Nextpower - Earnings Call - Q4 2025

Executive Summary

• Record Q4 FY25 revenue of $924.3M and adjusted EPS of $1.29; both exceeded Wall Street consensus (Revenue $828.1M*, EPS $0.98*) and capped FY25 with $3.0B revenue and $4.22 adjusted EPS.
• Full-year FY26 guidance introduced: revenue $3.2–$3.4B, adjusted EBITDA $700–$775M, adjusted EPS $3.65–$4.03; management flagged ~100 bps OpEx step-up, ~$100M capex, and >$450M FY26 FCF.
• Backlog increased sequentially again and is “significantly above $4.5B,” supported by strong bookings and a rising domestic content attach rate.
• Strategic expansion into eBOS via Bentek acquisition to enable single-source tracker + electrical BOS solutions; customers welcomed the move and early capacity exists to ramp.

Note: Consensus values (*) retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Record quarterly revenue and profitability: Q4 revenue $924M (+26% YoY); Q4 adjusted EBITDA $242.5M (+52% YoY); FY25 adjusted EBITDA $776.5M (+49% YoY).
• Strong cash generation and balance sheet: FY25 adjusted FCF $621.9M; cash $766.1M at year-end; no long-term debt outstanding.
• Product and platform momentum: robust uptake of Hail Pro trackers (>9 GW booked), XTR terrain-following (>17 GW sold FY25), record TrueCapture bookings, and >40 countries served; management emphasized flight-to-quality and market share leadership.
  • “We had a fantastic year, exceeding our financial, technology, customer satisfaction, and market growth targets.” — Dan Shugar, CEO.
  • “We completed a very strong financial year… ending the year with over $766 million in cash and no debt.” — Chuck Boynton, CFO.

What Went Wrong

• Margin compression vs prior periods: Q4 GAAP gross margin 33.1% (Q3: 35.5%; Q4 FY24: 46.2%); Q4 adjusted gross margin 33.4% (Q3: 36.0%); drivers include non-repeat one-time tailwinds in Q3 and higher international mix in Q4.
• Lower FY26 EBITDA margin guidance vs FY25 actuals as the company leans into growth: structural gross margin expected low-30s and EBITDA low-20s amid higher OpEx and investments (Bentek, other adjacencies).
• Policy/tariff uncertainties remain a monitoring item (House bill items like placed-in-service timing, component origin restrictions); management is “cautiously optimistic” but noted areas needing improvement.

Transcript

Operator (participant)

Good afternoon, everyone, and thank you for standing by. My name is Joel, and I will be your conference operator today. Today's call is being recorded. I would like to welcome everyone to Nextracker's fourth quarter fiscal year 2025 earnings call. After the speaker's remarks, there will be a Q&A session. At this time, for opening remarks, I would like to pass the call over to Mr. Chuck Boynton, CFO. Chuck, you may begin.

Chuck Boynton (CFO)

Thank you, and good afternoon, everyone. Welcome to Nextracker's fourth quarter fiscal year 2025 earnings call. I'm Chuck Boynton, Nextracker's CFO, and I'm joined by Dan Sugar, our CEO and founder, and Howard Wenger, our president. Following brief prepared remarks, we will transition to a Q&A session. As a reminder, there will be a replay of this call posted on the IR website along with the earnings press release and shareholder letter. Today's call contains statements regarding our business, financial performance, and operations, including our business and our industry, that may be considered forward-looking statements, and as such statements involve risks and uncertainties that may cause actual results to differ materially from our expectations. Those statements are based on current beliefs, assumptions, and expectations, and speak only as of the current date.

For more information on those risks and uncertainties, please review our earnings press release, shareholder letter, and our SEC filings, including our most recently filed quarterly report on Form 10-Q and annual report on Form 10-K, which are available on our IR website at investors.nextracker.com. This information is subject to change, and we undertake no obligation to update any forward-looking statements as a result of new information, future events, or changes in our expectations. Please note we will provide GAAP and non-GAAP measures on today's call. The full non-GAAP to GAAP reconciliations can be found in the appendix to the press release and the shareholder letter, as well as the financial section of our IR website. Now I will turn the call over to our CEO and founder. Dan?

Dan Shugar (CEO and Founder)

Thank you for joining us today to discuss our fourth quarter results and to recap our accomplishments for fiscal 2025. Nextracker had a fantastic year and again delivered strong financial performance for the quarter. A year ago, we forecast $2.8 billion-$2.9 billion of revenue, and we achieved $3 billion for the full year. We forecast $600 million-$650 million of adjusted EBITDA and delivered $775 million. For this fiscal year, we are set up for another year of solid growth. Chuck will provide the details shortly, but I want to first lay out three themes that you will hear during today's call. First, Nextracker continues to win in the market, driven by a flight to quality and evidenced by our continued strong bookings growth momentum. At our IPO in February 2023, our backlog was $2.1 billion, and today it is significantly over $4.5 billion.

We have been the global and U.S. market share leader for nine consecutive years, and according to third-party sources, in 2024, we further increased our leading global market share, with top share in U.S., Europe, Latin America, and Australia regions, and we hold a strong position in most other major markets. Second, we believe that we are best positioned to navigate the current policy uncertainties by virtue of our large, geographically diversified order backlog with tier-one customers, differentiated products that increase customer profitability, our healthy balance sheet, and an extremely flexible supply chain comprising over 90 manufacturing sites in 19 countries. Third, we are accelerating our innovation engine, acquiring and organically developing adjacent technologies to create a complete solar power platform.

By scaling new products and services across Nextracker's high-volume global tracker footprint, we can translate modest investments funded from free cash flow into meaningful financial contributions for the company with significant incremental value for our customers. Our market opportunity is expanding rapidly, driven by the structurally increasing global demand for electricity to power AI data centers, EVs, and buildings. This unprecedented surge in electricity demand is approaching the limits of existing generation capacity, with terawatts of incremental new capacity needed within the next five years. Many key customers have been asking us to offer additional products and services in addition to solar trackers to increase installation speed, improve system performance, and enhance long-term operating reliability. Customers value our solar domain expertise, innovation capabilities, supply chain acumen, financial strength, and business culture.

In response to these customer requests, we began the transition from a pure-play tracker company to a solar power technology platform supplier last summer when we acquired two specialty foundation companies. Today's announcement that we've acquired Bentek Corporation, a pioneer in electrical balance of systems, or EBOS, extends the strategy and continues our evolution. The Bentek acquisition will enable our customers to source both tracker systems and EBOS components from a single, highly bankable supplier, and we've completed additional acquisitions that we will be communicating over the coming months. I'm really excited about the opportunities that these combinations will unlock. We will be inviting analysts and investors to our headquarters in the fall to see our technologies firsthand and hear more about our longer-term plans to scale our business.

Before turning the call over to Howard to review some of the highlights from the quarter and year, let me say how proud I am of the contributions of our employees and how grateful we are for the trust and partnership with our customers and suppliers.

Howard Wenger (President)

As Dan noted, we had a great year and finished with a very strong quarter. Demand strength continued in Q4, helping to drive record bookings and backlog for FY25. We believe Nextracker is benefiting from a general flight to quality, leading to expanded market leadership. Customers continue to recognize our differentiated advantage driven by our technology platform and supply chain, faster installation times, operational superiority, including superb on-time delivery, and overall bankability and strength. In the U.S., the general market environment remains strong. Tier-one owner developers continue to advance their projects and bring them to notice to proceed.

Multiple owner developers have told us that their pipelines are secure, including making the necessary safe harbor investments and locking in domestic supply. We are seeing substantially increased demand for our 100% domestic content tracker, which is currently being shipped to many projects. In the international arena outside the U.S., we signed contracts in 17 different countries in Q4 alone, with dozens of new utility and DG projects across the globe. The international pipeline continues to grow, and we are seeing more countries installing solar. In Europe, we had the strongest year ever, delivering record-breaking volume. Spain was particularly strong, and we saw good traction across other countries in Europe. We believe our market share grew to a leading position, benefiting from our XTR terrain-following tracker, which is critical to this region, as well as benefits from our cost reduction programs.

We had a very solid year in Latin America led by Brazil, and we extended our reach into new countries. We saw increasing sales gains in our TrueCapture yield management platform. Regional independent engineers now recognize the benefits of TrueCapture through extensive measurement and verification programs, which owners rely on for their purchase decisions. We were also pleased to see Latin America's first installation of our NX Horizon Low-Carbon tracker. Finally, we had excellent gains and big wins in other markets, including Australia, New Zealand, India, Saudi Arabia, and South Africa. Now, turning to R&D and Nextracker's innovation DNA. In Q4, we reached a record 1,220 patents, including 646 issued patents and 574 patents pending. These patent assets reflect our focus on engineering excellence and solving real-world challenges at scale.

From control algorithms and structural design to tracker performance improvements, each patent represents a meaningful source of value for Nextracker and for our customers. Our innovation focus drove strong demand for new products in 2025. This includes excellent uptake for our Hail Pro Series trackers with over 9 GW of Hail Pro 60 and Hail Pro 75 sold during the year, providing solutions that really matter to owners in the insurance industry. We sold 17 GW of NX Horizon-XTR 0.75 and NX Horizon-XTR 1.5 during the year, reinforcing our global leading position in terrain following. We exceeded our sales plan for our recently acquired foundations business with 1 GW booked, moving to pricing, costs, and project timing. In Q4, pricing for Nextracker was generally stable, and the company continues to manage costs well.

Project timing was also stable and manageable on a portfolio basis in the quarter, with some projects accelerating and some pushing out, which, as we have noted previously, is the nature of large-scale projects spanning multiple quarters and years. Our backlog and large project portfolio provide excellent visibility and help reduce uncertainty. In summary, we had a great year, and we enter our new fiscal year with momentum. We are well positioned to achieve our FY26 outlook, bolstered by strong backlog and the quality of our customer partnerships. Furthermore, we are excited to expand our product offering by adding EBOS, foundations, and enhanced services to our global leading tracker offering. Our customers want us to do more, and we are responding. We look forward to the upcoming analyst day in the fall, where we will discuss in more depth our solar power platform strategy.

Now, I'll turn the call over to Chuck to discuss the outlook among other topics.

Chuck Boynton (CFO)

Thank you, Howard, and good afternoon, everyone. I'm pleased to share our financial results for the fourth quarter and fiscal year 2025. We closed the year with yet another exceptional quarter, reflecting strong execution by the global Nextracker team and continued momentum in utility-scale solar deployment worldwide. Let's start with revenue performance. Q4 reached a record $924 million, up 26% year over year, bringing our full-year revenue to approximately $3 billion, an 18% increase over fiscal 2024. Similar to fiscal 2024, our full-year geographic revenue mix was 69% in the U.S. and 31% from the rest of the world. Now, moving to profitability. Q4 adjusted EBITDA expanded to a record $242 million, a 52% increase year over year, with an adjusted EBITDA margin of 26%.

For the year, adjusted EBITDA was $776 million, also a record and up 49% compared to fiscal 2024. As a reminder, fiscal 2024 adjusted results did not include 45X credits. Adjusted gross profit for the year was just over $1 billion. Q4 adjusted gross margin was 33.4%, down 260 basis points from Q3, primarily driven by one-time benefits recognized in the prior quarter. Adjusted diluted EPS for fiscal 2025 was $4.22, up 38% year over year. In Q4, we delivered adjusted EPS of $1.29, a 34% increase compared to the prior year. We also delivered robust cash flow. Adjusted free cash flow was $227 million in Q4 and $622 million for the full year. Operating cash flow in Q4 was $237 million, offset by CapEx of $10 million. We closed the year with $766 million in cash, with no debt and approximately $1.7 billion of total liquidity.

This positions us well to continue investing in our strategic growth initiatives. During fiscal 2025, we used $150 million of cash to retire our debt and approximately $152 million of cash to fund key acquisitions, including two foundations businesses. Today, we also announced the acquisition of Bentek Corporation, a leader in EBOS solutions, expanding our platform and enabling integrated offerings that reduce system costs and simplify utility-scale solar deployment. Looking ahead to fiscal 2026, we expect revenue in the range of $3.2 billion-$3.4 billion, with adjusted EBITDA between $700 million and $775 million, and adjusted diluted EPS in the range of $3.65-$4.03. As Dan discussed, we are accelerating investments to capitalize on the opportunity ahead of us. This will include some additional OpEx to build out adjacent solutions, particularly around Bentek's technology and go-to-market efforts.

More specifically, in FY26, we plan to increase our OpEx as a percentage of revenue by approximately 100 basis points. We also plan to increase our CapEx to approximately $100 million in FY26, all while generating more than $450 million in free cash flow. On the M&A front, in FY25, we spent approximately $152 million in cash to acquire several businesses. As Dan mentioned, we recently closed several new transactions. The payments associated with these deals and our prior transactions will require approximately $110 million in cash this fiscal year. Excluding any additional M&A or capital allocation activity, we expect to end fiscal 2026 with over $1 billion in cash. Investing for growth while driving strong cash generation remains core to our strategy. We expect structural gross margins for fiscal 2026 in the low 30%.

Dan Shugar (CEO and Founder)

This takes into consideration geographic mix, impact of tariffs, and the investment to scale the recently announced acquisitions. While we have taken a prudent approach to guidance due to ongoing macroeconomic uncertainty, our confidence in the business is grounded in several key drivers: the strength of our record backlog, the continued flight to quality among solar developers, and the deep capability and commitment of our global team. In summary, Nextracker delivered another year of record results with strong revenue growth, expanding profitability, and excellent cash generation. We are strategically reinvesting into this momentum to grow market share, expand our portfolio, and create long-term shareholder value. With that, we're happy to take your questions. Operator?

Operator (participant)

We'll now open the line for questions. If you'd like to ask a question, please dial star one on your telephone keypad. If for any reason you need to remove your question, you can dial star two. Again, to ask a question, it is star one. The first question is from the line of Mark Strauss with JP Morgan. Your line is now open.

Mark Strouse (Executive Director and Senior Equity Research Analyst)

Great. Thank you very much. Thanks for taking our questions. Congrats on the continued execution. Maybe Dan or Howard. There is a lot to get to here, but I wanted to start with the HAL's tax bill. Just given your long experience in the space, knowing that things can still change, but just kind of based on your experience, based on kind of your initial conversations with partners, how workable do you think this package is with regards to some of the new provisions, like the timing being based on placed in service, the fiat requirements, et cetera, not just for trackers, but for the overall space, just kind of given my view that you are a good spokesperson for the overall industry. Thank you.

Dan Shugar (CEO and Founder)

Thanks, Mark. Both Howard—this is Dan Sugar—both Howard and I have been to Washington. We've met with congressional representatives. We've been working with our trade associations and obviously very focused on these issues. There are things in the reconciliation bill that are favorable, and there are things that need attention and ongoing work. In the favorable category, the Section 45X treatment as it relates to incentives to manufacture certain components in the U.S. Additionally, the Section 48E as it relates to the timing of the 30% investment tax credits. The timing of those two are generally favorable. Need for improvement would be the transferability provisions, the placed in service versus start of construction timing as it relates to when tax credits are locked in, and the FEOC areas that deal with certain components that are in solar systems that may have a foreign origin, how those can impact.

There are opportunities for improvement in those. I'd say it's fair that collectively, just with the Nextracker people, we've met with over 15 representatives in the last few weeks. Our peers and industry associations have met with many more. I'd say generally very supportive of our Make in America initiatives. Nextracker alone has had nine public factory openings of new or massively expanded factories making our equipment. We have over 25 manufacturer partners across the U.S. Others in the industry amplify that, and that's really recognized. I think it's also recognized that solar is a really key part of the energy dominance and that, I mean, solar was over 80% of the capacity installed in the grid last year. All that stuff's recognized. We're cautiously optimistic.

The areas I outlined for need for improvement, we're going to have constructive dialogue with our representatives and be able to move the needle forward. That said, the final bill, it's not done till it's done. We will need to see where that lands. Thanks, Mark. Next question, please.

Operator (participant)

Thank you. The next question is from Ben Callow with Baird. Your line's now open.

Ben Kallo (Senior Research Analyst)

Hey, guys. Congrats on the results. Maybe if you could just talk about international business there and how we think about margin going forward as it pertains to your backlog, and I have a follow-up.

Howard Wenger (President)

Sure. This is Howard. Yeah, we were really pleased with how we ended the quarter, both on the revenue side and booking side. We continue to perform kind of within the 30%-40% of our business being international or rest of world, and the balance, 60%-70%, being in the U.S. That is where we are at. We have been very consistent. It is in our shareholder letter on that front, and our backlog reflects that. The international business continues to hum. There are more countries, as we noted in our remarks, that we did business in Q4 alone, 17 countries outside the United States. Many of them are kind of countries that we do not talk that much about, like Saudi Arabia and Greece and Peru and Chile and Bulgaria. These were countries where we actually booked and signed contracts in the quarter, amongst others.

From a margin perspective, we've been quite consistent in saying that the margins are lower internationally, generally speaking, and we've been able to, as a combined overall company, maintain really healthy margins in the past, and that's what we're outlooking going forward. Thanks for the question, Dan.

Operator (participant)

Thank you. The next question is from Philip Shen with Roth Capital Partners. Your line's now open.

Philip Shen (Managing Director and Senior Research Analyst)

Hi, everyone. Thanks for taking my questions. Congrats on the strong results. First one is a follow-up on the HAL's draft bill. I showed you mentioned the fiat restrictions and then the change in language from construction start to placed in service. I was wondering if you might be able to quantify what kind of impacts there might be if these provisions were to become law. What kind of impacts could we see from each one of these new items on volumes for, let's say, for the industry, calendar 2026 and 2027? And then on bookings, can you share the directionality of what FQ4 bookings looked like? Was it well above $1 billion? If you can give a decimal, that'd be great.

What is your expectation in terms of bookings activity in the coming quarters, given the uncertainty in the marketplace, although we have some better understanding of where the changes to the IRA might be now? Thanks.

Dan Shugar (CEO and Founder)

Yeah, thanks. I'll take the first part as it relates to the policy, and then Howard will jump in on the rest. It's really early days on this bill. This bill's got a long way to go. It was just published. It's going to have quite a journey. We don't have precise answers to your question. I would say, though, directionally, there'll be little impact for the next few years in terms of what our realized financial results will be. What we're looking at is more intermediate term, three, four years out, how it relates to new projects that, as the projects that are grandfathered in now, which can go two to three years, become fulfilled. It's really the future book of business that will have the most impact due to the policy areas that need work that we outlined earlier on the call.

Howard, can you take the second part of this question, please?

Howard Wenger (President)

Sure. Hey, Phil. We have had sequential growth in our backlog since going public every quarter, and this last quarter was no exception. We had record revenue, and we still had $924 million, and we still increased backlog sequentially. That gives you some color on the booking strength this quarter. As far as in the coming quarters, our pipeline is healthy. The U.S. market, what we are finding is, and we talk a lot with owner developers, they have safe harbored and they have secured their—the tier ones for sure—the ones with multi-GW pipelines with a lot of investment behind it. They have safe harbored, and they are telling us their pipelines are secure, which means for us, it is really good news. In addition to the backlog being significantly over $4.5 billion, our pipeline continues to be very healthy.

The flagship of where we do business is the U.S., and that continues moving forward. Thanks, Phil.

Operator (participant)

Thank you. The next question is from Brian Lee with Goldman Sachs. Your line is now open.

Brian Lee (Chief Risk Officer)

Hey, guys. Thanks for getting the questions, and kudos on the great execution here. I had two sort of modeling guidance-related ones. The first one would just be around the revenue outlook. As you mentioned, Dan, your business is evolving. You're kind of a platform solutions model going forward. Can you give us a sense of, as we look at the 2026 revenue guidance, how much of the revenue is coming from some of your new businesses like foundations and Bentek? How much is coming from maybe some price capture with steel going up? And then what's the sort of delta between what you're seeing in international growth versus domestic? Secondly, just on margins, if I look at your guidance, implying EBITDA margin sort of in the 22% range, you just came off a year where you did 26%.

I know you're talking about 100 basis point headwind from higher OpEx and investment, but is there a bridge to why EBITDA margins are being implicitly guided down year on year, or is that just your level of conservatism getting baked in there? Thanks, guys.

Dan Shugar (CEO and Founder)

Yeah, thanks, Brian. Chuck will get into some detail. I'll just say at a high level, we're guiding up for another year of solid growth. We'll be in terms of getting into how much the new product offerings will be contributing to our total picture. We'll be in a position to do that at the upcoming analyst day we're going to have in the fall. We'll be inviting our analysts and investors to participate in that at our headquarters here in Silicon Valley. We'll be breaking that down at greater detail at that time. Chuck?

Chuck Boynton (CFO)

Great. Thank you, Brian. First of all, fiscal 2025 was just a stellar year. The company had a record Q4 and had incredibly strong margins all year. What you saw, and we talked about in Q2 and Q3, was we had a number of tailwinds that really helped increase both gross margin and operating margins. As we look forward into fiscal 2026, it is really a year where we are leaning in on growth and looking for multi-years of growth. We mentioned in our letter that we see in five years a third of our business coming from non-tracker revenue. This strategy is really about leaning in for growth. We are investing in OpEx, as you mentioned. We are investing in CapEx, investing in the acquisitions, as well as organic activities to drive growth that we will talk about in the fall at our analyst day.

Our margin profile, if you look at Q4, we were in that 33.4% for Q4. That is kind of a good number. Structural margins, as we talk about, are kind of in the low 30s, structural gross margins. Our outlook sort of contemplates that same kind of range for fiscal 2026. We feel that low 30s gross margins, low 20s EBITDA margins is a really good place to plan and run our business. Thank you.

Operator (participant)

Thank you. The next question is from Cassie Harrison with Piper Sandler. Your line's now open.

Kashy Harrison (Senior Research Analyst)

Good afternoon. Congrats on the fiscal year. Thanks for taking the question. My NERSC series just focused on Bentek. Could you just walk us through strategic rationale, go-to-market, how much of the supply chain is U.S. versus international, contract manufacturing versus direct manufacturing, and then cost structure? I just want to get a whole picture of how to think about the strategy behind this deal. Thank you.

Dan Shugar (CEO and Founder)

Yeah, we'll do a two-part. I'll answer a bit on the strategy. Howard will then fill in some of the details to the extent we can go there. First, we couldn't be more excited about this. Let me just take a step back. We're systems thinkers. Okay. We've been doing this since the 1980s. Back in the day, we actually designed, manufactured electrical balance of system as well as mechanical balance of system. They go together just like they do in your car or a number of other components. We really see there's an opportunity for customers to have one provider designing and supplying materials to the projects in buildable megawatts and delivering by blocks in a sequence that works for the customer. Also, for these products to work well together, they touch each other.

We're going to continue collaborating with the EBOS, other EBOS providers. We have a great deal of respect for the providers that exist. We're going to have the Bentek platform continue to support fixed systems, work with our tracker, work with other trackers. To the extent it's involved with our tracker, we see opportunities to co-optimize the solutions to add increasing value for the customers as we look forward. Howard, would you like to pick it up from there, please?

Howard Wenger (President)

Sure. We see massive synergy between electrical balance of system and the tracker because they touch each other, literally. They are designed at the same time. Right now, we do not design EBOS, but as we have announced today, we are doing that now. The same project engineering team, which is very large at Nextracker, will be doing the design and engineering of the tracker and the EBOS. We also see synergies in the product development, as Dan mentioned, like really thinking about what is the best and fastest way to install EBOS with our tracker. We are also going to make the EBOS solutions that we have available for other trackers, including fixed tilt systems. We see a lot of synergy on the design side, engineering side, and then the sales platform. We touch the same customers. We are selling to the EPCs.

The owners of the equipment really care about the tracker, and they care about the EBOS and the longevity, the reliability, the quality. Having our brand and our warranty wrapped around both is going to be very powerful. We've spoken with several customers already about it, and they're really excited.

Dan Shugar (CEO and Founder)

I'll jump in, Howard.

When you're finished.

Howard Wenger (President)

Sure. There's just a lot of synergy here.

Dan Shugar (CEO and Founder)

Yeah. And just building on Howard's comment, we've actually had customers just tell us point blank. They say, "We want to buy more from you, Nextracker. Please offer more components." Now, what we really love about Bentek, we did a lot of due diligence, personally went on the floor. Their main operation is in San Jose. It's only 30 minutes from our headquarters in Fremont. They have a very well-provisioned facility with spare capacity, very professionally laid out. Bentek's been an early mover in this category of EBOS for 15 years. We love their quality, reliability ethos, their culture. They're testing 100% of the electrical harnesses before they ship, which is very important for durability, confidence for customers. And we've also spoken to a number of customers that have been working with them for a long time.

For example, Solve Energy, which is one of the largest EPCs in the U.S. and the world and one of the longest operating, is both a current customer and a long-term customer of Bentek. There is a quote by George Hirschman in our release, who is CEO, saying that he really welcomed this, and he has actually been encouraging us to lean in. The other thing I would just say is that we need more manufacturing of all the above solar in the U.S. Bentek has the ingredients to become a larger player in the U.S., but they were lacking financial support, and they were lacking a holistic system design type approach to the system. We bring those things to them, and we are going to help building out the U.S.

Supply chain and continuing to be one of the providers in the industry to support the growth of the U.S. solar industry. Down the road, we could look at bringing these products overseas, and we could collaborate with others down the road as well. This was a good first step for us. We have domain expertise in this legacy. This gets us a very prudent step up and running into this segment, and we look forward to supporting their growth and serving customers.

I'll just close by saying that there's a saying that culture eats strategy for breakfast, and we are really culturally matched with Bentek. They have a great leadership team over there. We've interacted with them a lot, and the integration of the companies is already seamless. Thanks for the question.

Operator (participant)

Thank you. The next question is from Julian DeMoulin Smith with Jefferies. Your line's now open.

Julien Dumoulin-Smith (Research Analyst)

Hey, good afternoon, team. Thank you guys very much. Again, nicely done, I got to say. Maybe just to follow up on that last one a little bit, let's focus on the strategy still. You talk about a third of your business coming from non-tracker revenues. That's pretty impressive, right? I mean, even if that's in five years from now, even a third of the revenues would be north of $1 billion. How do you think about reconciling EBOS and/or other categories? I mean, how much are you thinking about scaling this business up to $1 billion+? Realistically, what is sort of the cadence of that build-out? I mean, what are you reflecting in guidance in 2026, for instance? How do you think about that trajectory?

As well as given the liquidity and cash profile that you guys are alluding to here, I mean, what is the prospect for having further subsequent acquisitions reflected, say, by this time when you have this analyst day later this fall? You can speak to it, so.

Dan Shugar (CEO and Founder)

Yeah. Thanks, Julian.

Julien Dumoulin-Smith (Research Analyst)

This scaling and real estate.

Dan Shugar (CEO and Founder)

Okay. Thanks, Julian. Dan Shugar here. I'll take the first part, then Chuck will jump in on the second. We have, in addition to Bentek, completed some other acquisitions recently that we have not announced yet. We will be speaking about those when we're ready to in the coming months. Let me just pull back and just say, how do we approach new technology in the market and new products and services? First of all, we have a very strong organic internal R&D program. We've roughly tripled the investment in that over the last few years. We're seeing the fruits of that in our bookings, in our shipments, with, for example, our TrueCapture technology, our terrain-following XTR technology, our Hail Pro systems, all of which we've pioneered in the industry. Those are quantified to an extent in the shareholder letter and the low-carbon tracker.

We're innovating, getting the job done with organic development. Not all great technology is invented here. Sometimes, even if we're working on something that's more prudent to serving customers and scaling, it is to partner with others that have been doing it for a while and myopically focused on that. The EBOS is one category. We have other things that are very exciting. We'll be speaking to those as soon as we're ready. We'll be providing a lot more granularity about the build-out of our non-tracker products and services offerings over the coming years during the analyst day in the fall. Chuck, can you pick it up from there, please?

Chuck Boynton (CFO)

I will. Thank you, Julian. If you think about our cash generation, this is really a great business. We generate a really good return on invested capital. The cash flow generation in 2026, even after the CapEx that we are going to do, we expect to generate more than $450 million of free cash flow. Even after paying for the current acquisitions and the prior acquisitions, we expect to end the year with north of $1 billion of cash. That does not include new deals that we might do, but I'll say we are prioritizing organic investment. We are investing heavily in R&D, as Dan mentioned. We will continue to evaluate other M&A opportunities. We may or may not do any or announce any, but we are looking for areas where we can add value to our customers and companies that will integrate well with our technology platform.

Thank you, Julian.

Dan Shugar (CEO and Founder)

Next question, please.

Operator (participant)

Thank you. The next question is from the line of Dimple Gosai with Bank of America. Your line's now open.

Dimple Gosai (Head of Us Cleantech & Sustainability Equity Research)

Thank you so much for taking my question and congrats on the quota. Can you please help unpack the durability of the structural growth margins and the low 30% that you're kind of speaking to, especially for 2026? I think I understand the geographic exposure and the margin differentials there, but how much of that is kind of driven by 45X versus operational execution or product mix improvements, especially post this acquisition that we've just discussed and some of the software pieces?

Chuck Boynton (CFO)

Thank you, Dimple. Nextracker is such a great company. If you look at our backlog, I'd say not all, but the vast majority of 2026 is contracted. There is a lot of work to do, for sure, but we have very good visibility on pricing, margins, and cost for 2026. Now, there is still work to do, but this is a business that we look at in terms of years and multi-years. The structural margins for fiscal 2026 are largely booked as of today. There is work to do still, but for the most part, we feel like we're really well positioned for 2026. Next question.

Moses Sutton (Head of Clean Energy Research)

The next question is from Moses Sutton with BNP Paribas. Your line's now open.

Thanks for squeezing me in. Two basic ones. First, it's great to see the EBOS entry. What % market share do you think Nextracker has had in recent past? Does it have sufficient manufacturing capacity? Number two, are you starting to see strong pipeline and even booking visibility for 2028? It seems many specific projects are getting greenlit already, even before that draft bill came out.

Howard Wenger (President)

This is Howard. Hey, Moses. So Bentek, we put them in the top three or four EBOS suppliers in the U.S. They have a very, I would say, loyal following. They've been undercapitalized, frankly, so that's constrained their growth. We're really looking forward to unlocking that. As Chuck mentioned, we're going to be giving more details on the outlook and impact on our business going forward. They do have a pipeline that does extend out. We think this is one of the areas where our sales team is so much larger than their team, and our platform for the U.S. and then internationally is massive compared to their volume. We think that we can really increase demand and supply and really ignite this business.

Operator (participant)

Thank you.

Howard Wenger (President)

Thank you.

Operator (participant)

The next question is from Dylan Nassano with Wolfe Research. Your line is now open.

Dylan Nassano (VP)

Hey, good afternoon. Thanks for taking my question. Just quick modeling one for me on the 45X. It looks like that stepped up by about $25 million in the quarter relative to the kind of run rate of the previous couple of quarters. Is there any one-time items we should think about there? Also, in terms of the 2026 guidance, can you just kind of speak to what kind of tariff framework you're assuming in there? Could we see movement towards the high end if more deals get done by the White House or vice versa if tariffs ratchet back up? Similarly, on the big beautiful bill, some of the items that you flagged that need some more work, if those get softened, could there potentially be any impact to the guidance range?

Chuck Boynton (CFO)

Great. I'll take the first two, and then Dan or Howard can take the third one. On 45X, Dylan, yes, Q4 was a little better on the 45X than planned. There was a couple of kind of one-time benefits. It was small. I think as we've looked in the past, if you look throughout fiscal 2025, we averaged about 11% of U.S. revenue. That's probably the upper end of what we'd outlook for 2026. I'd look at roughly 11% of U.S. revenue. On the tariff side, we've taken a prudent approach with our outlook. We feel like we're covered for the year. It could be a little better, could be a little worse, but I think we feel like our outlook contemplates where things are going to land. We feel comfortable with our prudent outlook. Dan, you want to cover the third part?

Dan Shugar (CEO and Founder)

I'm sorry. Could you restate the third part of that question, please?

Dylan Nassano (VP)

I mean, you guys identified some parts of the Republican proposal that maybe could use a little more work to be more beneficial for the industry. If that were to happen and we get something kind of softer with the Senate part of the bill, could you see movement towards the higher end of the range of guidance?

Dan Shugar (CEO and Founder)

I think what Chuck said is, and Howard, this year is pretty baked. I do not see that stuff impacting this year at all. Do you, Howard?

Howard Wenger (President)

No. Yeah. I mean, look, the important thing is that it's kind of for this year and next year, all of our partners that we've talked with, and I'm talking about many, many developer owners and EPCs, they're saying that their pipelines are secure.

All the major tier ones.

Yeah. Of course, could there be upside? Yes, anything's possible. We feel really good right now where we stand. We managed to, on an annual basis, we provided the outlook for the year. This is the first quarter. We feel very, very good about our outlook.

Dan Shugar (CEO and Founder)

Yeah. Look, taking the long view, we went public a little over two years ago. At that time, our backlog was $2.1 billion. Today, it's well over $4.5 billion. We just had a great quarter and many quarters in a row of book to bill over one. We feel very good about the business. We feel great about our margin profile, our position in the market. We're going to continue operating with price discipline and really lean in on the innovation and customer service, listening to customers, identify what their pain points are, either develop technology that addresses it or acquire those if we can, and then move with operational excellence to crush it and basically have fantastic customer satisfaction. That's our DNA, and our team is myopically focused on that. Operator, we have time for one more question, please.

Operator (participant)

Absolutely. The last question for today is from the line of Praneeth Satish with Wells Fargo. Your line's now open.

Praneeth Satish (Senior Equity Analyst)

Thanks for squeezing me in here. I know you mentioned that customers have been coming to you asking for a combined tracker EBOS solution. It seems like there could be some pent-up demand here. When we think about the go-to-market strategy where you really kind of scale up the EBOS revenue, is that something that could start immediately in fiscal 2026, or is it contingent on you finishing out some of the CapEx build that you referenced, or is it a more gradual ramp that'll take you into fiscal 2027? Just trying to understand how to think about and model the attach rate for the EBOS offering. Thank you.

Dan Shugar (CEO and Founder)

Sure. Thanks. We'll do a two-part. Let me say they have real bookings. They're serving customers, stuff shifting. And there's extra capacity at Bentek to continue scaling to take incremental business. So that's the fact. Howard?

Howard Wenger (President)

Yeah. We think that we can realize some benefits relative to their current run rate today. It has been like a week since we acquired them and realize those benefits this year in fiscal year 2026. We do think that we can increase their run rate this year.

Dan Shugar (CEO and Founder)

Just as a point of clarification, customers have asked us to do more than EBOS in terms of they want us. There are other things customers have asked us to do in terms of adding to our scope. I mean, we're systems-oriented. In the earlier days in the industry, we were doing many parts of the pie in terms of the value pie for customers. We are looking at where we can add value and where we can also complement the existing industry and basically help systems achieve higher levels of actual performance, which is a major thing. Okay. We'd like to thank you all so much for joining us for this earnings call to recap our fiscal year 2025 business.

As we set guidance for fiscal year 2026 and announced our launch of our EBOS business, we very much look forward to speaking with you in callbacks and to hosting you at our Analyst Day coming up in the fall. This concludes the call. Thank you very much.

Operator (participant)

That concludes today's call. Thank you for your participation. You may now disconnect your lines.