Nextpower Inc. (NXT) Earnings

Management highlights

### Strategic Platform Expansion - Core long-term strategy expanded beyond leading solar trackers to a full platform of utility-scale solar and energy storage solutions to meet growing customer demand for integrated, turnkey projects - Completed two strategic acquisitions: Prevalon (closed prior to the call) to launch NexPower Energy Storage, and the Apex inverter business (closed on the call date) to establish the company's domestic inverter product line - Definitive agreement in place to acquire Zimmermann PV, a leading European fixed-tilt solar structural solutions provider, to expand NextPower's European footprint and address the large fixed-tilt market segment - NextPower will host its second Capital Markets Day on November 16, 2027, where it will update its 2030 long-term outlook to reflect accelerated growth from recent acquisitions and strong market momentum ### Operational Milestones - Total backlog grew to over $5.5 billion (plus $300 million from NexPower Energy Storage), marking a new record high driven by strong bookings in both core and new product lines - The new Apex inverter product achieved UL 1741 SB certification, with commercial deliveries planned to begin in early 2027 and 10 gigawatts of U.S. manufacturing capacity expected to be online by next summer - The EPOS NX Power Merge solution also received UL certification, clearing the way for broad U.S. commercialization, with 850 megawatts already booked for delivery in the current quarter - Expanded global customer reach to over 50 countries; the Zimmermann acquisition will add 15 more countries primarily across Europe ### Market Positioning - Retained the number one global and U.S. solar tracker market share position for the 11th consecutive year, growing share to 55% in the U.S. and 30% worldwide - Benefiting from a structural industry tailwind driven by accelerating global electricity demand from electrification, AI data center growth, and the need for more resilient power infrastructure; solar and storage are the lowest-cost, fastest route to new generation capacity - U.S. market demand remains strong, with growing project pipelines moving through permitting to construction; international demand is also healthy, highlighted by a recent 721 megawatt tracker order for Australia's largest solar-plus-storage project to date ### Capital Allocation Priorities 1. First priority: organic investment in new product research and development and capacity expansion 2. Second priority: disciplined strategic M&A that enhances the company's platform and customer value, with a focus on proven businesses rather than unproven speculative opportunities 3. Third priority: return capital to shareholders via the existing board-approved $500 million share repurchase authorization

Guidance

- Management upwardly revised the lower bound of its fiscal 2027 revenue guidance to a new range of $4.1 billion to $4.4 billion, reflecting stronger than expected Q1 performance, high-quality backlog, and healthy demand across all product lines - Management expects near-term adjusted EBITDA margins to be temporarily impacted by pre-revenue investments in engineering, manufacturing, go-to-market, and service capabilities for new products and acquisitions, but the company's long-term objective is to sustain structural margins on a larger total revenue base while growing absolute adjusted EBITDA, free cash flow, and return on invested capital - The $50 million incremental investment in inverter business expansion announced previously remains unchanged, with spending planned over the next four quarters starting in Q2 FY27 - Management did not raise the upper bound of the revenue guidance range at this time because closure of the Zimmermann PV acquisition, which will add additional revenue, has not yet completed and its closing timing remains uncertain

Segment performance

Total company revenue for Q1 FY27 was $935 million, an 8% year-over-year and 6% sequential increase. Adjusted gross profit was $342 million with a 37% adjusted gross margin, and adjusted EBITDA was $233 million with a 25% adjusted EBITDA margin. Geographic revenue split is 83% from the U.S. and 17% from the rest of the world. The core Solar Tracker segment, which has maintained 11 consecutive years of global market leadership, represents approximately 86% of total Q1 revenue, with a 55% U.S. market share and 30% global market share. The Non-Tracker Products segment represents 14% of total Q1 revenue. Within non-tracker products: the eBoss business achieved record quarterly bookings and is on track to deliver over $100 million in full-year revenue; the Foundations segment grew 50% year-over-year in Q1; TrueCapture (AI yield optimization software) represented more than 2% of total revenue in the quarter, with accelerating revenue growth and increasing customer attach rates. NexPower Energy Storage, formed via the recent Prevalon acquisition, adds over $300 million of additional backlog on top of the core company's $5.5 billion total backlog.

Risks & headwinds

- Forward-looking statements about new product growth, acquisition integration, and market expansion are inherently uncertain, and actual results may differ materially from expectations due to general industry and macroeconomic risks, as detailed in the company's public SEC filings - New product and acquisition investments are made ahead of revenue generation, which creates near-term margin pressure and carries the risk that projected customer demand or financial returns will not materialize as expected - The inverter and energy storage markets face potential supply chain constraints for key components including battery cells and power electronics, which could impact the company's ability to meet customer delivery timelines - Utility-scale solar and storage projects are subject to permitting delays and timeline shifts, which can create quarterly revenue volatility and impact near-term financial performance - Ongoing changes in U.S. trade policy and tariffs on imported energy infrastructure components create cost uncertainty, though the company has proactively positioned its domestic inverter manufacturing to address potential new restrictions on imported inverters

Analyst Q&A

• Q: How has the recent FCC announcement on imported inverters changed the size of NextPower's inverter market opportunity, and was the investment decision made before the announcement?

  A: NextPower began developing its inverter product line over two years ago in direct response to long-standing customer pain points around inverter reliability and supply chain certainty. The company acquired the Apex product line to accelerate its entry into the market, and its core objective is to deliver the most operationally available inverters in the industry via strong product quality, domestic manufacturing, cybersecurity compliance, and a robust service model. Customer demand has been very strong pre- and post-FCC announcement, driven by demand for domestic production and supply chain certainty, so the opportunity scale has increased consistent with this market demand.

• Q: Can you provide an update on integration progress for recent acquisitions and what the opportunity looks like with hyperscaler/data center customers?

  A: NextPower has a proven track record of successful M&A integration: the eBoss acquisition, closed five quarters ago, is already at a $100 million annualized revenue run rate, double the target. Prevalon (energy storage) has a mature, already operational team with 38 completed customer projects, and Zimmermann PV is a stable, profitable established business that will require minimal integration. NextPower serves hyperscalers both indirectly via IPP developer partners building projects for hyperscalers, and directly with Prevalon's hybrid OS power stabilizer product that meets fast-response data center power needs. Customer pipelines for this segment are already expanding and the company is actively closing new business, with additional synergies from the newly acquired Apex inverter technology.

• Q: Can you share more detail on TrueCapture's contribution to Q1 margin upside and its current attach rate?

  A: The Q1 adjusted EBITDA margin beat versus guidance (25% vs. low 20s guidance) was primarily driven by material IEPA tariff recoveries, partially offset by higher freight and logistics costs. TrueCapture revenue did accelerate in Q1 and is now higher than the historical 2% of total revenue level, with increasing customer attach rates. TrueCapture, a 10-year development yield optimization product that individually controls each tracker row to maximize energy output, is validated by third parties and deployed across tens of gigawatts. Attach rates are rising as projects are increasingly built on more challenging uneven terrain, where TrueCapture delivers the most value.

• Q: What is the company's capacity plan for U.S. inverters, and what new product areas will NextPower target next?

  A: NextPower will size inverter production capacity to match market demand, supported by its strong cash balance with zero debt. The NexPower Energy Storage business will remain free to use either NextPower-built inverters or third-party inverters based on what best meets customer needs. The company has assembled a top-tier operations team to deliver on the inverter ramp, focused on solving the historical industry reliability issues that have made inverters the weakest link for solar and storage projects. NextPower has already put all major platform components in place (trackers, storage, inverters, eBOS, foundations), but will continue to pursue organic R&D or disciplined M&A to address unmet customer needs that improve project IRR, with a strict focus on both customer and shareholder value.