Vikram Bagri

Vikram Bagri asked about the importance of vertical integration for Fluence given rising competition, current M&A opportunities, and the threshold for return (accretion, ROIC) for potential acquisitions. He also requested a split of leads versus pipeline for data center and long-duration numbers, along with the definitions for each category.

Answer

Julian Nebreda (President and CEO, Fluence Energy) stated that Fluence does not see a strong need for vertical integration, as it's deeply integrated with suppliers through its designs and IP, using contracted manufacturers for competitive costs and technology access, emphasizing Fluence's agility in integrating multiple battery manufacturers. For acquisitions, they must be accretive and reflect the additional risks and loss of agility from vertical integration. He stated that roughly 25% of the 34-36 GWh for data centers and long-duration are currently in the pipeline. He defined pipeline projects as having a greater than 50% chance of converting to backlog within two years, based on customer credit, project realism, and feasibility, which drives internal costs and planning, while leads are earlier-stage opportunities.

Vikram Bagri asked about the importance of vertical integration for Fluence Energy given rising competition, M&A opportunities, and the return thresholds for potential acquisitions. He also requested a split of leads versus pipeline for data center and long-duration projects, along with their definitions.

Answer

Julian Nebreda, President and CEO of Fluence Energy, stated that Fluence does not see a strong need for vertical integration due to effective integration with contracted manufacturers and the agility of their Smartstack technology. He noted that acquisitions must be accretive and account for the risks of losing agility. Nebreda clarified that approximately 25% of the 34-36 GWh for data centers and long-duration projects are currently in the pipeline, defined as projects with a greater than 50% chance of conversion to backlog within two years, based on customer credit and project feasibility.

Vikram Bagri asked about the outlook for Average Selling Price (ASP) pressure given Chinese competition and inquired where the $30 million in cost reductions were being made.

Answer

President and CEO Julian Nebreda and CFO Ahmed Pasha acknowledged ongoing ASP pressure but noted it is offset by significant volume growth. Julian Nebreda explained the cost cuts are being made across the organization, excluding product and sales, to align the cost structure with the lower 2025 revenue forecast.

Vikram Bagri asked about the lead time for Safe Harbor, when the 'frenzy' for TPO orders might begin, and whether TPOs are safe harboring current volumes or anticipating future growth. He also inquired about the sequential increase in inventory on the balance sheet and the reasons behind it.

Answer

Badri Kothandaraman, President and CEO, explained that for the 5% Safe Harbor method, TPOs have approximately 105 days to ship after placing an order by year-end. He expects a lot of Safe Harbor activity in Q2 but is unsure if TPOs are factoring in future demand growth. Regarding inventory, Mr. Kothandaraman attributed the $99 million sequential increase to taking ownership of inventory from contract manufacturers to ensure FIOC compliance, but stated there are clear plans to continuously reduce it.

Vikram Bagri asked about the lead time for safe harbor, when the 'frenzy' for safe harboring might begin, and whether TPO partners are safe harboring based on expected future growth or conservatively on current volumes. He also inquired about the $99 million sequential increase in inventory on the balance sheet and its impact on days of inventory.

Answer

Badri Kothandaraman (President and CEO, Enphase Energy) explained the 105-day shipping window for 5% method safe harbor orders and noted that TPOs have until approximately the first week of July to finalize plans, suggesting a frenzy in Q2. He believes TPOs are not currently factoring in future demand increases when safe harboring, but it's hard to know for sure. Regarding the inventory increase, Kothandaraman clarified it was due to taking ownership of inventory from contract manufacturers to ensure FEOC compliance. He stated that while backward-looking inventory is very lean, forward-looking inventory is normal, and plans are in place to continuously reduce it.

Vikram Bagri sought to understand the framework for 2026 revenues, noting that the Q3 2025 inventory reduction of $45 million and potential further reductions in Q1 2026 suggest a 25-30% decline in installs. He asked if this understanding of inventory reduction is correct, if Enphase has more insight into the outlook, or if the reduction is driven by conservatism or new product launches, comparing it to historical U.S. residential install decline estimates.

Answer

President and CEO Badri Kothandaraman acknowledged the uncertainty for Q1 2026, stating that while Q1 is historically down 15% sequentially, the additional pressure from the 25D tax credit expiration leads to industry expectations of a 20-30% overall market reduction, primarily impacting the cash and loan markets. He emphasized that new financing structures like the prepaid lease with a loan could alter this trajectory and help revive a portion of the loan market.

Vikram Bagri sought to understand the framework for Enphase Energy's 2026 revenues, comparing the historical U.S. install decline (20%) with the current inventory reduction (Q3 $45 million, with potential for more in Q1 2026). He asked if the inventory reduction implies a 25-30% decline, if Enphase has more insight into the outlook, or if it's driven by conservatism or new product launches.

Answer

Badri Kothandaraman, President and CEO, reiterated that the Q1 2026 outlook of $250 million is a preliminary view, acknowledging that Q1 is historically down 15% and the 25(d) tax credit expiration adds additional pressure. He noted that the industry generally expects a 20-30% market reduction due to the impact on cash and loan markets, but believes that new financing structures like the prepaid lease with a loan could alter this trajectory and help revive the loan market.

Vikram Bagri sought clarification on non-tracker margins, noting a discrepancy between being 'comparable to corporate average' and a 6% figure mentioned at Analyst Day. He also asked about the importance of Nextpower's investment-grade (IG) rating for customers and its competitive edge.

Answer

Chuck Boynton, CFO, clarified that he was referring to gross margins, not EBITDA, and that the Capital Markets Day outlook remains intact. He emphasized that the IG rating is crucial for all customers and suppliers, particularly internationally, as it validates the counterparty's credit profile and disciplined management. Dan Shugar, CEO and Founder, added that customers, increasingly owners and operators, highly value long-term support, reliability, and optimized risk-adjusted Levelized Cost of Energy (LCOE).

Vikram Bagri sought clarification on non-tracker margins, noting a discrepancy between the current statement of "comparable to corporate average" and a 6% indication at Analyst Day, asking if margins are tracking higher and what has changed.

Answer

Chuck Boynton, CFO, clarified that his previous comments referred to gross margins, not EBITDA margins, for non-tracker products, which are generally around the corporate average, with software being significantly higher. He confirmed no change from the Capital Markets Day outlook. Regarding the investment-grade rating, Chuck Boynton stated it's important to all customers and suppliers, especially internationally, for large developers and owners concerned about counterparty credit profiles. Dan Shugar, CEO and Founder, added that as the industry matures, with more utility and long-term ownership, the ability to support projects over their full lifecycle, including financing, warranties, and service, has become a critical differentiator.

Vikram Bagri asked about the business environment in Brazil, the margin gap between international markets and the U.S., and the current attach rate for software.

Answer

Howard Wenger, President, stated the company's ethos is to not 'chase bad business' and to focus on large TAMs where its product plays well, noting strong fundamentals for growth in key international markets. He declined to quantify margin differentiation by region. Chuck Boynton, CFO, addressed software, stating the attach rate is increasing for new and existing customers, which drove the recent revenue contribution, and that there is still room for improvement.

Vikram Bagri from Citibank (asked by Ted) inquired about the higher principal collections of $382 million in the quarter, seeking insight into the maturity profile and rollout schedule of HASI's existing portfolio, and whether this pace of collections is expected to increase.

Answer

Chuck Melko, Chief Financial Officer, clarified that the SunStrong refinancing was the primary driver of the higher principal collections, contributing approximately $200 million from mezzanine loan payoffs, which represented an acceleration of the normal amortization profile. He added that the weighted average life of HASI's assets is around 10 years, and future amortization should generally mirror this.

Vikram Bagri (via Ted) asked about the significant increase in principal collections during the quarter, seeking insight into the portfolio's maturity profile and whether this pace of collections is expected to continue.

Answer

Charles Melko, CFO, attributed the higher principal collections, specifically the $382 million, primarily to the SunStrong refinancing, which included approximately $200 million from mezzanine loan paydowns. He noted this was an acceleration of the normal amortization profile, with the weighted average life of assets being around 10 years.

Vikram Bagri asked for specifics on how short-term policy uncertainty is causing 'stress' in end markets. He also inquired about the long-term dividend payout ratio target and the new asset yield for Q4.

Answer

Chief Revenue & Strategy Officer Marc Pangburn described the 'stress' as clients facing increased risk or extended timelines on development decisions due to policy ambiguity. President and CEO Jeffrey Lipson reiterated the long-term payout ratio target of 50% by 2030, established at the 2023 Investor Day. CFO Charles Melko confirmed the Q4 new portfolio yield was very similar to the full-year figure of over 10.5%.

Vikram Bagri from Citi sought clarification on project shipment push-outs, asking if they were related to FEOC compliance uncertainty and a slowdown in backlog bookings. He also asked for an update on the normalization of energy storage margins.

Answer

Chairman and CEO Dr. Sean Hsu clarified that the project push-outs were due to tariff issues, not FEOC, as the new FEOC rules apply to future projects. He noted that the energy storage pipeline, measured in dollar value, actually increased. Yan Zhong, President of CSI Solar, added that major new deals are in the final stages of negotiation. Regarding margins, Mr. Zhong stated that the company continues to work towards a 20% target for the storage business.

Vikram Bagri from Citigroup Inc. sought to confirm if energy storage margins remain in the 17-20% range for Q1, which would imply very low module margins. He also asked if the full-year guidance assumes a module price rebound in the second half of the year and what would drive it.

Answer

CFO Xinbo Zhu stated that module margins are expected to remain stable and that the lower overall Q1 margin is due to the product mix, including lower-margin project sales, not a drop in storage margins. CEO Shawn Qu clarified that they are not forecasting a price increase in the second half; rather, prices are currently rebounding in the first half due to a policy-driven installation surge in China, which is expected to normalize later in the year.

Vikram Bagri from Citigroup Inc. asked for details on funding the company's significant CapEx plans for PV and battery cells, considering potential tariff deposits and buybacks. He also requested color on the geographical mix of PV shipments for 2025 and the key factors influencing margins.

Answer

CFO Xinbo Zhu explained that project CapEx is largely funded by non-recourse debt, while U.S. manufacturing is supported by a new $450M debt facility, customer down payments, and equity. He affirmed confidence in liquidity, citing over $1.5B in cash at CSI Solar. On the 2025 outlook, Senior VP Thomas Koerner projected U.S. shipment volumes would be at least flat to 2024, with potential for slight growth due to strong demand.

Vikram Bagri of Citigroup asked for clarification on de-bookings, specifically whether any were the result of customers switching to a competitor versus projects simply being canceled.

Answer

CFO Keith Jennings and CEO Kevin Hostetler stated definitively that they have not lost orders to competitors. De-bookings or descoping events, such as the recent VCA adjustment, were attributed to projects being canceled or becoming non-viable for the customer, often due to timing and pricing changes, not a competitive loss.

Vikram Bagri of Citi questioned the 2025 margin outlook, asking if the implied margin for the last nine months of the year suggests no sharing of 45X benefits or if there is potential risk to margins if sharing increases.

Answer

CFO Keith Jennings stated there are no explicit agreements to share 45X benefits and the company is comfortable with its 29-30% gross margin guidance for the year. CEO Kevin Hostetler emphasized that the primary driver of the year-over-year margin change is the accounting roll-off of prior year 45X amortization, not a degradation of underlying project profitability.

Vikram Bagri asked about changes in customer contract terms, the outlook for the Brazilian market, and whether Array is sharing 45X benefits with customers.

Answer

CEO Kevin Hostetler stated there are no material shifts in contract terms, though they have selectively accepted smaller initial deposits to secure large orders. He clarified that while there are no explicit 45X sharing agreements, Array is opportunistically using the margin benefit to be more competitive. President and COO Neil Manning added that the Brazilian market is stabilizing and Array is well-positioned for future growth due to its leading DG market share.

Ted on behalf of Vikram Bagri questioned Oklo's funding needs in light of larger reactor designs and higher HALEU prices, and inquired about the NRC licensing process for the Atomic Alchemy VIPR facility.

Answer

CFO Richard Bealmear stated that the current balance sheet is adequate for the first plant at INL but acknowledged that growth initiatives may require future capital, which would be raised strategically. CEO Jacob Dewitte added that the VIPR facility follows a simpler Part 50 non-power reactor licensing process, which is a two-step construction and operating permit pathway, differing from the Part 52 process for the Aurora powerhouses.

A representative for Vikram Bagri questioned Oklo's future funding needs in light of increased costs and growth initiatives, and also asked for details on the regulatory process for the Atomic Alchemy VIPR facility.

Answer

CFO Craig Bealmear confirmed the current balance sheet is adequate for the INL plant but acknowledged that factors like higher HALEU prices and a larger order book will require the company to be positioned so capital is not a constraint. Co-Founder and CEO Jacob Dewitte explained the VIPR facility follows a Part 50 license application, a two-step process similar to research reactors, which is generally considered simpler than the Part 52 process for power reactors like Aurora.

Vikram Bagri of Citigroup inquired about the response from hyperscalers to Oklo's current reactor sizes and whether there are plans to develop larger 100 MW reactors. He also asked about the potential business scale of the Atomic Alchemy acquisition, including its potential for independent revenue streams and the timeline for securing customer orders.

Answer

CEO Jake Dewitte explained that Oklo's 15 MW and 50 MW reactors are well-suited for the modular build-out of data center campuses, offering reliability and resilience that aligns with customer needs. While acknowledging a future roadmap for reactors north of 100 MW, he stressed the current market traction with existing sizes. Regarding Atomic Alchemy, Dewitte highlighted massive synergies with Oklo's fuel recycling, creating high-value co-products. CFO Craig Bealmear added that Atomic Alchemy has stand-alone capabilities that provide near-term market access to the growing radioisotope sector, positioning Oklo advantageously before its own recycling facilities are fully operational.

Inquired about hyperscaler response to Oklo's reactor sizes and plans for larger reactors, and then asked detailed questions about the Atomic Alchemy acquisition, including its potential market size, revenue model, and timeline for partnerships.

Answer

Oklo's current 15 MW and 50 MW reactor sizes are well-suited for the modular build-out of data centers, and while a larger reactor is on the roadmap, it's not an immediate focus. The Atomic Alchemy acquisition is highly synergistic, tapping into a large ($55B+) and strategic radioisotope market. Atomic has stand-alone, near-term revenue potential before Oklo's full-scale recycling comes online, and this will help establish market access. Partnerships and orders for Atomic are expected to develop post-transaction.

Vikram Bagri asked about the response from hyperscalers to Oklo's current reactor sizes, plans for larger 100 MW reactors, and the potential scale of the Atomic Alchemy acquisition, including its independent revenue streams and timeline for securing partnerships.

Answer

CEO Jacob Dewitte explained that Oklo's 15 MW and 50 MW reactors are well-suited for the modular build-out of data center campuses, offering critical reliability and resilience. Regarding Atomic Alchemy, Dewitte and CFO Richard Bealmear described it as a highly complementary business with stand-alone revenue potential in a large, supply-constrained radioisotope market, which also enhances the economics of Oklo's future fuel recycling by creating valuable co-products.

An analyst on behalf of Vikram Bagri asked how potential tariffs are impacting customer discussions and supply chain exposure, and about the potential formats for future DOE task orders.

Answer

President and CEO Amir Vexler stated that tariffs have not disrupted their supply chain or customer discussions, highlighting that their supply chain is fully domestic unlike foreign competitors. Regarding DOE task orders, he declined to speculate on specific contracting mechanisms like cost-sharing, affirming Centrus is prepared for any format.

Vikram Bagri asked for an update on the non-GAAP OpEx run rate target, whether the full-year breakeven free cash flow implies a breakeven Q2, and if normalized distributor inventory by end of Q2 means Q3 revenues will match sell-through.

Answer

CFO Asaf Alperovitz confirmed the year-end OpEx target of $85-$90 million and noted the company continues to seek efficiencies. He stated that SolarEdge does not provide quarterly free cash flow guidance. Regarding Q3, he reiterated the focus on reducing inventory levels but did not comment on whether revenues would match sell-through.

Vikram Bagri of Citigroup asked if the Q3 sell-through figure reflected the most recent price cuts, what the current manufacturing capacity is, what revenue level is needed to achieve mid-20% gross margins, and how the company is setting OpEx targets amid uncertainty.

Answer

CFO Ariel Porat clarified that the major European price reductions occurred after Q3 ended and are not reflected in the Q3 results. Interim CEO Ronen Faier added that manufacturing capacity is significantly lower than the previous $1 billion level after exiting facilities in Mexico and reducing operations in China and Europe. He stated that achieving a 20% gross margin is possible at a level below the prior $550 million target, but depends heavily on geographic mix. OpEx will be managed to reach breakeven during 2025.

Vikram Bagri asked about the assumptions in the 2025 guidance, specifically the extent of any demand pullback after the recent surge. He also questioned how the company reconciles potential price increases with its strategy to improve close rates.

Answer

CEO Aaron P. Jagdfeld clarified that the guidance assumes a normalization to a new, higher baseline, not a pullback, though he noted a tough comparison for portable generators. Regarding pricing and close rates, he explained that the company is focused on initiatives to lift close rates, highlighting consumer financing as a key lever that has shown a high correlation with closing deals. He mentioned they are actively working with partners like Synchrony on new programs.

Inquired about the future mix of acquired operating assets versus new builds, the potential impact of domestic content incentives, and the nature of the Q2 tax benefit.

Answer

The company expects a mix of roughly 75% acquisitions and 25% new builds going forward. The development pipeline is also robust due to market consolidation. The Q2 tax benefit was a one-time item related to a noncash gain on alignment shares, not NOLs.