Dimple Gosai

Dimple Gosai asked about the timing, targeted returns, and risk-return profile of flexible gas paired with renewables for hyperscaler data center complexes, comparing them to traditional renewables. She also inquired about the timing, CAFD contribution, and size of repowering opportunities for Mount Storm, Goat Mountain, and San Juan Mesa, noting associated sales and repurchasing mechanisms.

Answer

Craig Cornelius, President and CEO, explained that these hybrid complexes, developed by Clearway Group, are long-term investment opportunities for Clearway Energy, Inc. (CWEN) beyond 2030, not essential for current 2030 targets. He noted they aim for highly contracted resources with risk-adjusted returns at least as good as, if not superior to, current dropdowns. Regarding repowering, Mr. Cornelius stated that most CAFD uplift from 2027 investments would be seen in the 2028 financial year, contributing to the 2030 CAFD per share goal, with attractive PPA tenors and high capital yields.

Dimple Gosai asked about the timing, target returns, and risk-return profile of developing flexible gas paired with renewables near hyperscaler clusters, and also inquired about the timing of CAFD contribution and the size of the opportunity for repowering projects like Mount Storm, Goat Mountain, and San Juan Mesa.

Answer

President and CEO Craig Cornelius explained that flexible generation resources are part of Clearway Group's work to create investment opportunities for Clearway Energy, Inc. (CWEN) in 2030 and beyond, noting that current 2030 goals do not depend on these complexes. He emphasized that these resources would be highly contracted, load-following, and aim for risk-adjusted returns at least as good as, if not superior to, current dropdowns. Regarding repowering, Mr. Cornelius stated that the majority of the campaign will occur through CWEN investments in 2027, with CAFD uplift largely reflected in the 2028 financial year, and highlighted attractive PPA tenors and terms for these projects.

Dimple Gosai from Bank of America asked for a megawatt perspective on how much of the repowering pipeline is safe-harbored for tax credits and inquired about the California RA (Resource Adequacy) market, specifically the company's open position for 2027-2028 and current pricing trends.

Answer

CEO Craig Cornelius responded that all repowering projects planned through 2028 have already commenced construction and qualified for tax credits under pre-existing guidance. Regarding the RA market, he stated the 2027 position is about 75% contracted and the company's CAFD goals reflect conservative pricing expectations for the open portion, despite fundamentals suggesting higher future value.

Dimple Gosai from Bank of America asked for a megawatt-specific view of repowering projects that are safe-harbored and sought commentary on the California Resource Adequacy (RA) market, including open positions for 2027-2028 and current pricing trends.

Answer

CEO Craig Cornelius responded that all repowering projects planned through 2028 have already qualified for tax credits under previous guidance. Regarding the RA market, he noted the 2027 position is approximately 75% contracted and that CAFD targets incorporate conservative pricing assumptions, not necessarily the peak prices seen in the prior year.

Dimple Gosai asked for quantification of Nextracker's investment in the Nextracker Arabia joint venture, details on local manufacturing plans, expected revenue contribution or manufacturing footprint by 2027, and a comparison of pricing or margins in the MENA region to the U.S.

Answer

CEO and Founder Dan Shugar provided context on the Nextracker Arabia JV, highlighting a long legacy in Saudi Arabia and rapid market growth. He emphasized the strategic partnership with Abu Nahyan Holding and confirmed increased local manufacturing capacity, including a Nextracker factory shipping finished goods for multi-gigawatt orders. President Howard Wenger added that the JV covers the broader MENA region, with strong markets and a shared vision. CFO Chuck Boynton clarified it's a roughly 50/50 JV not planned for consolidation, fitting an asset-light model, with revenue from license fees and technology sales, expressing excitement for future growth without specific 2027 projections.

Dimple Gosai asked for quantification of Nextracker's investment in the Nextracker Arabia JV, details on local manufacturing plans, expected revenue contribution or manufacturing footprint by 2027, and a comparison of pricing/margins in the MENA region versus the U.S.

Answer

Dan Shugar, CEO and Founder, highlighted Nextracker's long legacy in Saudi Arabia, the rapid market growth, and the strategic partnership with Abu Nahyan Holding. Howard Wenger, President, emphasized the strong cultural fit and synergistic nature of the JV, which covers the broader MENA region with significant market aspirations. Chuck Boynton, CFO, clarified it's a roughly 50/50 JV, not consolidated, aligning with an asset-light model, with revenue derived from license fees and technology sales, expressing excitement for future growth without providing specific 2027 figures.

Dimple Gosai from Bank of America inquired about the nature of conversations with developers following the OBBBA bill's passage and whether the pace of bookings is accelerating, given the backlog growth.

Answer

President Howard Wenger responded that Nextracker is in close contact with sophisticated Tier 1 developers who feel good about their project portfolios and ability to safe harbor projects. He confirmed the backlog is solid, with no projects dropping out, and that it grew for the 15th consecutive quarter, indicating healthy global demand signals.

Dimple Gosai asked for more detail on the durability of the guided 'low 30s' structural gross margin, specifically the contribution from 45X credits versus operational and product mix factors.

Answer

An executive responded that the company has very good visibility for fiscal 2026 because the vast majority of the year's business is already contracted and in the backlog. This provides a high degree of confidence in pricing, costs, and margins, indicating that the structural margins for the upcoming year are 'largely booked as of today.'

Dimple Gosai inquired about capital allocation priorities, asking how the company weighs returning cash to shareholders versus M&A or further market share expansion, given its healthy liquidity.

Answer

Chuck Boynton, CFO, reiterated that the capital allocation policy is unchanged. The priority is organic growth, followed by evaluating value-accretive M&A. He mentioned that the company will look at potential buyback programs later in the calendar year, subject to certain restrictions from the spin-off, and emphasized the 'fortress balance sheet' as a competitive advantage.

Dimple Gosai from Bank of America asked about current competitive dynamics and customer behavior, particularly any rush to secure domestic products ahead of the U.S. election. She also inquired about the geographic mix of the eight new customer wins.

Answer

President Howard Wenger described continued solid demand across all major regions, driven by macro trends like electrification and data centers, which he stated is not being dampened by the U.S. election. He highlighted a 'flight to quality' benefiting Nextracker, citing the company's differentiated technology, operational excellence, and strong balance sheet as key factors attracting customers.

Dimple Gosai of Bank of America asked if Fluence is seeing Chinese competitors front-running potential tariff escalations and inquired about the remaining tariff sensitivity and cancellation risks in the current backlog.

Answer

President and CEO Julian Nebreda stated that Fluence is focused on the domestic content market, which does not directly compete with Chinese equipment. He affirmed there is no risk of contract terminations due to tariffs, as all previously halted contracts have been reactivated and the financial impact is already incorporated into the company's guidance.

Dimple Gosai of Bank of America asked about current project lead times and whether there has been any impact from the Department of Interior's new permitting rules for renewable energy projects.

Answer

CEO Kevin Hostetler stated there has been no impact on project lead times from the new DOI rules yet, as the industry awaits further guidance. He also highlighted that the rules primarily affect federal lands, which account for less than 5% of all solar projects, making the impact less significant for the solar industry compared to wind.

Dimple Gosai asked about the impact of the final 45X guidance, particularly why components like clamps did not qualify for higher credits, and how this affects the margin outlook.

Answer

CEO Kevin Hostetler clarified that while they had advocated for clamps to be classified as structural fasteners for a higher credit, their 2024 guidance never assumed this outcome. President and COO Neil Manning added that over 20% of current quotations require domestic content, and the company is well-positioned to meet this demand, with 100% domestic content capability expected in H1 2025.

Dimple Gosai asked for color on what drove the strong battery performance in the quarter and whether the TPO market shift would favor storage adoption. She also requested quantification of working capital's contribution to free cash flow and the cash impact from 45X credits.

Answer

CEO Shuky Nir attributed strong battery sales to increasing attach rates across all residential regions, a trend he expects will extend to the TPO segment. CFO Asaf Alperovitz stated that 45X monetization is an ongoing part of the business and is not disclosed separately. He reiterated the full-year positive free cash flow guidance, driven by improved business fundamentals, but did not break down the specific working capital drivers.

Dimple Gosai asked for the key drivers behind the improved Q1 gross margin guidance, questioning the impact of inventory write-downs, U.S. shipment mix, and fixed cost absorption.

Answer

CFO Ariel Porat confirmed the question identified the main drivers. He emphasized two primary factors: reduced fixed COGS, resulting from the closure of the Korea storage division and lower warranty costs, and the dual benefit of higher IRA credits and a greater mix of U.S. revenue.

Dimple Gosai of Bank of America asked about the likelihood of further inventory write-downs and requested a breakdown of the Q3 write-down between inventory impacted by the U.S. shift to domestic content versus unsold inventory in Europe.

Answer

Interim CEO Ronen Faier stated that the company does not expect further significant inventory write-downs in the solar division. He explained the write-downs were driven by several factors, primarily inventory obsolescence due to slowing European demand and the discontinuation of certain product lines. He noted that while the accelerated shift to domestic content in the U.S. was a factor, most of the write-down was related to obsolescence rather than selling below cost.

Dimple Gosai from Bank of America requested more details on the battery energy storage systems (BESS) OEM partnership opportunity, particularly concerning potential FIAC restrictions and the partner's sourcing strategy.

Answer

CEO Brandon Moss explained that while not commenting on specific partners, there are domestic BESS suppliers developing alternative, non-lithium technologies to navigate potential tariffs and FIAC restrictions. CFO Dominic Bardos added that these alternative technologies are well-suited for data center demands, such as long discharge times.

Dimple Gosai of Bank of America inquired about the potential for tariffs to change the competitive landscape. She also asked about the probability and timeline for a favorable outcome in the company's ITC case appeal.

Answer

CEO Brandon Moss explained that as a domestic manufacturer, tariffs could directly benefit Shoals by impacting competitors in China and Mexico. Regarding the ITC litigation, he stated that the timeline for the new case and the appeal is typically 12-18 months but declined to assign a specific probability of success.

Dimple Gosai of Bank of America requested more clarity on the Oracle deal's contractual status and inquired about the capital needs and liquidity required for the planned manufacturing expansion.

Answer

KR Sridhar, Founder, Chairman & CEO, confirmed the Oracle deal is a firm purchase order currently being executed, with a 90-day delivery commitment. Regarding the expansion, he reiterated earlier comments that the company is well-funded for the approximately $100 million investment.

Dimple Gosai questioned Bloom's average selling price (ASP) strategy in light of the ITC situation and the high demand for 'time to power.' She also sought confirmation on the company's cost-cutting targets, specifically if the 10% reduction was an annual goal.

Answer

CEO KR Sridhar explained that with the ITC secured for customers through 2028, pricing is based on the value delivered, and the company maintains pricing discipline. He confirmed that Bloom has achieved double-digit cost reductions on a per-annum basis for most of the last 15 years, with the exception of the COVID period.

Dimple Gosai inquired about Bloom's average selling price (ASP) strategy given the ITC safe harbor and high demand, and asked for confirmation on the company's historical cost-cutting achievements.

Answer

CEO KR Sridhar explained that with the ITC secured for customers through 2028, pricing is determined by market value, and the company remains disciplined on margins. He confirmed that Bloom has a long history of achieving double-digit cost reductions per annum, with the exception of the COVID-19 period.

Dimple Gosai of Bank of America questioned the drivers behind the raised EBITDA margin guidance of 18-19%, asking how much is due to structural improvements versus temporary tailwinds and how sustainable these margins are into 2026.

Answer

CFO York Ragen attributed the confidence to strong gross margin performance over the last four quarters and the ability to offset tariff impacts with pricing. He noted the guidance increase is partly a function of holding margin dollars on slightly lower sales. CEO Aaron Jagdfeld added that longer-term margin expansion is achievable by reducing the drag from energy tech products and gaining significant operating leverage from the rapidly growing C&I business, particularly the data center opportunity.

Dimple Gosai requested details on the international opportunity, asking about its potential size relative to the U.S. pipeline and the specific asset classes, sectors, and geographies being considered.

Answer

Chief Revenue & Strategy Officer Marc Pangburn characterized the international efforts to date as very small and stated the business will remain heavily U.S.-focused in the near term. President and CEO Jeffrey Lipson added that the international strategy is overwhelmingly likely to be pursued with existing clients, which makes it difficult to speculate on specific geographies as it will depend on opportunities those clients present.

Dimple Gosai inquired about the sustainability of higher average selling prices (ASPs) that are helping to offset increased domestic manufacturing costs and product mix impacts.

Answer

Chief Products Officer Raghu Belur explained that while U.S. manufacturing does increase costs, which is reflected in pricing, it generates substantial value for customers. The domestic content enables TPO providers and asset owners to claim an additional 10% ITC adder, a value of $0.40 to $0.50 per watt, which far outweighs the modest price increase required to cover the higher production costs.