Nextpower Inc. Q3 FY2024 Earnings Call

Good afternoon, everyone. And thank you for standing-by. My name is Sarah, and I'll be your moderator today. Today's call is being recorded. I'd like to welcome everyone to Nextracker's Third Quarter Fiscal Year 2024 Earnings Conference Call. After the speakers' remarks, there will be a Q&A session. At this time for opening remarks, I like to pass the call over to Mary Lai, Vice-President of Investor Relations. Mary, you may begin.

Thank you and good afternoon, everyone. Welcome to Nextracker's third quarter fiscal year 2024 earnings call. I'm Mary Lai, Vice-President of Investor Relations. I'm joined by Dan Shugar, our CEO and Founder; Howard Wenger, our President; and Dave Bennett, our CFO. Following our 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 our slides and press release. Today's call contains statements regarding our business, financial performance, and operations. Including the impact of our business, and industry that may be considered forward-looking statements and 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, slides, and our SEC filings, including our most recent filed Form 10-Q, 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, slides of today's presentation as well as the financial section of our IR website. And now, I will turn the call over to our CEO and Founder. Dan?

Thank you, Mary. Good afternoon, everyone. And welcome to our third quarter fiscal year 2024 earnings call. We start this call by noting how thrilled we are to be a fully independent public company after successful separation from Flex in early January. We are appreciative of our time with Flex, an eight-year combination that exceeded its goals related to our growth and global expansion. And we sincerely thank the six outgoing board members, all Flex executives for their service. We're also excited to welcome Julie Blunden and Howard Wenger to our Board, further strengthening our directors' deep domain expertise in solar, storage and public companies. Let's focus on Q3 results. This was another strong quarter and our fourth consecutive quarter of double-digit growth, resulting in record revenue, profit, and backlog. Q3 demonstrated ongoing momentum for Nextracker in the solar industry. Our revenue grew 38% year-over-year to exceed $700 million. And our adjusted EBITDA accelerated to $168 million. It's noteworthy that we've doubled our adjusted EBITDA in the last 12 months. The significant top-line and profit expansion was the result of our solid execution, further optimization of our re-architected supply chain, and continued rigor in pricing discipline. Our reported $168 million of adjusted EBITDA does not include the anticipated 45X tax benefits, which are expected to further increase earnings. Q3's performance was driven by exceptionally high deliveries in our U.S. business, growing 70% year-over-year. We also highlight our international expansion progress by celebrating the 10 gigawatt milestone we reached in the Middle East, India, and Africa. We have a long-term and proven track record in these regions, where in some cases, we have the advantage of first market mover. Our differentiated product reliability in extreme weather and ability to deliver large volumes at scale are well understood by customers. Recently, we have booked significant orders and have tracker fleets operating in India, Saudi Arabia, United Arab Emirates, and Africa. To serve our growing demand, we keep expanding our global supplier footprint. In total, we now have over 70 major supply chain partners across five continents. Our new contract bookings continue at a healthy pace, both domestically and overseas. This resulted in a new record backlog significantly exceeding $3 billion. With strong demand and record backlog year-to-date, we are increasing guidance. We are raising the midpoint of our previous annual revenue and profit guidance by approximately $100 million and $73 million respectively. For the full fiscal year, our new revenue target is $2.45 billion, and our new EBITDA target is $488 million at the midpoints. This is the third consecutive quarter we've raised our revenue and profit guidance. We achieved this growth by focusing on innovation, customers, execution, and our team, delivering over 90 gigawatts since inception. Based on our strong growth profile supported by healthy profitability and ample liquidity, we've continued to increase our investments in R&D with an emphasis on technology that lowers the levelized cost of solar energy for our customers. The additional R&D investments we've made have accelerated the time-to-market for new products and allowed us to maintain market leadership. In Q3, we bolstered our overall patent portfolio, both organically and through strategic investments. We now have over 500 patents issued and pending at the end of the quarter. Last September, we launched our next-generation technology suite with three innovations: Extreme Terrain Tracker, Hail Pro, and NX Horizon with Zonal Diffuse. All of these innovations are either operating in the field today or under contract to be delivered to customer projects later this year. We will now speak to the short and long-term dynamics in the market. Starting with the United States. As covered on our previous calls, there are multiple headwinds and tailwinds impacting solar development velocity. Headwinds including interconnection backlog, permitting delays, and equipment shortages are real and can impact any specific project EPC or developer. But in totality, the combination of new entrants in both developers and EPCs and the increasing number of projects in their portfolios has allowed the market to continue expanding. Solar panel availability in the United States has improved significantly over recent quarters. And as things stand today, we are not seeing panel availability as a first order problem in the market. There are, however, multiple trade proceedings pending which could impact panel imports from certain geographies into the U.S. We will need to see how this evolves over time to determine any potential impact. According to the Solar Energy Industries Association, at the one-year anniversary of the Inflation Reduction Act or IRA, 85 gigawatts of new U.S. solar module manufacturing capacity had been announced, which inspires confidence that power availability will be systemically addressed in the coming years. Overseas, some of the headwinds noted above also exist, but they are typically less severe than in the U.S. And globally, falling solar panel pricing has enabled the economics of projects to continue improving, allowing markets in general to keep expanding. Longer-term, we believe it's insightful to consider both the accelerating need for new power in combination with retiring legacy power generation assets. Focusing on the U.S., power generation requirements grew modestly from 2007 through 2022 at about a 1% annual increase. Over the last few years, however, energy usage has increased dramatically driven by growth in data centers, electrification of appliances and transportation, and reindustrialization across the United States. At the same time, there has been a significant retirement of legacy power plants. The combination of these factors has caused the U.S. Energy Information Administration to forecast a 5% annual increase in needed new power generation capacity in the grid over the next five years. The result is that almost 300 gigawatts of new power plants are needed over the next five years and about 500 gigawatts of new power is needed over the next decade. Where is this massive amount of new power going to come from? The U.S. CIA, historically very conservative on renewables, is forecasting that solar and wind power will comprise the vast majority of new power generation. Solar is expected to have a 26% compound annual growth over the next five years and within 10 years be the number one source of electric generation in the United States, comprising almost a quarter of all electric energy. Naysayers point to the intermittency of renewable power as an impediment to its large-scale adoption in the grid. We believe this issue will improve. Sharp decreases in battery costs have enabled steep ramping of battery storage power plants in the grid, both co-located with renewable power and standalone projects. Battery power increased five-fold in the last two years to 15 gigawatts, operating in the USA today. And batteries are expected to triple again to about 50 gigawatts by 2026. Many battery systems have four hours of storage today, which pairs well with the solar tracker plant, which together provides power through the evening peaks. Nextracker is very well-positioned to continue driving utility-scale and distributed generation as the world transitions to renewable energy, with solar leading the charge. We are the skeletal system for the solar power ecosystem. With over two million tracker systems shipped to more than 30 countries, we are the global market leader in trackers and a preferred partner for Tier 1 owners, developers, and EPCs. And equally important, we appreciate our customers and their guidance on our products. We listen and respond to customer requirements with operational excellence and uncompromising quality. Now I'll turn the call over to Howard Wenger, our President, to expand on our commercial progress and product innovation.

Thank you, Dan. Q3 was another successful quarter delivering multiple proof points that our products are differentiated and our team continues to execute on fulfilling customer requirements. It's been an amazing journey as we have scaled Nextracker's revenue to over $700 million this quarter. In just a short two-year span, we've more than doubled our quarterly revenue while increasing profitability. Our proactive investments are paying off. We have invested in innovation, increasing our technology lead. We've implemented a regional strategy to further enable international expansion. And we have successfully deployed a strategic pivot to localize our U.S. supply chain which is in full flight. The U.S. remains our largest served market, representing 78% of total Q3 revenue. This is a higher percentage than in previously reported quarters. However, we expect our revenue mix to continue to be approximately two-thirds U.S. and one-third international for the full fiscal year '24. We did have some delays of projects in the quarter, but this was more than offset by other projects pulling in ahead. As our team continued to focus on customer needs and delivery requests. The international business performed as expected with our EMEA region leading the way with project deliveries in the Middle East, India, and Africa. We are very pleased with our global supply chain and project management teams as they continue to collaborate with customers worldwide. Establishing local supply has further optimized our offering and provides even more reliability, improving execution on multiple continents to achieve on-time delivery for our customers. Let me now provide some details on our new Q3 bookings. Overall, we are seeing continued strong demand. We had another excellent quarter for new business with a book-to-bill ratio greater than one. Our backlog increased quarter-over-quarter to a new record and remained significantly over $3 billion. In the U.S., Q3 bookings were diversely represented across the country where we continue to win under a wide range of conditions and terrains. We executed a healthy mix of new EPC contracts and volume commitment agreements in the quarter. We believe our continued sales strength reflects Nextracker's superiority across multiple dimensions that matter most to discerning customers. This includes product performance and capability, quality and reliability, service offering, track record, our team, and execution and customer focus. This catalog of positive attributes earned over many years translates into what we believe is the most bankable product with the lowest levelized cost of energy for large scale solar power. We also now have a robust U.S. manufacturing capability that is enabling us to deliver domestic content that our customers want, as well as providing scalable capacity to allow for future growth. As for the IRA and the impact of waiting for treasury clarifications, the upshot is that we are not seeing a significant impact on U.S. project deliveries or on new bookings. Customers and projects are transacting. And as we have outlined in previous earnings calls, we continue to see positive demand activities as our backlog continues to grow. Let's now turn to our international bookings. In Q3, we signed customer contracts across several international regions, notably in India, Australia, Saudi Arabia, and Spain. We've also added new countries to our list, such as South Africa, New Zealand, and even Sweden, which is not considered a traditional solar market, but reflects improving economics driven by recent solar technology developments such as Bifacial Solar Panels and Nextracker TrueCapture Technology. As you heard from Dan, we achieved the milestone of 10 gigawatts of operating contracted systems in our EMEA region comprised of Middle East, India, and Africa. Our deep relationships and already established track record of superior solar performance matter greatly to customers in these regions. As we deploy our regional strategy, we have more boots on the ground to scale. But more importantly, we lead with product quality and reliability, our world class wind engineering and performance coupled with our high quality and durable components such as batteries, motors, and fasteners. While we believe it's early days in our global expansion, we've been fast movers and are the leading solar tracker platform in many countries. And we have increasing opportunities to further invest and mobilize to address and grow in these significant markets. As Dan noted, we are constantly monitoring headwinds and tailwinds for our business as we navigate the company forward. We continue to see on balance a net positive trend, and we are in a strong position going forward. We do want to acknowledge that some of our shipments are being rerouted due to the Red Sea and Suez Canal conflict, which does have an impact on some deliveries and costs and potentially revenue recognition. We have factored this into our guidance. While we don't see a material impact today, we are closely monitoring the situation and we continue to make the adjustments needed to minimize the impact to our customers. I'd like to briefly discuss pricing. Solar trackers are not commodity products but are highly engineered for site specific conditions such as soils and foundation requirements, topography, wind speeds, panel type and local permit needs, codes and standards. As such, costs and pricing are specific to each and every project and vary from site to site, region to region, and customer to customer. Also, I want to point out there is a significant lag time of multiple quarters between ASP or average sales price at the time of booking versus the revenue per watt that is often used as a proxy for ASP. That said, on an aggregate basis worldwide for Q3 and for the majority of last year, our ASP has been relatively stable. Our margin strength is, in part, a result of our continued rigor in pricing discipline. But even more so, it's driven by a differentiated, superior product and service offering in our ability to deliver what we believe offers the lowest LCOE and highest financial returns for our customers. We do not chase business. And finally, let me wrap up with a quick update on our continued hardware and software innovation. We are having tremendous success with our NX Horizon tracker products as well as increasing traction for both of our XTR and Hail Pro product lines. As we increase project installations of these products in a wider variety of terrains and weather conditions, we are expanding use cases for Nextracker. Q3 sales and installation of TrueCapture increased both sequentially and year-over-year. TrueCapture is our intelligence self-adjusting tracker software that integrates with our patent and electronic controller to help maximize solar power production. It operates automatically with no user intervention. TrueCapture is a differentiated software platform and enhances our overall offering. We are seeing increasing adoption as our customers see the value add by boosting energy gains and enhancing their financial returns. We will continue our R&D investments to accelerate innovation and time to market for new products. We recently announced new product innovations that leverage inherent features of our flagship NX Horizon smart solar tracking system. We are making good progress in Hail Pro and Hail Pro 75, XTR 1.5, and enhancements to TrueCapture including Zonal Diffuse. All of these innovations are either operating in the field today or scheduled to be delivered to customer projects later this year. We will be reporting on our progress in the quarters ahead. In summary, we are very proud of the team's execution and accomplishments in the quarter. We just celebrated our 10-year anniversary, and we are energized and ready for more, as the world transitions to renewable energy. Now, let me turn the call over to Dave Bennett, our Chief Financial Officer, to review financials. Dave?

Thank you, Howard. Before I start, I'd like to remind everyone that all references to financial metrics except for revenue are non-GAAP adjusted, and all growth rates are year-over-year unless otherwise stated. Please note, our Q3 results exclude any benefit from the IRA 45X tax credits related to tracker components. Q3 was another record quarter, delivering double-digit growth for both top and bottom line. And our fourth consecutive quarter of growth since the IPO. Q3 revenue closed at $710 million, up 38%, driven by a 70% increase in the U.S. market, offset by a decline of 17% in the rest of the world. Q3 revenue mix was 78% and 22% respectively. We saw a material uptick to U.S. revenue, primarily due to strong execution from our teams and progressing projects to schedule. We expect the U.S. to land at the high end of our previously reported full-year revenue mix of 60% to 70% of total revenue. Adjusted EBITDA for Q3 was $168 million, an increase of $105 million or 168% growth establishing another new record for the company. Gross margins expanded in Q3 to 30% as a result of our strong execution and favorable mix, both by project and region. As Howard and Dan both mentioned, our teams continued to optimize our supply chain and drive pricing discipline. As I just said, Q3 also had a larger U.S. mix which has somewhat higher pricing and margins versus the rest of the world. Our Q3 EBITDA margin of 23.6% was up over 1100 basis points from the prior year and marks the seven consecutive quarters of sequential margin improvement. Despite Q3's outperformance, we continue to expect project gross margins to track in the mid-20s as we manage our business to optimize annual results. Adjusted diluted earnings per share was $0.96 in the quarter. As previously stated, the separation from Flex increased our public float by approximately 74 million shares but does not impact our diluted EPS. Adjusted free cash flow was $62 million for the quarter and $314 million for the first nine months of fiscal year '24, driven by strong net working capital management, customer deposits, and higher EBITDA. Net working capital at the end of Q3 was approximately 13% of trailing 12-month revenue, which was within our expected 10% to 15% levels. To support our planned growth in the next few quarters, we expect to continue to fund our net working capital, which may pressure free cash flow. Our high-quality balance sheet, cash flow generation, and ample liquidity remain competitive advantages. We closed the quarter with $368 million in total cash, which is greater than two times our total debt of less than $150 million. Total liquidity at the end of Q3 was nearly $800 million. We continue to operate with a debt-to-EBITDA ratio of less than one with no significant debt maturities until fiscal 2028. We have a resilient financial model with a growth mindset. We will continue to make investments in our teams, technology, and infrastructure to grow, create value, and scale our business. At the same time, we have the flexibility to explore M&A opportunities to accelerate our business with the mindset to create differentiated value for customers, in addition to increasing shareholder value. Let me now transition to the IRA 45X benefit considerations for Nextracker. We have developed great relationships and arrangements with top vendors in the industry. We have strong conviction that our torque tubes and the bulk of our fasteners will qualify under 45X, which will be meaningful to our financials in fiscal year 2025. The key takeaway to understand is that our objective is to reduce the cost of materials to enable domestically made products to be cost competitive with imports via the 45X tax credit vendor rebates. Consistent with last quarter, we have not factored in any expected IRA 45X profit projections in our updated fiscal 2024, adjusted EBITDA and non-GAAP EPS guidance. However, based on current arrangements with vendors and the 45X Treasury rules, we expect to realize a reduction in GAAP cost of sales in the range of $50 million to $80 million in our fourth quarter fiscal '24. This is our current projection and subject to change based on contract terms and tax filing timing by our vendors. As previously messaged, fiscal '24 continues to be a transitional year as we work through respective contract terms and mechanics with our vendors. We plan to include the impacts of the 45X credits in our fiscal 2025 adjusted EBITDA and non-GAAP EPS guidance. Now, let me speak briefly about the successful separation from Flex. As stated in the previously issued press release on January 2nd, we announced the completion of Flex's spin-off of all of its remaining interest in Nextracker to the Flex shareholders. Flex no longer directly or indirectly holds any shares of Nextracker common stock. We continue to maintain a transition services agreement with Flex to properly transition certain non-customer facing and back office functions, which we expect to be completed this year. Turning to guidance. Our revised full year fiscal '24 guidance is as follows. With strong results year-to-date, we have once again raised the midpoint of our full year revenue guidance by $100 million. The new range is now $2.425 billion to $2.475 billion. At the midpoint, we are expecting 29% growth year-over-year. We've also raised our adjusted EBITDA guidance range meaningfully by $73 million. The updated range is now $475 million to $500 million. At the midpoint, we're expecting over 130% growth year-over-year and an implied EBITDA margin of approximately 20%. Our business should be evaluated on an annual basis. Structurally, we expect our gross margin to be sustainable in the mid-20s range, factoring in quarterly variations in regional, project, and customer mix. GAAP EPS is expected to be between $2.53 and $2.90 per share and includes approximately $0.30 related to stock-based compensation and intangible amortization. GAAP EPS also includes the benefit of approximately $0.28 to $0.45 per share related to the recognition of the expected IRA tax credit vendor rebates. Adjusted EPS is expected to be between $2.55 to $2.75 per share, based on a $148 million weighted average shares outstanding. Net interest and other income are expected to be under $5 million due to benefits from FX and interest income offsetting interest expense. We still expect the adjusted income tax rate to range between 15% to 20% for the full fiscal year. As we head into fiscal 2025, we do expect the tax rate to trend slightly higher as an independent company domiciled in the U.S. I will now turn the call back to Dan for concluding remarks. Dan?

Thank you, Dave. I'm so proud of our team and what we've achieved. Our execution is backed by a strong history of innovation, deep domain expertise, global supply chain, and trusted relationships. We're thrilled to begin this year as a fully independent company. We will continue to make strategic investments, expand our talented team, and look to pursue additional market opportunities ahead. Nextracker is well positioned to grow and scale globally. We're just getting started. We now look forward to your questions. Let me pass the call back to the operator.

Thank you. Our first question comes from Brian Lee with Goldman Sachs. Please proceed.

Hey, guys. Good afternoon. Thanks for taking the question and kudos on great execution again. First question, I know you probably can't get into all the specifics, but if we sort of backed into what's implied by the guidance for the vendor rebate that you're going to be seeing in fiscal Q4. I guess, I get to something in the ballpark of like a third credit share with other constituents here. I know we might not have all the details to be able to get to that number, but I thought it'd be a bit higher. So is there some additional clarity you can provide as to whether one, is that in the right ballpark or two, is there something unique about your shipments in '23 that you wouldn't get the full share or 50% plus that I think has been implied thus far by you and your peers. Just wondering what we should be thinking about as we head into fiscal '25? And then, I have a follow-up.

Brian, Daniel Shugar. Thank you for your question. We're not commenting on the share that we have with our manufacturing partners. Dave, do you have more to elaborate on that?

Yeah. Thanks, Dan. Hi, Brian. A couple of things to remember on our fiscal '24. And one is, we've previously guided without 45X, we're going to finish the year measuring our business to that standard. And trying to give you guys enough transparency to understand that we are partnering with our vendors and have a meaningful share, and that's the extent of it. But '24 is a transitional year. Starting in January, we started U.S. manufacturing before 2023 but tripled down on it after IRA, think about the ramp going through calendar 2023. So you're not at a full run rate at the beginning of it. So to try to measure the amount based on our cumulative catch up entry is not going to be representative of our going forward plan. And then each vendor, we're going to work contract by contract to understand their tax filing status and work with them. And then lastly, Q4 contains a cumulative catch up for all of those periods over in the ramp. And so in a nutshell, the way we're addressing in fiscal '25, 45X will be operationalized and used as a measure of our performance for us. So it will be in our guidance for fiscal '25, but looking at it for fiscal '24 is really a transitional year. And that's kind of why we've approached it that way.

Yeah. Fair enough. That makes sense. So that figure there are some nuances to the number for this year. Maybe just second question, I'll pass it on. This could be for you, Dan. I guess, can you talk a bit about the competitive landscape, the market share outlook, particularly in the U.S., it seems like that has become a bit noisier of late. I know Nextracker has been winning via innovation and meeting customer requirements. So any reason to believe that won't be the case going forward? Can you maybe speak to examples where you're getting wins or feedback from customers on this being the reason you continue to win business here in the U.S.

Thank you, Brian. Yes. Product differentiation is a primary driver for winning in the market. That combined with our experience, financial condition. And at the end of the day, what does that mean? Our trackers need more energy than other designs that are at scale in the market. You can visually see it if you go on YouTube and look at our TrueCapture. There are a couple of three-minute videos where you can actually see how the systems are working with empirical side-by-side cases where TrueCapture operates or not. And we harvest more energy due to it. About a third of the United States is in a pretty extreme weather risk area, and we have operationalized our Hail Pro technology to help customers enjoy operational performance on their systems that are safer, and we have many successful customers with their fleets using our technology. So there's a variety of factors there. But we've been in the shoes of the customer. What we're focused on is below LCOE for our customers by having differentiated technology and really strong operational metrics.

All right. Thanks for all the color, guys. I'll pass it on.

Thank you. That's a great result. You mentioned some project delays, and I would appreciate any insights into what caused those delays. You had some projects that were accelerated, which allowed you to exceed revenue expectations, but any additional information about the nature of the delays and their geographical context would be helpful. Thank you.

Sure. This is Howard Wenger. I'll answer that. So we had some delays, for example, in the Midwest. There is a lot of it's the wintertime and it's raining. Facing it muddy, things can get pushed a week or two weeks. So the shipments can vary from quarter-to-quarter as a result of that. Meanwhile, we've had acceleration for customers who want product faster. And so on balance, we beat on every financial metric, which means we beat on shipments too. So on balance, we're good. But we're in the project business where part of that's construction business, and things can shift here and there. The other thing I mentioned was the conflict in the Suez Canal region, and that we have factored that into our shipping time frames. So with our customers, we were able to mitigate, and yes, product to our customers on time, so they can finish their projects on time, but things can shift a week or two as a result of different dynamics. Thanks for your question.

Good afternoon and thank you for your questions. I want to extend my congratulations as well. It's quite impressive to see the upside in guidance with only a quarter left in the year. I would like to know if you could discuss any project movements, both forwards and backwards. Were there any significant project advancements into the March quarter that you would like to highlight, or is this more reflective of a general acceleration in the market?

It really is this broader market acceleration, Mark. As we noted in our previous call, we have a lot of backlog. Our backlog has grown over call quarter-over-quarter, we're over $3 billion significantly. And so customers in the strength of the market, particularly in the U.S., as we noted, 78% of our revenue came from the U.S. in the quarter, which is higher than normal, it can fluctuate quarter-to-quarter, and we expect it to normally be two-thirds, one-third. But there are some pull-ins in the U.S., but it's not significantly changing our demand picture at all. Our backlog grew in the quarter. So there's really nothing significant. One thing that Dan noted in his remarks is that there are simply more developers and more EPCs. And we believe we're doing a good job with our team, winning share of the business. So the strength is there, the demand strength is there. And things aren't slowing down because of the IRA in any way. So that's where we're at on balance.

Hey. Indeed, really very well done. Impressive indeed. Look, thank you guys very much. Appreciate it. So with respect to the 45X, just coming back to what we're seeing executive percentage. If I can ask that question slightly differently, rather than what the percentages. How do you think about what a run rate might look like for instance? Like how do you think about what that would trend into the '25 period? And is that fully reflective of all the various aspects of 45X as you think about torque tube and beyond?

Hi, Julien. Thanks for your question. Let me just start with the operational aspect and then Dave will speak to the financial. Nextracker is very, very serious about scaling off domestic manufacturing in the states and our other core markets. And we hit this early. Last summer, we announced 25 gigawatts of contracted capacity across the United States. We've operationalized that, and we've had six public factory openings. We have over a dozen factories shipping finished goods across the United States. And we're going to be in a position to be any customer requests for domestic manufacturer content. And be able to arbitrage any problem with congestion at a port if there is a problem in logistics route or currency or natural disaster, whatever have you. So we're really focused on being able to operationalize that with both the supply chain. And we're achieving great success with our partners. In a number of cases, we've gone back to some of these factories we've started upwards with our partners to double or greater increase capacity in those factories. Dave?

The only thing to add would be is, as I indicated, there is a lot of moving parts with what quantifies the fiscal '24 Q4 amount, and that isn't necessarily a good indicator for what we will be given the ramp, given the one-time nature of the cumulative catch-up. As we've been saying, we bring the demand, it's a meaningful partnership with our vendors, and we will include that in our fiscal '25 guidance, so it will be transparent. You see the uplift to our profitability for fiscal '25.

Hey, guys. Congrats on a great quarter. Just a quick follow-up on Julien's last question there. Specifically for Q3, was international mix down due to seasonality or is it more just strength in the U.S. market? Or was there some slowdown in international growth? And then what is your expectation for the international versus U.S. mix for FQ4? Thanks.

So to begin with the full fiscal year '24, we anticipate ending up at approximately one-third and two-thirds. Accordingly, you will observe Q4 numbers that align closer to this distribution. The U.S. market is currently very robust, and customers are fast-tracking certain projects, which was evident this quarter. If you consider a specific timeframe, there are significant projects that receive more products during certain weeks as opposed to spreading over subsequent weeks into the next quarter, which may affect that ratio; however, we remain steady at one-third and two-thirds. Additionally, I want to highlight that our international business is improving, showing an increase in bookings and revenue both year-over-year and quarter-over-quarter.

Hi. Thanks for squeezing me in. Just a quick one on TrueCapture. So you noted it's slightly better software attached. Any way to quantify this at all, maybe the cumulative installed gigawatt number, how much has changed on a quarter-over-quarter, year-over-year. Just anything that could help us on the TrueCapture side to the numbers. Thanks again.

Moses, thanks for your question. As we have kept introducing new features on TrueCapture like Split Boost, we've seen increasing uptake on our TrueCapture fleet. As I mentioned, you can visually see it. So we reached a few people to watch those videos we have on YouTube. We'll go in deeper on your question after next quarter when we do the annual guidance.

Great. Thank you everyone for joining the call. This concludes our call. Thank you.

This will conclude today's conference call. Thank you all for your participation. You may now disconnect your line.