the company awaits final rulings before knowing the full cash impact.

Brian Lee asked about the drivers and sustainability of the strong margin increase in Hayward's international markets. He also sought insight into the North American net pricing trend, specifically whether 2026 would see a return to normal low single-digit price increases or if elevated mid-single-digit pricing would persist.

Answer

Eifion Jones, Senior VP and CFO, attributed the 750 bps year-over-year and 300 bps sequential margin improvement in Europe and Rest of World (ERW) to the non-repeat of Q3 2024 inventory items and stabilization of Spanish facilities. He noted that Q3 2025 included one-time benefits, such as a cumulative tariff refund (~100 bps) and other items (~100 bps), but sequential improvements were still strong. Regarding pricing, Mr. Jones explained that Q3's net price realization benefited fully from late 2024 seasonal pricing and midterm tariff-related pricing. He anticipates slightly higher than normal mid-single-digit pricing for 2026, hoping for a return to a normal inflationary environment.

Brian Lee asked about the drivers and sustainability of the strong margin increase in Hayward's international markets. He also inquired about the recent uptick in North American net pricing and whether the 2026 pricing paradigm would revert to normal low single-digit increases or remain elevated in the mid-single digits.

Answer

Eifion Jones, Senior VP and CFO, attributed the year-over-year international margin improvement to the non-repeat of discrete inventory items from Q3 2024, stabilized Spanish facilities, and improved management. He noted that Q3 2025 benefited from a cumulative tariff refund (approx. 100 bps) and other one-time items, but sequential improvements were still strong. Regarding pricing, Mr. Jones explained Q3's net price realization was due to seasonal and midterm tariff-related pricing. He expects 2026 pricing to be slightly higher than normal, in the mid-single digits, but hopes for a return to a normal inflationary environment.

Brian Lee asked for clarification on the updated revenue guidance, questioning if the raised lower end was due to a better volume outlook despite a lower net price forecast. He also sought to quantify the potential gross margin leverage from improved factory utilization and cost mitigation efforts.

Answer

President and CEO Kevin Holleran confirmed the assumption was accurate, stating that with less pricing being implemented, the company assumes stronger volume performance, now expected to be down only about 1% versus a previous 2.5% estimate. SVP & CFO Eifion Jones explained that a 10% increase in top-line revenue typically yields about 1% of gross margin leverage and that the company targets a minimum of 25 basis points of margin improvement annually from operational initiatives, though this is not always linear.

Brian Lee asked about the cadence of PQI margin recovery, specifically when the tariff impact would be fully lapped (suggesting Q2 2026), and whether pricing alone would be sufficient for recovery or if productivity, mix, or other factors were also needed.

Answer

Sameer Ralhan (SVP and CFO) confirmed that the tariff impact should start being fully lapped in Q2 2026. He stated that margin expansion would be driven by a combination of price versus raw material costs, productivity, and volume fall-through (30-35%), which should contribute 25-50 bps of margin expansion, along with the offsetting of one-off tariff mitigation costs next year.

Brian Lee from Goldman Sachs asked about the expected cadence for PQI margins, specifically if the full tariff impact would be lapped by Q2 2026, and when year-over-year margin expansion could resume. Lee also questioned if pricing increases alone would be sufficient to recapture the 100-200 basis points of margin decline seen year-to-date, or if productivity gains, mix, and other factors would also be necessary.

Answer

Sameer Ralhan, SVP and CFO, confirmed that the tariff impact is expected to be fully lapped by Q2 2026. He explained that margin expansion would be driven by a combination of price versus raw material costs, productivity, and volume fall-through in the 30%-35% range, which should yield 25-50 bps of operating margin expansion. Ralhan also noted that some one-off tariff mitigation costs from this year should offset next year, expressing confidence in the business's ability to expand margins.

Brian Lee asked about the conservative margin outlook despite positive drivers like pricing and sales, and questioned the performance of the PQI segment in Western Europe.

Answer

SVP and CFO Sameer Ralhan attributed the cautious margin guidance to tariff fluidity and built-in assumptions for Q4 investments. President and CEO Jennifer Honeycutt explained that PQI's sequential dip in Europe was due to equipment sale timing and that year-to-date growth remains a strong 6%.

Brian Lee asked about the expected cadence of price increases throughout the year and whether the company is seeing any real-time demand slowdown or customer pushback due to tariff-related pricing.

Answer

SVP and CFO Sameer Ralhan stated that April order patterns appear normal with no signs of a slowdown or pull-forward. He confirmed that pricing will likely move toward the higher end of their historical 1-2% range but emphasized it is only one of three mitigation levers, alongside manufacturing and supply chain adjustments. He noted that all potential impacts on volume are reflected in the low-to-mid-single-digit core growth guidance.

Brian Lee requested a breakdown of the 350 basis point sequential margin contraction in the PQI segment and asked about the margin cadence for 2025, particularly the drivers behind the year-over-year decline guided for Q1.

Answer

SVP and CFO Sameer Ralhan deconstructed the Q4 PQI margin decline into four factors: ~70 bps from TraceGains dilution, ~120+ bps from one-time cost optimization actions, increased R&D spending, and a higher mix of equipment sales. He clarified that for Q1, the one-time cost actions do not repeat, but ongoing TraceGains investment dilution and the equipment mix will continue to have an impact.

Brian Lee asked for quantification of the margin impact from rising PQI equipment sales and inquired about the on-the-ground situation in China, including the potential for a near-term recovery.

Answer

SVP and CFO Sameer Ralhan indicated the equipment recovery would be gradual into 2025 and suggested looking at the 2019 margin mix as a reference point for the potential impact, which the company aims to mitigate with VES. President and CEO Jennifer Honeycutt stated China is 'bouncing along the bottom,' with modest recovery in PQI offset by challenges in Water Quality due to municipal funding and tough comps, with no overall improvement expected near-term.

Brian Lee from Goldman Sachs inquired about the directional outlook for segment margins, specifically if Acuity Brands Lighting (ABL) is expected to hold or expand margins, and if Acuity Intelligent Spaces (AIS) will prioritize growth over near-term margin expansion. He also asked about data monetization opportunities within the AIS segment.

Answer

Neil Ashe, Chairman, President, and CEO, Acuity, clarified that ABL will continue productivity improvements driving margin, with tariff and price impacts being a temporary percentage margin headwind. For AIS, the focus is on low to mid-teens growth, with continued margin expansion opportunities, but the company will invest for growth when faced with a choice. Mr. Ashe explained that data monetization will initially manifest through outcomes from expanded experiences and specific software opportunities, with data-specific products potentially introduced over time.

Brian Lee of Goldman Sachs requested more detail on typical customer behavior following price hikes and asked about the risk of customers delaying orders amid tariff uncertainty. He also inquired about the QSC integration progress and any visibility into cost or product synergies.

Answer

CEO Neil Ashe described the typical customer reaction to price increases as an acceleration of near-term orders to lock in costs, which he noted occurred with the last price hike. On the QSC integration, Ashe reported it is exceeding expectations, with enablement functions mostly integrated, leading to margin opportunities. He emphasized that while teams are exploring synergies, new joint offerings will be pulled by the market rather than pushed by the company.

Brian Lee of Goldman Sachs & Company asked about the performance and outlook for the independent sales network channel, which returned to growth. He also questioned the fiscal 2025 margin outlook, observing that gross margins appear flat and asking if future leverage will primarily come from OpEx to meet the 50-100 basis point annual operating margin expansion target.

Answer

Neil Ashe, Chairman, President and CEO, highlighted the power of the independent sales network, which constitutes about 60% of the Lighting business and is performing consistently. Regarding margins, he affirmed that strong gross margin performance is expected to continue, and the 50-100 bps annual operating profit margin improvement target will be achieved through a mix of both gross margin expansion and OpEx leverage. He noted that some technology investments that boost gross margin are recorded in SG&A.

Brian Lee of Goldman Sachs asked for an update on the RoPower project timeline, which appears delayed, and whether securing a U.S. customer by year-end is still the target. He also inquired where NuScale is best positioned to benefit from recent presidential executive orders.

Answer

President & CEO John Hopkins confirmed the RoPower project's final notice to proceed is now projected for late 2026. He reiterated that NuScale is still forecasting to have 'hard contracts' in place with U.S.-based customers by the end of 2025. Regarding executive orders, he stated the main benefit for NuScale would be a streamlined process for construction and operations licenses, enabling quicker deployment.

Representing Brian Lee, an analyst asked about future capital expenditure needs now that the new foundry is online and whether customers are delaying projects due to tariff-related cost uncertainty.

Answer

Paul McAndrew, President and COO, explained that as a vertically integrated company, CapEx is expected to remain in the 3% to 4% of sales range to maintain its iron foundries and fund ongoing improvement projects. CEO Marietta Zakas added that while municipal end-market demand remains resilient for Q3, the company sees potential uncertainty for the residential construction market in Q4 due to broader inflation concerns.

Brian Lee from Goldman Sachs asked for more detail on the better-than-expected order levels, questioning the mix between inventory normalization and new organic demand. He also probed the drivers behind the low-to-mid-single-digit pricing outlook.

Answer

CEO Marietta Zakas attributed the strong orders to normalized lead times for key products. President and COO Paul McAndrew noted that channel inventories are at normal levels, but lapping the prior year's service brass backlog reduction will be a headwind. Regarding pricing, Zakas clarified that the projected low-to-mid-single-digit realization is consistent with historical norms, outside of the recent period of exceptionally high inflation.

Brian Lee asked for a breakdown of the fiscal 2025 growth guidance between price and volume, and questioned when infrastructure spending might begin to appear in KPIs. He also sought clarity on the expected EBITDA cadence, particularly why the second half is expected to be stronger despite tougher comps.

Answer

CEO Marietta Zakas clarified the guidance includes carryover pricing and some volume growth, with potential infrastructure spending likely to first appear in specialty valve orders. She explained the stronger second-half EBITDA is driven by sales seasonality and manufacturing improvements, specifically the 80-100 basis point annualized margin benefit from the legacy brass foundry closure, which begins in H2. Additionally, cost headwinds from the Krausz facility will be more pronounced in H1 FY25 compared to the prior year.

Brian Lee of Goldman Sachs inquired about the drivers behind the lower free cash flow conversion expected in 2025 and the path back to the long-term target. He also asked about the company's exposure to potential tariffs.

Answer

CFO William Grogan identified three main factors impacting 2025 free cash flow: cash outlays for the restructuring program, capital for large build-on-operate projects, and system investments. Regarding trade, CEO Matthew Pine and CFO Grogan stated they expect no material impact from tariffs, as they affect only 5% of material costs. They confirmed that mitigation efforts, including pricing actions and supply chain diversification, are already underway.

Questioned the key assumptions in the financial model, including the 75% advance rate, the customer mix for 2025 additions, and the reasons for a significant reduction in the projected EPC cost for 2025-2026.

Answer

The 75% advance rate is considered achievable, with a recent private deal hitting 76%. The 2025 customer growth of 127,000 represents a 15% YoY increase, with about 10% being service-only customers. The lower EPC cost reflects an optimization for cash generation and reduced working capital consumption, allowing for a better balance in their conservative forecast.

Questioned the increase in the 2024 megawatt growth forecast despite commentary on constraining growth, and inquired about the capital allocation strategy for the large projected cash balance, specifically regarding debt paydown versus other options.

Answer

The megawatt growth is driven by larger average system sizes and a mix shift to southern markets. The current run rate is what's projected for 2025-26. The primary focus for capital is generating cash to create options for the board. While paying down debt is a priority, having cash on hand is key. Asset-level cash flows are strong, and loan prepayments are surging, supporting this strategy.

Asked for clarification on whether ITC adder benefits are in the cash forecast, details on asset monetization options, and why lower growth guidance doesn't change financial forecasts.

Answer

The company confirmed forecasts are conservative regarding ITC benefits and do not reflect the full potential. They listed asset sales and deeper securitizations as monetization options. They explained that financial forecasts are stable because over 85% of cash flows are locked in from the existing asset base and significant cost cuts are already underway.

Brian Lee requested the free cash flow and CapEx numbers for Q3 and sought an update on the company's planned GDR listing in Frankfurt, including expected proceeds, dilution, timeline, and use of funds.

Answer

Haiyun Cao, CFO of JinkoSolar Co., Ltd., provided full-year 2024 estimates of approximately RMB 9 billion in CapEx and RMB 5 billion in operating cash flow. Regarding the GDR listing, he detailed plans to raise roughly RMB 4.5 billion with 5-6% dilution, expecting completion in Q2 of the following year. The proceeds are designated for the Shanxi factory, working capital, and U.S. capacity expansion.

Questioned the terms of the SunPower settlement, asking what Maxeon received in return for letting SunPower out of its 2024-2025 contracts. Also asked about the timeline for IBC margins to recover to their previously high levels and sought details on potential customer co-investments for the New Mexico factory.

Answer

The SunPower settlement includes warrants for Maxeon, but the primary driver was the strategic goal of establishing a direct-to-installer sales channel, which allows for better pricing and higher ASPs by cutting out the middleman. Margins are expected to recover in the second half of 2024, driven by a revamped product portfolio including Maxeon 7 and Performance Series 7. Regarding the New Mexico factory, customer co-investments are a key pillar of the financing strategy alongside the DOE loan, and discussions are on track, though details are not yet being disclosed.