Nextpower Inc. (NXT) September 2026 Conference Transcript

Okay. I think we'll get started here. Good morning. Thank you for sticking with us on the last day of the 40th annual Energy Power Conference. To close out our clean tech fireside chats for this year's conference, we have NextPower, a company that started off as a tracker company but has evolved to a more comprehensive energy technology platform, including hardware, software, and power conversion systems. Here to discuss the company is Dan Trigger, Chief Executive Officer. Hi, Dan. How are you this morning?

Thanks for the opportunity to be here, Christine.

Yes, it's your first time at our conference, so we're very happy to have you. So I thought I would start, you know, at your analyst day or capital markets day last year. You laid out a goal of generating more than one-third of revenue from non-tracker revenue by fiscal 2030. You're already roughly at 15%. you've announced the number of deals. Since then, you guys have been very busy. Do you now look at that number as a floor, and which product categories do you expect to be the largest contributors?

Yes, thanks, Christine. And so thank you. We had our capital markets day in November. We also articulated – we were finishing a year of about $3.5 billion, and we articulated a path to $5.2 billion by our fiscal 2030, which is predominantly calendar 2029. So we're a couple years ahead of schedule in terms of the revenue growth, the earnings growth, and the diversification to include other product categories. We're having another capital market stay on November 16th, and we'll be unpacking that in much more granular detail. But as you mentioned, when we did the last capital markets, we had not yet acquired an energy storage company, nor had we acquired a power conversion company, which is complementary to our organic power conversion program. So we see those as very significant vectors of additional growth and highly strategic with each other and with our core business. i'll just say you know each of our product categories and business units are overperforming so in totality we we we perform well and we're significantly ahead of plan and we'll be articulating a much bigger revenue earnings and product diversification landing zone for our FY2030 target.

So I do kind of want to touch upon, like, the new businesses that you have entered into. You closed the acquisition of your power conversion business not too long ago. From what I understand, this accelerated your go-to market for power conversion. That is still a bit further out. I guess you were internally working on a next-generation product that is still further out. How should we think about how this business evolves? Should we expect you to get involved with more things like solid-state transformers, which is a big topic for data centers, but is also relevant for utility-scale solar, which is your bread and butter?

Yeah, well, first let's talk about what's actually happening. So we acquired a Spanish – a subsidiary of a Spanish electronics company called Apex, which is manufacturing inverters. We're manufacturing inverters today. The legacy parent company called Ziger, which is based in Spain, is our contract manufacturer. Today we have UL-listed inverters and power conditioning units to serve solar and storage. We also have IEC-listed products for solar and storage. We're actually shipping finished goods today, produced by our contract manufacturer in Spain. They'll continue supporting us. In parallel, we're building a very significant U.S. factory that will be at double-digit gigawatts that will be operational next year. We're taking orders now. And we see there's a huge vacuum and opportunity for us to fill it. But before I get to that, the reason we made the original decision to move into this space was that when we ask our customer what their problem sets are, it's inverter, inverter, inverter, typically. So there was a huge entitlement for additional performance. We believe we've got the skill set and the position to fill that gap. Then we had, after we made the decision we're moving forward, a number of tailwinds with various U.S. government actions with the FCC ban, cybersecurity issues and concerns, and FIAC issues. So that's been a great tailwind, and our customers are responding very affirmatively. Now, we could continue the product categories to include other things like Transformers, either conventional or solid state or what have you. You know, we've done 13 acquisitions in the last two and a half years, and so we're really focused on executing what we have now. I'll just say that the inverter and power conditioning technology we've brought on, both the acquisition and the organic, is highly strategic with our storage program as well.

So that is a great segue into my next question. So, you know, you did mention the FCC ban, and then there was the Trump. ban. How do we think about this opportunity for you on the solar inverter side as well as the storage side? The U.S. really hasn't seen domestic inverters. Why do you think that is? Has it just been sort of like a cost thing up until now? And I guess how much urgency are you seeing from customers to diversify their sourcing strategies?

Yeah, well, let me just first say I've been working with verters my whole career in renewables going back to the late 80s and in a prior company we interconnected serial number one igbt inverter and solar that was in 1994 and it's not rocket science to build highly reliable products highly reliable products and service are are not what most customers are experiencing right now in the market there's a variety of root causes for that But basically, there was a commoditization, people just pushing too much power through these units and not doing proper design. So we really think there's an opportunity to address those reliability issues. Now, there are legitimate concerns and also a lot of fears around having a predominant amount of power conditioning manufactured by, let's just say, fiat countries. And so Next Power is a U.S. company. We're going to be making our controllers in the United States with our code. Our control boards are here. We're going to have full domestic supply options where customers can also get domestic content points to hit their domestic content goals. We were the first to do on trackers and other key components, and we're going to perform. And so we think it's an opportunity to both improve performance to help customers improve their unlevered IRRs or their power plants, but also have supply security, cybersecurity. Next Power is an investment-grade company. In terms of pure-play companies and clean tech, I think we're the only one. So we have an investment-grade, very responsible company with a supply and support organization already in place.

You're historically known as more of a tracker company, And, you know, the tracker has a longer shelf life, right? So when people think about tracker, we mostly think about sort of like new build, right, new installations. But with inverters, those, I think, tend to have a shorter life. And so I guess with the bands that are in place, if, let's say, some of the FIOC players exit the market, should we think that there's a retrofit opportunity for you with the installed base? How should we think about that?

Yeah, that's a good question. I hope it doesn't get to a point where people rip out power conditioning that's operating properly in the field. But we already are serving repower applications today. We're shipping today, both overseas and in the U.S., for some of these legacy products. One thing we really like about the platform and the team we brought on is that the technology is flexible to be able to support older installations that may have been at a lower voltage. For example, in solar today, typically you have an inverter class at 1,500 volts, but some of the legacy systems are at 1,000 volts, and our platform can support that. And we've actually shipped and have operating units at a range of legacy voltages.

And then just moving on to your storage acquisition. So, you know, with respect to your entry here with the Prevalon deal, can you talk through why this way was the right way to enter it, you know, as an aggregator? I think historically investors think of this as a low-moat business with the view that you're just sort of packaging things. So what do you think that you can do here that is differentiated, and what are the other synergies that are emerging that weren't initially obvious?

Yeah, great question. So just for strategically, like, why did we do it, right? Well, so we had enjoyed, you know, about a 30% CAGR for five years in solar, then a 20% CAGR. It's still growing, but more like a 10% CAGR is what we've been delivering recently. in solar sometimes more but the storage is really taking off and it's not just growth for growth sake but also many of our legacy customers are doing storage we need storage we need storage to do more solar too and more wind and that's part of our part of our mission so um well we could have we could make or we could buy companies and we just saw there was a huge market need and And rather than incubate another business within the company, and we're doing plenty of that, which is working great, we decided we had a need for speed, but to do the right acquisition. So actually, we spent about a year and a half. We invested a lot, hired some top consulting companies. We basically looked at everything and talked to everybody. We have a lot of liquidity. We have about $1.2 billion of cash in the bank and a line of credit of comparable size. We could have acquired, you know, some really big companies. So we looked at everything. The reason we acquired Prevalon, we really liked this team because they have tremendous track record and knowledge around power generation. They came from the Mitsubishi Heavy Industries, which had built a battery unit to complement their gas power generation unit. and the team we have understands rotating machines and the interaction between solar storage and rotating equipment and 38 successful projects, we're in the middle of delivering. And so in terms of strategically, no one was really thinking about using batteries to support inference data centers a few years ago. That's like a whole new pie. Very interesting. And what's great is that you don't have to build a lot of new electric transmission and distribution. I was a former T&D engineer for PG&E. It's really hard to build new stuff. So you can take the existing grids in many cases and add a battery on the customer side of the main utility transformer. Whether it's on the customer side of the meter or not is less relevant. But the battery can basically, when the data centers have very fast fluctuating loads, which is measured in tens of milliseconds, the battery can charge or discharge very quickly and basically stabilize the voltage and enable those systems to operate reliably. And the company we acquired now called Next Power Energy Storage, We're in the middle of fulfilling a 1.3 gigawatt tier one plus inference data center customer. And so that's like a brand new use case. And so I don't think anyone really fully understands how big that market can be. But the great thing about storage is it's kind of a Swiss army knife. You can do arbitrage. You can do this. We call it hybrid power stabilizers, our product. You can do black start for generators, all kinds of microgrids, all kinds of applications, and the company we acquired has proven track record in doing those.

So you raise an interesting point. With this deal, I think, and correct me if I'm wrong, you know, all of your customers have been front of the meter up until Prevalon, is that right? And with this Prevalon, it's sort of like, I don't know, I guess you can say, like your entry into behind the meter with this data center. I guess how should we think about sort of the roadmap there, like, and with the storage, should we think, like, those are the types of customers that you're really going to go after? Is it front of the meter? Is it both? And then just sort of, like, are there other, you know, you're very good at going to customers and saying, what do you need? What are your problems? Do you already start – are you already having conversations those data centers around pinch points that extend beyond storage?

Well, yes, and it's one thing that's served as well is having flexible product portfolios to serve a variety of use cases over time. And one of the things that's highly strategic here, and it also reflects on your prior question about this segment, we're more than an integrator here. We are an integrator in the battery space, but we're more than that because we're also manufacturing the really core technology, which is the inverter, the EMS system, the control system that allows these products to operate reliably with the grid in a way that utilities are comfortable with. And so we could do what we are doing all the way from the inference data center all the way back to, you know, storage that's co-located with solar for arbitrage. There's many use cases. The day we closed our transaction, which was only like six weeks ago, I went up to Boise, Idaho. And one of the customers that formerly Prevalent had served was Idaho Power. They have nine solar power systems. We were in the field. I saw a 200-megawatt, 800-megawatt-hour system, which is the largest system in Idaho. And they had a very interesting use case where there was a transmission line, And at the end of that is a semiconductor manufacturer, a large chip manufacturer that has very large loads. But for the battery, they would not be able to reliably serve that customer and other customers on that circuit. But it's not exactly the data center case. It's another use case, which is basically grid augmentation. So we're very excited about this. And the main thing is having the right product family to be able to address use cases. And it will be really exciting to see how things play out over the next few years because customers want to get online, but you can't wait for the utility.

I mean, your company has changed so much since you came public. I can't imagine what it's going to look like three years from now.

Well, you know what, Christine, just to riff on that for a second, I can't tell you exactly what we're going to do, but what I can tell you is everything we will do will be an informed decision. And I think what our company's track record is, when we enter new product lines, for example, 11 years ago, we built a software business around our True Capture platform. We acquired a machine learning company, and we built this incredible software business, which is helping our customers get much higher returns on their power plants with this yield optimization software. It remains best in class. We built this great software business. And if you look at all the new product line and families that we've brought out of the company, they're all performing. So what we're really focused on is being very sober, prudent, doing things that add value to customers, and then really focus on operational excellence with on-time delivery, excellent quality, and then ensuring whatever our promises are that we deliver.

So you touched upon storage, and I actually have a question on that. So when you came public, you know, I think software was the only, quote, unquote, recurring revenue you had. And I could be wrong here, but it seems like you're quietly trying to build up your recurring revenue with other solutions, such as maybe O&M offerings, et cetera. Can you talk about, like, what you're thinking here? How big can this get? Or will this just sort of be a smaller part of the business with respect to percent of revenue, but it can materially improve gross margins as these businesses just tend to be higher margin?

All right. First, thank you. Very insightful. Yes, we are building out a recurring revenue business. It's step-by-step like everything we do. We do have an element of that in our software business, and in particular when it's done overseas. Now, with our battery business, they have a significant portion of that business that's LTSAs to service those batteries over the long term. So that's like a big step forward on that. If you look at the population of our fleet, we've shipped so much, over 160 gigawatts. And we're shipping, you know, we had record revenue last quarter, so we're continuing to ship at very high rates. A lot of the older equipment is rolling out of warranty over the coming years. And so what we've been doing is really there was sort of a rush to ensure that we had the right product family and that we were capturing a large share of the market. By the way, we've had 11 consecutive years as number one globally and in the U.S. Last year, we were 30% global share, and in the U.S., we're about 55%. We don't try to optimize for share, but it's a byproduct of innovation and serving customers. So we have this, like, huge legacy fleet, some of which is rolling out of warranty. That's an opportunity to then support customers with long-term parts and service and so forth. We just brought a senior executive on, a senior vice president, to build our services business, software business. And so it's still, on a top-line basis, you know, a small percentage, but that's something strategically we are leaning into, and in particular with the storage business, we want to add to that as we go forward.

And I'm not incorrect in thinking that this is a higher-margin business.

It's a higher-margin business.

If there's sort of one bottleneck that you, you know, think could slow down sort of deployment across your product portfolio, is it interconnection? Is it transmission, finance? Well, I don't think it's financing, but like supply chain, labor, like what's on your mind or, you know, what keeps you up at night?

I think the thing that's had the biggest impact is just the, you know, unstable federal policy. So, you know, we've just seen, like, lots of things happen, and when they do, they can temporarily slow down the market. The latest thing du jour is the Section 232 tariff. we think solar goes forward with that but it did you know can impact a customer told us the other day it was kind of like a mid single digit impact on the ppa price they needed i'm sure different customers have different views but that required them to uh go back to some of the deals that we're trying to close which were for projects that are two three years out not for things that are happening you know this year or next year okay so that was like a headwind kind of temporary we had you know a month a few months before that federal government started imposing english-speaking language tests on truck drivers like out of the blue and then if they didn't pass the test they were disqualified okay so we have like a few weeks where we couldn't get truckers to some factories. We have 35 factories in the U.S. operating that are run by others for us. By the way, I came up with this financing method called the OPM method. Have you ever heard about that?

Other people's money? Exactly.

It's our best way of doing factories. Although we do operate some factories in some places where it makes sense, like Saudi Arabia and Brazil and a few places. But generally, yeah, we like the OPM. But, you know, this trucker thing, you couldn't get truckers for a certain number of weeks, so that slowed things down. There's just been a lot of that and then a lot of tariff stuff. The need for power doesn't go away. The projects don't go away. Hopefully, we have a little more stable environment, but that would be the big thing. Despite all that, we've powered through. We have record revenue last quarter. We have record backlog again, so we're certainly performing the demands there. So I would think that in the U.S. would be the top thing. I think overseas you can't overstate the impact of this latest Gulf War on the fundamental economics of what we do in solar and storage because 20% of the world's gas, liquefied natural gas, is offline. The price of gas in Asia tripled to quadrupled for LNG. It's way higher in Europe. Europe's a huge market we're leaning in. And we're just about to close our third major acquisition with Zimmerman. So we are acquiring a company in Germany that will bring us not only Germany, where we've done very little over the years, but 15 additional new countries in Europe that we haven't served. Next Power has served 45 to 50 countries, but this will bring us 15 new countries. And that Zimmerman deal has been approved by the German government. We're waiting on one additional approval. We think that will happen soon. Zimmerman's well-positioned, brings us some additional product families, like fixed systems for sites that are very constrained, floating systems. I saw on your Barclays thing at the registration, this huge floating project, Zimmerman's one of the leaders in Europe on that, and that's, for them, a high-margin business. So with them, not only do we get the additional product line, we'll be able to sell through, and in one acquisition, our international business significantly expands, and so we're very excited about that. That will also add to the top-line growth. We'll be speaking about that at Capital Markets Day. We expect it to be closed by then.

Just, you know, when you talked about the policy, you mentioned 232, and I know earlier I asked about the ban on inverters and things like that, and that's generally viewed as sort of like a positive thing for someone in your shoes. But then during this conference, one of the things I heard, and I would love to know if you're seeing something similar, is that the Trump ban has kind of made customers – it's put uncertainty into the market and has paused sort of orders as customers are trying to evaluate, especially because I guess there are quote-unquote rumors that additional things or additional bans can come into place before the Xi Trump meeting on the 24th. is that something you're seeing or no it's business as usual um you know it's not a big enough thing for people to be concerned about i mean it you know our do customers have concerns

that there's going to be additional um rules from the administration regarding inverter based systems yeah there are concerns do i think that's going to happen yes uh and but that further underscores our strategy and why you would want to work with a company like NextPower that's investment grade, domiciled in the U.S., making products in the U.S., and basically able to deliver reliably and have also a service support network and a tremendous brand around performance. So we think for us that's a tailwind for this, in particular, this segment. What it also does is it motivates customers. We have a lot of customer Goodwill. But if you go to a customer and said, hey, we've got this great new family of inverter, let's say they were working with an overseas product, they'd be like, oh, okay, that's great. We'd like to work with you. We'll think about you for the next project. But if all of a sudden there's an existential issue with receiving or commissioning a particular product from an overseas manufacturer or the specter of that happening. They're very motivated to, you know, quickly redesign the system or amend the existing design of the system, going back to utility and perfecting the ability of that to move forward. So that's what we're experiencing. And so we're very much there to solve customer issues. And what, again, we're very focused on is performance, reliability, uptime. And what we're promising customers is, well, our goal is to have the most available from that standpoint. I mean, like online, if you look back over the course of the year, our power conditioning family of products is online performing available because the fleets have really suffered less availability than they could be operating at.

Okay, I'm going to squeeze one last one in here. you've been very acquisitive, and I know you can't really time these things, but as you have a very strong balance sheet, you announced the buyback. So two questions here. It's, I think, a $500 million over three years, if I'm remembering correctly. Should we think that it's going to take three years, or is it possible that it accelerates? And then with respect to M&A, is the focus now just to execute on the acquisitions that you've done or no, there are still a couple of holes that you would love to fill if and when the opportunity presented itself?

Sure. So we had a strategy that we completed about two to three years ago about creating an entire platform. We've executed that, generally speaking. There are always opportunities to add value with some incremental products or services. We're in, as you mentioned, a very strong liquidity place to do that. We're also heavily investing in R&D. We've tripled our R&D budget over the last four years, well over $100 million. And many new products keep popping out of that. And that generally is the highest return on investor capital from a new product standpoint. We did announce a $500 million buyback over three years that was approved by the board. We are executing on that. We are buying back our stock. Now is a good time. We saw the, you know, because valuations in our sector have come down. But that was our first, really our first foray into buyback. So we started that. Could we complete that early and do more? We haven't had internal discussions or done that with the board at this point. We remain in a very strong position. We like having our fortress balance sheet as our CFO, Chuck Boynton, who will be here for the conference, likes to say. And also, opportunistically, if companies come along, they have a liquidity problem, they've got great tech, great position in the market, we can evaluate. We're getting people calling us all the time. But what we're really focused on is serving our customers' needs, really focused on operational excellence, meeting or exceeding performance with our customers, our investors, and so forth. And, you know, we're very pleased to have articulated a strategy being a couple years ahead of schedule and now really powering through all this choppiness we've seen in the market with reliable performance.

Okay, Dan. Thank you so much for all your insights today, and thank you, everyone, for joining.

Thanks for the invitation, Christine.