Earnings Call Transcript - NXT Q4 2025

Operator, Operator

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 Shugar, 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 will contain 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 slated 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. And now, I will turn the call over to our CEO and Founder. Dan?

Dan Shugar, CEO

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 to $2.9 billion of revenue and we achieved $3 billion for the full year. We forecast $600 million to $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 1 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 additional 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 to 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 system for 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 FY ‘25. 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 1 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 a 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 have 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 region to 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. And 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 FY '25. This includes excellent uptake for our Hail Pro series trackers with over nine gigawatts 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 gigawatts of XTR 0.75 and XTR 1.25 during the year, reinforcing our global leading position in terrain following, and we exceeded our sales plan for our recently acquired foundations business with 1 gigawatt 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 FY '26 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 '24. Similar to fiscal '24, 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 '24. As a reminder, the '24 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 '25 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 '25, 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 to $3.4 billion, with adjusted EBITDA between $700 million and $775 million and adjusted diluted EPS in the range of $3.65 to $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 FY '26, 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 FY '26. And all while generating more than $450 million in free cash flow. On the M&A front, in FY '25, 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 '26 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 '26 in the low-30s. 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, a 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.

Mark Strouse, Analyst

Great. Congrats on the continued execution. Maybe Dan or Howard, there's a lot to get to here, but I wanted to start with the house 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 FEOC requirements, etc., not just for trackers but for the overall space, just kind of given my view that you're a good spokesperson for the overall industry.

Dan Shugar, CEO

Thanks, Mark. This is Dan Shugar. 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 45x treatment as it relates to incentives to manufacture certain components in the United States. Additionally, the 48E as it relates to the timing of the 30% investment tax credits. The timing of those two are generally favorable. The 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 foreign origin, how those can impact. So 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, most 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 manufacturing partners across the U.S., and others in the industry are amplifying that. And that's really recognized. I think it's also recognized that solar is a really key part of energy dominance and that, I mean, solar was over 80% of the capacity installed on the grid last year. So all that stuff is recognized. So we're cautiously optimistic about 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 until it's done. So we'll need to see where that lands.

Ben Kallo, Analyst

Congrats on 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. Yes, we're really pleased with how we ended the quarter, both on the revenue side and bookings side. And we continue to perform within the 30% to 40% of our business being international or rest of the world and the balance 60% to 70% being in the U.S. And that's where we're at. We've been very consistent. It's 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, we did business in Q4 alone in 17 countries outside the United States. And many of them are countries that we don't 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. And 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 out looking going forward. Thanks for the question, Ben.

Philip Shen, Analyst

Congrats on the strong results. First one is a follow-up on the house tax bill. Chuck, you mentioned the FEOC restrictions and then the change in language from construction start to place in service. I was wondering if you might quantify what kind of impact there might be if these provisions were to become law, what kind of impact could we see from each one of these new items on volumes for, let's say, for the industry, calendar '26 and '27. And then on bookings, can you share the directionality of what FQ4 bookings looked like? Was it well above $1 billion, 1 point? If you can give a decimal, that would be great. And then what's your expectation in terms of bookings activity in the coming quarter, given the uncertainty in the marketplace, although you have some better understanding of where the changes to the IRA might be up?

Dan Shugar, CEO

Yes. Thanks, Phil. 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 has got a long way to go. It was just published. It's going to have quite a journey, and 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 to four years out, how it relates to new projects, as the projects that are grandfathered in now, which can go two to three years, become fulfilled. And so 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, Phil. So we've had sequential growth in our backlog since going public every quarter, and this last quarter was no exception. We had record revenue at $924 million, and we still increased backlog sequentially. So that gives you some color on the booking strength this quarter. And as far as in the coming quarters, our pipeline is healthy. The U.S. market, what we're finding is, and we talk a lot with owner developers. They've secured their Tier 1s, for sure, with multi-gigawatt pipelines with a lot of investment behind them. They've safe harbor, and they're telling us their pipelines are secure, which means for us it's really good news. So in addition to the backlog being significantly over $4.5 billion, our pipeline continues to be very healthy. And the flagship of where we do business is in the United States, and that continues moving forward.

Brian Lee, Analyst

Kudos on the great execution here. I had two sort of modeling guidance-related questions. First one would just be around the revenue outlook. As you mentioned, Dan, your business is evolving kind of into a platform solutions model going forward. So can you give us a sense of, as we look at the '26 revenue guidance, how much of the revenue is coming from some of your news 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? And then 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 a 100 basis point headwind from higher OpEx and investment. But is there a bridge why EBITDA margins are being implicitly guided down year-on-year? Or is that just your level of conservatism in maintaining that?

Dan Shugar, CEO

Yes. 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, and we'll be inviting our analysts and investors to participate in that at our headquarters here in Silicon Valley, and we'll be breaking that down in greater detail at that time. Chuck?

Chuck Boynton, CFO

Great. Thank you, Brian. So first of all, fiscal '25 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 '26, it's really a year where we're leaning in on growth and looking for multiple years of growth. We mentioned in our letter that we see in five years, one-third of our business coming from non-tracker revenue. So this strategy is really about leaning in for growth. So we're investing in OpEx, as you mentioned. We're investing in CapEx, investing in the acquisitions as well as organic activities to drive growth that we'll 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. And that's a good number, and that's the structural margins as we talk about are kind of in the low 30s, structural gross margins. And our outlook sort of contemplates that same kind of range for fiscal '26. And so we feel that low 30s gross margins, low 20s EBITDA margins is a really good place to plan and run our business.

Kashy Harrison, Analyst

Congrats on the fiscal year. So minor series just focused on Bentek. Could you just walk us through the 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?

Dan Shugar, CEO

Yes, 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. We've been doing this since the '80s, and back in the day, we actually designed and manufactured down systems as well as mechanical balance systems, and they go together, just like they do in your car or a number of other components. And so we really see there's an opportunity for customers to have one provider designing and supplying materials for the projects as in a buildable megawatt and delivering by blocks in a sequence that works for the customer. And also for these products to work well together, they touch each other. And so we're going to continue collaborating with the eBOS, other eBOS providers. We have a great deal of respect for providers that exist, and we're going to have the Bentek platform continue to support the fixed systems work with our tracker, and 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 systems in the tracker because they touch each other, literally. And they're designed at the same time. Right now, we don't design eBOS, but as we've announced today, we are doing that now. So the same project engineering team, which is very large at Nextracker, we'll 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's the best and fastest way to install eBOS with our tracker, but we're also going to make the eBOS solutions that we have available for other trackers, including fixed Hill systems. So we see a lot of synergy on the design side, engineering side, and then the sales platform. We touch the same customers. We're selling to the EPCs. The owners of the equipment really care about the tracker, and they care about the eBOS and longevity, the reliability, the quality, and 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. There's just a lot of synergy here.

Dan Shugar, CEO

Yes. Building on Howard's comment, we have received direct feedback from customers expressing their desire to purchase more from Nextracker and requesting additional components. We appreciate Bentek; after thorough due diligence and a personal visit to their San Jose facility, which is conveniently located just 30 minutes from our Fremont headquarters, I can confirm they have a well-equipped operation with spare capacity and a professional layout. Bentek has been a pioneer in the eBOS category for 15 years, and we admire their quality, reliability, and culture. They test 100% of their electrical harnesses before shipment, which greatly enhances durability and instills confidence in customers. We have also engaged with long-term customers, such as SOLV Energy, one of the largest EPCs globally, who is both a current and long-term client of Bentek. The CEO, George Hirschman, expressed his support for our collaboration and encouraged us to deepen our involvement. Additionally, there is a need for more solar manufacturing in the United States. Bentek has the potential to expand its presence in the U.S., but they require financial backing and a comprehensive system design approach, which we can provide. We aim to strengthen the U.S. supply chain and be a key player in the solar industry’s growth. In the future, we might consider offering these products internationally and exploring partnerships, but this is an excellent initial step for us. We possess considerable expertise in this area, and this marks a careful advancement into the segment. We are eager to support their growth and serve our customers.

Howard Wenger, President

I'll just close by saying that culture is more important than strategy, and we are very aligned culturally with Bentek. They have an excellent leadership team, and our interactions have been frequent. The integration of our companies is already seamless.

Julien Dumoulin-Smith, Analyst

To follow up on that last point, let's dive deeper into the strategy. You mentioned that about one-third of your business comes from non-tracking revenues, which is quite impressive. In five years, that could mean one-third of the revenues exceeding $1 billion. How do you plan to reconcile eBOS and other categories? What are your thoughts on scaling this business to over $1 billion? What timeline are you projecting for that growth, particularly in your guidance for 2026? How do you envision that trajectory, especially considering the liquidity and cash profile you've mentioned? What are the prospects for future acquisitions when you hold the Analyst Day later this fall?

Dan Shugar, CEO

Okay. Thanks, Julien. Dan Shugar here. I'll take the first part, and then Chuck will jump in on the second. In addition to Bentek, we completed some other acquisitions recently that we have not announced yet. And we'll be speaking about those when they're ready to in the coming months. And 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, and we're seeing the fruits of that in our bookings in what our shipments with our, for example, our TrueCapture technology, our Terrain following XTR technology, our Hail Pro systems, all of which we've pioneered in the industry, and those are quantified to an extent in the shareholder lighter and the low carbon tracker. So we're innovating, getting the job done with organic development. Not all great technologies are invented here, and sometimes even if we're working on something, it's more prudent to serve customers and scale by partnering with others that have been doing it for a while and myopically focused on that. So eBOS is one category. We have other things that are very exciting that we'll be speaking to as soon as we're ready. And 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, Julien. If you think about our cash generation, this is really a great business. We generate a really good return on invested capital. You look at the cash flow duration in '26, even after the CapEx that we're going to do, we expect to generate more than $450 million in free cash flow. And even after paying for the current acquisitions and the prior acquisitions, we expect to end the year with north of $1 billion in cash. Now that does not include new deals that we might do, but I'll say we're prioritizing organic investments. We're investing heavily in R&D, as Dan mentioned, and then we'll continue to evaluate other M&A opportunities. We may or may not do any or announce any, but we're looking for areas we can add value to our customers and companies that will integrate well with our technology platform.

Dimple Gosai, Analyst

Can you please help unpack the durability of the structural gross margins in the low-30s 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 '26 is contracted. And so there's a lot of work to do for sure, but we have very good visibility on pricing, margins, and costs for '26. Now there's still work to do, but this is a business that we look at in terms of years and multi-years. And the structural margins for fiscal '26 are largely booked as of today. And so there's work to do still, but for the most part, we feel like we're really well positioned for '26.

Moses Sutton, Analyst

Two basic ones. First, it's great to see the eBOS entry. What percent market share do you think Bentek has had in recent past? And does it have sufficient manufacturing capacity? And then number two, are you starting to see strong pipeline and even bookings 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. Hi, Moses. So Bentek, we put them in like the top 3 or 4 eBOS suppliers in the U.S. So they have a very, I would say, loyal following. They've been undercapitalized, frankly, so that's constrained their growth. So we're really looking forward to unlocking that. And as Chuck mentioned, we'll be giving more details on the outlook and impact on our business going forward. But they do have a pipeline that extends out. We think this is one of the areas of like our sales team is so much larger than their team in our platform for the U.S., and then internationally is massive compared to their volume. So we think that we can really increase demand and supply and really ignite this business.

Dylan Nassano, Analyst

Just a 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? And then also in terms of 2026 guidance, can you just kind of speak to what kind of tariff framework you're assuming in there? And could we see movement towards the high end if more deals get done by the White House or vice versa tariffs rate back up? And then similarly, on the big beautiful bill, some of the items that you flagged that need some 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. So on 45x, Dylan, yes, Q4 was a little better in the 45x than planned. There were a couple of onetime benefits. It was small. I think as we've looked in the past, if you look throughout fiscal '25, we averaged about 11% of U.S. revenue. That's probably the upper end of what we'd outlook for '26. So 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; it could be a little worse. But I think we feel like our outlook contemplates where things are going to land. And so we feel comfortable with our prudent outlook. Dan, do you want to cover the third part?

Dan Shugar, CEO

Well, I think what Chuck said is, and Howard, this year is pretty baked. I don't see that stuff impacting this year at all. Do you, Howard?

Howard Wenger, President

Yes. I mean, look, the important thing is that it's kind of for this year, next year, all of our partners that we've talked with, and I'm talking about many developers, owners, and EPCs, they're saying that their pipelines are secure. All the major Tier 1s. Yes, and so of course is could there be upside? Yes, anything is possible. But we feel really good right now where we stand. We manage it 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

Yes. And look, I'll just take 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. And we just had a great quarter in many quarters in a row of book-to-bill over 1. So we feel very good about the business. We feel great about our margin profile and 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, identifying what their pain points are, either developing technology that addresses it or acquiring those if we can and move with operational excellence to crush it and basically have fantastic customer satisfaction. That's our and our team is myopically focused on that.

Operator, Operator

We have time for one more question, please.

Praneeth Satish, Analyst

I understand you mentioned that customers have been requesting combined tracker eBOS solutions, indicating potential demand. Regarding the go-to-market strategy, could you start scaling up eBOS revenue in fiscal 2026, or is that dependent on completing some of the CapEx build you referred to? Or will it be a gradual increase that extends into fiscal 2027? I'm trying to gauge how to model the attach rate for the eBOS offering.

Dan Shugar, CEO

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

Howard Wenger, President

Yes, we believe we can achieve some advantages compared to their current run rate, and it's only been a week since we acquired them. We expect to realize those benefits this year in fiscal 2026. We also believe we can enhance their run rate this year.

Dan Shugar, CEO

Customers have requested that we expand beyond just eBOS. They are looking for additional offerings, and as a systems-oriented company, we used to address various segments of the value pie for customers in the past. We are now exploring how we can add value and support the current industry to help systems achieve enhanced performance, which is crucial. Okay. We'd like to thank you all so much for joining us for this earnings call to recap our fiscal year 2025 business and 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, Operator

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