☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2023 | |||||
Or | |||||
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from to | |||||
Commission file number: 001-41617 | |||||
Nextracker Inc. | |||||
(Exact name of registrant as specified in its charter) |
Delaware | 36-5047383 | |||||||||
(State or other jurisdiction of | (I.R.S. Employer | |||||||||
incorporation or organization) | Identification No.) | |||||||||
( | ||||||||||
(510) 270-2500 | ||||||||||
( |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Class A Common Stock, $0.0001 par value | NXT | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ | ||||||||||||||||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☐ | ||||||||||||||||||||||
Emerging growth company | ☐ |
PART I. FINANCIAL INFORMATION
PART I. FINANCIAL INFORMATION | ||||||||||||
Item 1. | Financial Statements: | Page | ||||||||||
Nextracker Inc. | ||||||||||||
2023 | ||||||||||||
Notes to the Unaudited Condensed | ||||||||||||
Item 2. |
| |||||||||||
Item 3. | ||||||||||||
Item 4. | ||||||||||||
PART II. OTHER INFORMATION | ||||||||||||
Item 1. | Legal Proceedings | |||||||||||
Item | Risk Factors | |||||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||||||
Item 3. | Defaults Upon Senior Securities | |||||||||||
Item 4. | Mine Safety Disclosures | |||||||||||
Item 5. | Other Information | |||||||||||
Item 6. | Exhibits | |||||||||||
Signatures |
i
As of June 30, 2023 | As of March 31, 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 355,081 | $ | 130,008 | ||||
Accounts receivable, net of allowance of $1,621 and $1,768, respectively | 222,750 | 271,159 | ||||||
Contract assets | 320,124 | 297,960 | ||||||
Inventories | 136,656 | 138,057 | ||||||
Other current assets | 82,195 | 35,081 | ||||||
Total current assets | 1,116,806 | 872,265 | ||||||
Property and equipment, net | 6,914 | 7,255 | ||||||
Goodwill | 265,153 | 265,153 | ||||||
Other intangible assets, net | 1,258 | 1,321 | ||||||
Deferred tax assets and other assets | 266,741 | 273,686 | ||||||
Total assets | $ | 1,656,872 | $ | 1,419,680 | ||||
LIABILITIES, REDEEMABLE INTERESTS AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 293,451 | $ | 211,355 | ||||
Accrued expenses | 57,280 | 59,770 | ||||||
Deferred revenue | 251,040 | 176,473 | ||||||
Due to related parties | 22,049 | 12,239 | ||||||
Other current liabilities | 52,318 | 47,589 | ||||||
Total current liabilities | 676,138 | 507,426 | ||||||
Long-term debt | 147,289 | 147,147 | ||||||
TRA liability and other liabilities | 276,298 | 280,246 | ||||||
Total liabilities | 1,099,725 | 934,819 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Redeemable non-controlling interest | 3,909,522 | 3,560,628 | ||||||
Stockholders' deficit: | ||||||||
Class A common stock, $0.0001 par value, 900,000,000 shares authorized, 46,422,308 shares and 45,886,065 shares issued and outstanding, respectively | 5 | 5 | ||||||
Class B common stock, $0.0001 par value, 500,000,000 shares authorized, 98,204,522 shares issued and outstanding | 10 | 10 | ||||||
Accumulated deficit | (3,352,390) | (3,075,782) | ||||||
Additional paid-in-capital | — | — | ||||||
Total stockholders' deficit | (3,352,375) | (3,075,767) | ||||||
Total liabilities, redeemable interests, and stockholders' deficit | $ | 1,656,872 | $ | 1,419,680 |
2022 | ||||
Three-Month Periods Ended | ||||||||||||||||||||
June 30, 2023 | July 1, 2022 | |||||||||||||||||||
Revenue | $ | 479,543 | $ | 403,230 | ||||||||||||||||
Cost of sales | 365,799 | $ | 353,367 | |||||||||||||||||
Gross profit | 113,744 | 49,863 | ||||||||||||||||||
Selling, general and administrative expenses | 34,235 | 16,117 | ||||||||||||||||||
Research and development | 5,629 | 3,977 | ||||||||||||||||||
Operating income | 73,880 | 29,769 | ||||||||||||||||||
Interest and other (income) expense, net | 1,134 | (61) | ||||||||||||||||||
Income before income taxes | 72,746 | 29,830 | ||||||||||||||||||
Provision for income taxes | 9,101 | 5,700 | ||||||||||||||||||
Net income and comprehensive income | 63,645 | 24,130 | ||||||||||||||||||
Less: Net income attributable to Nextracker LLC prior to the reorganization transactions | — | 24,130 | ||||||||||||||||||
Less: Net income attributable to redeemable non-controlling interests | 43,216 | — | ||||||||||||||||||
Net income attributable to Nextracker Inc. | $ | 20,429 | $ | — | ||||||||||||||||
Earnings per share attributable to the stockholders of Nextracker Inc. (1) | ||||||||||||||||||||
Basic | $0.44 | N/A | ||||||||||||||||||
Diluted | $0.43 | N/A | ||||||||||||||||||
Weighted-average shares used in computing per share amounts: | ||||||||||||||||||||
Basic | 46,411,859 | N/A | ||||||||||||||||||
Diluted | 146,868,852 | N/A |
Class A common stock | Class B common stock | |||||||||||||||||||||||||||||||
Three Months Ended June 30, 2023 | Redeemable preferred units | Redeemable non-controlling interests | Accumulated net parent investment | Shares outstanding | Amounts | Shares outstanding | Amounts | Additional paid-in-capital | Accumulated deficit | Total stockholders' deficit | ||||||||||||||||||||||
BALANCE AT MARCH 31, 2023 | $— | $3,560,628 | $— | 45,886,065 | $5 | 98,204,522 | $10 | $— | $(3,075,782) | $(3,075,767) | ||||||||||||||||||||||
Net income | — | 43,216 | — | — | — | — | — | — | 20,429 | 20,429 | ||||||||||||||||||||||
Stock-based compensation expense and other | — | — | — | — | — | — | — | 8,641 | — | 8,641 | ||||||||||||||||||||||
Vesting of Nextracker Inc. RSU awards | — | — | — | 536,243 | — | — | — | — | — | — | ||||||||||||||||||||||
Redemption value adjustment | — | 305,678 | — | — | — | — | — | (8,641) | (297,037) | (305,678) | ||||||||||||||||||||||
BALANCE AT JUNE 30, 2023 | $— | $3,909,522 | $— | 46,422,308 | $5 | 98,204,522 | $10 | $— | $(3,352,390) | $(3,352,375) |
Class A common stock | Class B common stock | |||||||||||||||||||||||||||||||
Three Months Ended July 1, 2022 | Redeemable preferred units | Redeemable non-controlling interests | Accumulated net parent investment (deficit) | Shares outstanding | Amounts | Shares outstanding | Amounts | Additional paid-in-capital | Accumulated deficit | Total stockholders' deficit | ||||||||||||||||||||||
BALANCE AT MARCH 31, 2022 | $504,168 | $— | $(3,035) | — | $— | — | $— | $— | $— | $— | ||||||||||||||||||||||
Net income prior to reorganization transactions | — | — | 24,130 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Stock-based compensation expense prior to reorganization | — | — | 1,005 | — | — | — | — | — | — | — | ||||||||||||||||||||||
Paid-in-kind dividend for Series A redeemable preferred units | 6,250 | — | (6,250) | — | — | — | — | — | — | — | ||||||||||||||||||||||
Net transfer to Parent | — | — | 851 | — | — | — | — | — | — | — | ||||||||||||||||||||||
BALANCE AT July 1, 2022 | $510,418 | $— | $16,701 | — | $— | — | $— | $— | $— | $— |
Three-Month Periods Ended | ||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 63,645 | $ | 24,130 | ||||
Depreciation and amortization | 1,046 | 1,269 | ||||||
Changes in working capital and other, net | 161,076 | (22,605) | ||||||
Net cash provided by operating activities | 225,767 | 2,794 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (694) | (427) | ||||||
Net cash used in investing activities | (694) | (427) | ||||||
Cash flows from financing activities: | ||||||||
Net transfers (to) from Parent | — | (309) | ||||||
Net cash used in financing activities | — | (309) | ||||||
Effect of exchange rate on cash and cash equivalents | — | — | ||||||
Net increase in cash | 225,073 | 2,058 | ||||||
Cash and cash equivalents beginning of period | 130,008 | 29,070 | ||||||
Cash and cash equivalents end of period | $ | 355,081 | $ | 31,128 | ||||
Non-cash investing activity: | ||||||||
Unpaid purchases of property and equipment | $ | 155 | $ | 116 | ||||
Non-cash financing activity: | ||||||||
Capitalized offering costs | $ | — | $ | 297 | ||||
(In thousands, except unit and per unit amounts) | As of December 31, 2022 | As of March 31, 2022 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 100,081 | $ | 29,070 | ||||
Accounts receivable, net of allowance of $1,926 and $3,574, respectively | 285,800 | 168,303 | ||||||
Contract assets | 267,665 | 292,407 | ||||||
Inventories | 251,198 | 172,208 | ||||||
Other current assets | 49,593 | 52,074 | ||||||
Total current assets | 954,337 | 714,062 | ||||||
Property and equipment, net | 7,910 | 7,423 | ||||||
Goodwill | 265,153 | 265,153 | ||||||
Other intangible assets, net | 1,383 | 2,528 | ||||||
Other assets | 30,912 | 28,123 | ||||||
Total assets | $ | 1,259,695 | $ | 1,017,289 | ||||
LIABILITIES, REDEEMABLE PREFERRED UNITS AND PARENT COMPANY EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Accounts payable | 311,354 | 266,596 | ||||||
Accrued expenses | 44,189 | 26,176 | ||||||
Deferred revenue | 173,219 | 77,866 | ||||||
Due to related parties | 41,185 | 39,314 | ||||||
Other current liabilities | 34,665 | 63,419 | ||||||
Total current liabilities | 604,612 | 473,371 | ||||||
Other liabilities | 35,907 | 42,785 | ||||||
Total liabilities | 640,519 | 516,156 | ||||||
Redeemable preferred units, $0.001 par value, 23,809,524 units and 238,096 units issued and outstanding, respectively | 522,918 | 504,168 | ||||||
Parent company equity (deficit): | ||||||||
Accumulated net parent investment | 96,258 | (3,035 | ) | |||||
Total parent company equity (deficit) | 96,258 | (3,035 | ) | |||||
Total liabilities, redeemable preferred units and parent company equity (deficit) | $ | 1,259,695 | $ | 1,017,289 | ||||
Three-Month Periods Ended | Nine-Month Periods Ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Revenue | $ | 513,370 | $ | 337,607 | $ | 1,383,742 | $ | 1,017,779 | ||||||||
Cost of sales | 431,111 | 303,843 | 1,187,081 | 909,700 | ||||||||||||
Gross profit | 82,259 | 33,764 | 196,661 | 108,079 | ||||||||||||
Selling, general and administrative expenses | 18,613 | 13,009 | 55,475 | 39,149 | ||||||||||||
Research and development | 4,984 | 3,649 | 13,283 | 10,600 | ||||||||||||
Operating income | 58,662 | 17,106 | 127,903 | 58,330 | ||||||||||||
Interest and other (income) expense, net | (2,366 | ) | 91 | (1,118 | ) | 371 | ||||||||||
Income before income taxes | 61,028 | 17,015 | 129,021 | 57,959 | ||||||||||||
Provision for income taxes | 18,442 | 4,469 | 35,218 | 12,840 | ||||||||||||
Net income and comprehensive income | $ | 42,586 | $ | 12,546 | $ | 93,803 | $ | 45,119 | ||||||||
Three-Month Periods ended December 31, 2022 and 2021 | Net Parent Investment | Redeemable Preferred Units | ||||||
(In thousands) | ||||||||
BALANCE AT SEPTEMBER 30, 2022 | $ | 86,400 | $ | 516,668 | ||||
Stock-based compensation expense | 940 | — | ||||||
Net income | 42,586 | — | ||||||
Paid-in-Kind | (6,250 | ) | 6,250 | |||||
Net transfers from Parent | (27,418 | ) | — | |||||
BALANCE AT DECEMBER 31, 2022 | $ | 96,258 | $ | 522,918 | ||||
BALANCE AT OCTOBER 1, 2021 | $ | 463,578 | $ | — | ||||
Stock-based compensation expense | 842 | — | ||||||
Net income | 12,546 | — | ||||||
Net transfers to Parent | 11,550 | — | ||||||
BALANCE AT DECEMBER 31, 2021 | $ | 488,516 | $ | — | ||||
Nine-Month Periods ended December 31, 2022 and 2021 | Net Parent Investment | Redeemable Preferred Units | ||||||
(In thousands) | ||||||||
BALANCE AT MARCH 31, 2022 | $ | (3,035 | ) | $ | 504,168 | |||
Stock-based compensation expense | 2,790 | — | ||||||
Net income | 93,803 | — | ||||||
Paid-in-Kind | (18,750 | ) | 18,750 | |||||
Net transfers from Parent | 21,450 | — | ||||||
BALANCE AT DECEMBER 31, 2022 | $ | 96,258 | $ | 522,918 | ||||
BALANCE AT MARCH 31, 2021 | $ | 456,047 | $ | — | ||||
Stock-based compensation expense | 2,222 | — | ||||||
Net income | 45,119 | — | ||||||
Net transfers to Parent | (14,872 | ) | — | |||||
BALANCE AT DECEMBER 31, 2021 | $ | 488,516 | $ | — | ||||
Nine-Month Periods Ended | ||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | ||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 93,803 | $ | 45,119 | ||||
Depreciation and amortization | 3,594 | 9,889 | ||||||
Changes in working capital and other, net | (25,015 | ) | (160,750 | ) | ||||
Net cash provided by (used in) operating activities | 72,382 | (105,742 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (2,653 | ) | (5,123 | ) | ||||
Proceeds from the disposition of property and equipment | 24 | 167 | ||||||
Net cash used in investing activities | (2,629 | ) | (4,956 | ) | ||||
Cash flows from financing activities: | ||||||||
Net transfers (to) from Parent | 1,258 | (14,872 | ) | |||||
Net cash provided by (used in) financing activities | 1,258 | (14,872 | ) | |||||
Net increase (decrease) in cash | 71,011 | (125,570 | ) | |||||
Cash beginning of period | 29,070 | 190,589 | ||||||
Cash end of period | $ | 100,081 | $ | 65,019 | ||||
Non-cash investing activity: | ||||||||
Unpaid purchases of property and equipment | $ | 422 | $ | 480 | ||||
Non-cash financing activity: | ||||||||
Capitalized offering costs | $ | 2,534 | $ | 3,815 | ||||
Legal settlement paid by Parent, net of insurance recoveries | $ | 20,428 | $ | — |
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Beginning balance | $ | 11,431 | $ | 16,213 | $ | 10,485 | $ | 17,085 | ||||||||
Provision (release) for warranties issued (1) | 8,582 | (2,373 | ) | 9,974 | (2,608 | ) | ||||||||||
Payments | (117 | ) | (404 | ) | (563 | ) | (1,041 | ) | ||||||||
Ending balance | $ | 19,896 | $ | 13,436 | $ | 19,896 | $ | 13,436 | ||||||||
Three-month periods ended | |||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | |||||||||
Beginning balance | $ | 22,591 | $ | 10,485 | |||||||
Provision (release) for warranties issued | (1,582) | 127 | |||||||||
Payments | (278) | (225) | |||||||||
Ending balance | $ | 20,731 | $ | 10,387 |
Three-month period ended June 30, 2023 | |||||
(in thousands) | |||||
Balance at beginning of period | $ | 3,560,628 | |||
Net income attributable to redeemable non-controlling interests | 43,216 | ||||
Redemption value adjustment | 305,678 | ||||
Balance at end of period | $ | 3,909,522 |
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Timing of Transfer | ||||||||||||||||
Point in time | $ | 7,618 | $ | 41,220 | $ | 40,771 | $ | 63,024 | ||||||||
Over time | 505,752 | 296,387 | 1,342,971 | 954,755 | ||||||||||||
Total revenue | $ | 513,370 | $ | 337,607 | $ | 1,383,742 | $ | 1,017,779 | ||||||||
Three-month periods ended | ||||||||||||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | ||||||||||||||||||
Timing of Transfer | ||||||||||||||||||||
Point in time | $ | 5,641 | $ | 23,251 | ||||||||||||||||
Over time | 473,902 | 379,979 | ||||||||||||||||||
Total revenue | $ | 479,543 | $ | 403,230 |
As of December 31, 2022 | As of March 31, 2022 | As of June 30, 2023 | As of March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||
(In thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | (In thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | ||||||||||||||||||||||||||||||||||
Intangible assets: | Intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||||
Trade name and other intangibles | $ | 15,900 | $ | (14,517 | ) | $ | 1,383 | $ | 15,900 | $ | (13,372 | ) | $ | 2,528 | Trade name and other intangibles | $ | 2,500 | $ | (1,242) | $ | 1,258 | $ | 2,500 | $ | (1,179) | $ | 1,321 | ||||||||||||||||||||
Total | $ | 15,900 | $ | (14,517 | ) | $ | 1,383 | $ | 15,900 | $ | (13,372 | ) | $ | 2,528 | Total | $ | 2,500 | $ | (1,242) | $ | 1,258 | $ | 2,500 | $ | (1,179) | $ | 1,321 | ||||||||||||||||||||
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Cost of sales | $ | 63 | $ | 63 | $ | 188 | $ | 3,980 | ||||||||
Selling general and administrative expense | — | 478 | 957 | 3,944 | ||||||||||||
Total amortization expense | $ | 63 | $ | 541 | $ | 1,145 | $ | 7,924 | ||||||||
(In thousands) | Amount | |||
Fiscal year ending March 31, | ||||
2023 (1) | $ | 62 | ||
2024 | 250 | |||
2025 | 250 | |||
2026 | 250 | |||
2027 | 250 | |||
Thereafter | 321 | |||
Total amortization expense | $ | 1,383 | ||
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Cost of sales | $ | 350 | $ | 426 | $ | 1,105 | $ | 1,105 | ||||||||
Selling, general and administrative expenses | 590 | 416 | 1,685 | 1,117 | ||||||||||||
Total stock-based compensation expense | $ | 940 | $ | 842 | $ | 2,790 | $ | 2,222 | ||||||||
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Corporate allocations (excluding stock-based compensation expense) | $ | 65 | $ | 2,604 | $ | 1,463 | $ | 7,849 | ||||||||
Transfer of operations to Nextracker (1) | (51,527 | ) | 4,558 | (8,440 | ) | 401 | ||||||||||
Net cash pooling activities (2) | 10,154 | (655 | ) | (1,195 | ) | (37,843 | ) | |||||||||
Income taxes | 13,890 | 5,043 | 29,622 | 14,721 | ||||||||||||
Net transfers (to) from Parent | $ | (27,418 | ) | $ | 11,550 | $ | 21,450 | $ | (14,872 | ) | ||||||
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Income tax | 18,442 | 4,469 | 35,218 | 12,840 | ||||||||||||
Effective tax rates | 30.2 | % | 26.3 | % | 27.3 | % | 22.2 | % |
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Revenue: | ||||||||||||||||
U.S. | $ | 327,548 | $ | 161,703 | $ | 908,361 | $ | 605,743 | ||||||||
Rest of the World | 185,822 | 175,904 | 475,381 | 412,036 | ||||||||||||
Total | $ | 513,370 | $ | 337,607 | $ | 1,383,742 | $ | 1,017,779 | ||||||||
Three-month periods ended | ||||||||||||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | ||||||||||||||||||
Cost of sales | $ | 1,926 | $ | 410 | ||||||||||||||||
Selling, general and administrative expenses | 6,715 | 595 | ||||||||||||||||||
Total stock-based compensation expense | $ | 8,641 | $ | 1,005 |
Three-month period ended June 30, 2023 | |||||||||||||||||
Income | Weighted average shares outstanding | Per Share | |||||||||||||||
(in thousands except share and per share amounts) | Numerator | Denominator | Amount | ||||||||||||||
Basic EPS | |||||||||||||||||
Net income available to Nextracker Inc. common stockholders | $ | 20,429 | 46,411,859 | $ | 0.44 | ||||||||||||
Effect of Dilutive impact | |||||||||||||||||
Common stock equivalents from options awards (1) | 896,988 | ||||||||||||||||
Common stock equivalents from RSUs (2) | 885,710 | ||||||||||||||||
Common stock equivalents from PSUs (3) | 469,773 | ||||||||||||||||
Income attributable to non-controlling interests and common stock equivalent from Class B common stock | $ | 43,216 | 98,204,522 | ||||||||||||||
Diluted EPS | |||||||||||||||||
Net income and comprehensive income | $ | 63,645 | 146,868,852 | $ | 0.43 |
Three-month periods ended | |||||||||||||||||
(In thousands) | July 1, 2022 | ||||||||||||||||
Corporate allocations (excluding stock-based compensation expense) | $ | 1,360 | |||||||||||||||
Transfer of operations to Nextracker (1) | 3,229 | ||||||||||||||||
Net cash pooling activities (2) | (8,908) | ||||||||||||||||
Income taxes | 5,170 | ||||||||||||||||
Net transfers from Parent | $ | 851 |
Three-month periods ended | |||||||||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | |||||||||||||||
Income tax | 9,101 | 5,700 | |||||||||||||||
Effective tax rates | 12.5 | % | 19.0 | % |
Three-month periods ended | |||||||||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | |||||||||||||||
Revenue: | |||||||||||||||||
U.S. | $ | 270,338 | $ | 269,390 | |||||||||||||
Rest of the World | 209,205 | 133,840 | |||||||||||||||
Total | $ | 479,543 | $ | 403,230 |
|
25
We have shipped approximately 7580 GW of solar tracker systems as of December 31, 2022June 30, 2023 to projects on six continents. Our customers include engineering, procurement and construction firms (“EPCs”("EPCs"), as well as solar project developers and owners. Developers originate projects, select and acquire sites, obtain permits, select contractors, negotiate power offtake agreements, and oversee the building of projects. EPCs design and optimize the system,
2023.
Three-month periods ended | Nine-month periods ended | |||||||||||||||||||||||||||||||
(In thousands) (Unaudited) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||||||||
U.S. | $ | 327,548 | 64 | % | $ | 161,703 | 48 | % | $ | 908,361 | 66 | % | $ | 605,743 | 60 | % | ||||||||||||||||
Rest of the World | 185,822 | 36 | % | 175,904 | 52 | % | 475,381 | 34 | % | 412,036 | 40 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||||||
Total | $ | 513,370 | $ | 337,607 | $ | 1,383,742 | $ | 1,017,779 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
Three-month periods ended | ||||||||||||||||||||||||||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | ||||||||||||||||||||||||||||||
Revenue: | (Unaudited) | |||||||||||||||||||||||||||||||
U.S. | $ | 270,338 | 56% | $ | 269,390 | 67% | ||||||||||||||||||||||||||
Rest of the World | 209,205 | 44% | 133,840 | 33% | ||||||||||||||||||||||||||||
Total | $ | 479,543 | $ | 403,230 |
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In millions) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Customer A* | $ | 131.8 | $ | 35.4 | $ | 295.1 | $ | 140.6 |
|
Three-month periods ended | |||||||||||||||||||||||
(In millions) | June 30, 2023 | July 1, 2022 | |||||||||||||||||||||
Customer A* | $25.6 | $42.1 | |||||||||||||||||||||
26
Reverse Unit Split
The Board of Managers and the members of Nextracker LLC approved an amendment to the LLC Agreement in effect prior to the IPO, effecting a 1-for-2.1 reverse unit split of the units issued by the LLC. The reverse split was effected on January 30, 2023.
Our business model
Our sales and marketing strategy is focused on building long-term relationships with key stakeholders involved in developing, building, owning, and maintaining utility-scale solar projects. We educate those stakeholders on the benefits of our solutions, including increased energy yield performance, superior constructability, reliability, ease of maintenance, and advanced software and sensor capabilities compared to competing products.
•In the United States and more mature international markets, our sales team maintains active relationships with key stakeholders and customers such as developers and builders of utility-scale solar systems. We leverage these relationships and knowledge of the available project pipeline, inbound requests for proposals (“RFPs”) from potential customers, and competitive dynamics. Frequently we are either awarded the project outright or become ‘short-listed’ among a group of eligible bidders. In each case we create a detailed proposal that leverages our project engineering expertise to offer a compelling project and/or project portfolio-specific value proposition.
•In less mature international markets, we leverage a variety of broad and account-based marketing techniques to acquire customers. These include conducting thought leadership seminars and developer forums, installation training programs, and participation in industry conferences, events, and trade associations.
27
•We set pricing for our products based on the long-term value derived from energy yield performance and total cost of ownership. For our core tracker products, we offer differing pricing to address multiple market segments based on site characteristics and weather protection requirements, among other factors.
For example,IPO, our historical condensed combinedconsolidated financial statements in this Quarterly Report include expense allocations for certain support functions that arewere provided on a centralized basis within Flex, such as corporate costs, shared services and other selling, general and administrative costs that benefit the Company, among others. Since our IPO, we have incurred and will continue to incur additional costs as a public company. Under the transition service agreementTSA Flex willhas agreed to continue to provide us with some of the services related to these functions on a transitional basis in exchange for agreed-upon fees, and we have incurred and will continue to incur other costs to replace the services and resources that will not be provided by Flex. Since our IPO, we have incurred and will continue to incur additional costs as a separate public company. Our total costs related to such support functions may differ from the costs that were historically allocated to us from Flex. These additional costs are primarily for the following:
•additional personnel costs, including salaries, benefits and potential bonuses and/or stock-based compensation awards for staff, including staff additions to replace support provided by Flex that is not covered by the transition services agreement; and
•corporate governance costs, including director and officer insurance costs, board of director compensation and expenses, audit and other professional services fees, annual report and proxy statement costs, SEC filing fees, transfer agent fees, consulting andand legal fees and Nasdaq fees, bank fees or other costs related to existing or future financing arrangements.
As
28
Key businessCritical accounting policies and operational metrics
In addition to information related to our financial performance, we use certain operating metrics to evaluate our business. These metrics, together with oursignificant management estimates
Three-month periods ended | Nine-month periods ended | |||||||||||||||||||||||
December 31, 2022 | December 31, 2021 | Percent change | December 31, 2022 | December 31, 2021 | Percent change | |||||||||||||||||||
GW delivered | 5.2 | 3.8 | 37 | % | 13.2 | 10.7 | 23 | % |
fiscal year ended March 31, 2023.
We derive our revenue from the sale of solar trackers and software products to our customers. Our revenue growth is dependent on (i) our ability to maintain and expand our market share, (ii) total market growth and(iii) our ability to develop and introduce new products driving performance enhancements and cost efficiencies throughout the solar power plant.
29
Operating expenses
If the performance-based vesting condition for our equity-based compensation awards issued under the Restated 2022 Nextracker LLC Equity Incentive Plan had occurred on December 31, 2022, we would have recognized $10.4 million of equity-based compensation expense for the awards that had satisfied or partially satisfied the time-based vesting condition on that date and would have approximately $37.1 million of unrecognized compensation cost that represents the awards which have not met the time-based vesting condition as of December 31, 2022.
30
RESULTS OF OPERATIONS
Three-month periods ended | Nine-month periods ended | |||||||||||||||||||||||
(In thousands, except percentages) (Unaudited) | December 31, 2022 | December 31, 2021 | % change | December 31, 2022 | December 31, 2021 | % change | ||||||||||||||||||
Condensed Combined Statement of Operations and Comprehensive Income Data: | ||||||||||||||||||||||||
Revenue | $ | 513,370 | $ | 337,607 | 52 | % | $ | 1,383,742 | $ | 1,017,779 | 36 | % | ||||||||||||
Cost of sales | 431,111 | 303,843 | 42 | 1,187,081 | 909,700 | 30 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross profit | 82,259 | 33,764 | 144 | 196,661 | 108,079 | 82 | ||||||||||||||||||
Selling, general and administrative expenses | 18,613 | 13,009 | 43 | 55,475 | 39,149 | 42 | ||||||||||||||||||
Research and development | 4,984 | 3,649 | 37 | 13,283 | 10,600 | 25 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Operating income | 58,662 | 17,106 | 243 | 127,903 | 58,330 | 119 | ||||||||||||||||||
Interest and other (income) expense, net | (2,366 | ) | 91 | (2,700 | ) | (1,118 | ) | 371 | (401 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Income before income taxes | 61,028 | 17,015 | 259 | 129,021 | 57,959 | 123 | ||||||||||||||||||
Provision for income taxes | 18,442 | 4,469 | 313 | 35,218 | 12,840 | 174 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Net income and comprehensive income | $ | 42,586 | $ | 12,546 | 239 | % | $ | 93,803 | $ | 45,119 | 108 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three-month periods ended | ||||||||||||||||||||
(In thousands, except percentages) | June 30, 2023 | July 1, 2022 | % change | |||||||||||||||||
Condensed Statement of Operations and Comprehensive Income Data: | (Unaudited) | |||||||||||||||||||
Revenue | $ | 479,543 | $ | 403,230 | 19% | |||||||||||||||
Cost of sales | 365,799 | 353,367 | 4 | |||||||||||||||||
Gross profit | 113,744 | 49,863 | 128 | |||||||||||||||||
Selling, general and administrative expenses | 34,235 | 16,117 | 112 | |||||||||||||||||
Research and development | 5,629 | 3,977 | 42 | |||||||||||||||||
Operating income | 73,880 | 29,769 | 148 | |||||||||||||||||
Interest and other (income) expense, net | 1,134 | (61) | (1959) | |||||||||||||||||
Income before income taxes | 72,746 | 29,830 | 144 | |||||||||||||||||
Provision for income taxes | 9,101 | 5,700 | 60 | |||||||||||||||||
Net income and comprehensive income | $ | 63,645 | $ | 24,130 | 164% |
31
Among other limitations, Non-GAAP gross profit, Non-GAAP operating income, Non-GAAP net income, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted free cash flow do not reflect our cash expenditures or future capital expenditures or contractual commitments (including under the Tax Receivable Agreement), do not reflect the impact of certain cash or non-cash charges resulting from matters we consider not to be indicative of our ongoing operations and do not reflect the associated income tax expense or benefit related to those charges. In addition, other companies in our industry may calculate Non-GAAP gross profit, Non-GAAP operating income, Non-GAAP net income, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted free cash flow differently from us, which further limits their usefulness as comparative measures.
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands, except percentages) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
Other Financial Information: | ||||||||||||||||
Non-GAAP gross profit | $ | 82,672 | $ | 34,253 | $ | 197,954 | $ | 113,164 | ||||||||
Non-GAAP operating income | 59,665 | 18,489 | 133,279 | 68,476 | ||||||||||||
Non-GAAP net income | 43,396 | 13,772 | 97,196 | 52,763 | ||||||||||||
Adjusted EBITDA | 62,703 | 19,033 | 136,467 | 70,105 | ||||||||||||
Net income (% of revenue) | 8.3 | % | 3.7 | % | 6.8 | % | 4.4 | % | ||||||||
Adjusted EBITDA (% of revenue) | 12.2 | % | 5.6 | % | 9.9 | % | 6.9 | % | ||||||||
Adjusted free cash flow | 18,603 | (76,239 | ) | 69,753 | (110,698 | ) |
business
.Three-month periods ended | |||||||||||||||||||||||||||||
(In thousands, except percentages) | June 30, 2023 | July 1, 2022 | |||||||||||||||||||||||||||
Other Financial Information: | |||||||||||||||||||||||||||||
Non-GAAP gross profit | $ | 115,733 | $ | 50,336 | |||||||||||||||||||||||||
Non-GAAP operating income | 82,403 | 31,315 | |||||||||||||||||||||||||||
Non-GAAP net income | 70,943 | 24,755 | |||||||||||||||||||||||||||
Adjusted EBITDA | 83,672 | 32,040 | |||||||||||||||||||||||||||
Net income (% of revenue) | 13.3% | 6.0% | |||||||||||||||||||||||||||
Adjusted EBITDA (% of revenue) | 17.4% | 7.9% | |||||||||||||||||||||||||||
Adjusted free cash flow | 225,073 | 2,367 |
32
Three-month periods ended | Nine-month periods ended | |||||||||||||||
(In thousands, except percentages) | December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||
(Unaudited) | ||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures: | ||||||||||||||||
GAAP gross profit | $ | 82,259 | $ | 33,764 | $ | 196,661 | $ | 108,079 | ||||||||
Stock-based compensation expense | 350 | 426 | 1,105 | 1,105 | ||||||||||||
Intangible amortization | 63 | 63 | 188 | 3,980 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP gross profit | $ | 82,672 | $ | 34,253 | $ | 197,954 | $ | 113,164 | ||||||||
|
|
|
|
|
|
|
| |||||||||
GAAP operating income | $ | 58,662 | $ | 17,106 | $ | 127,903 | $ | 58,330 | ||||||||
Stock-based compensation expense | 940 | 842 | 2,790 | 2,222 | ||||||||||||
Intangible amortization | 63 | 541 | 1,145 | 7,924 | ||||||||||||
Legal costs (1) | — | — | 1,528 | — | ||||||||||||
Other | — | — | (87 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP operating income | $ | 59,665 | $ | 18,489 | $ | 133,279 | $ | 68,476 | ||||||||
|
|
|
|
|
|
|
| |||||||||
GAAP net income | $ | 42,586 | $ | 12,546 | $ | 93,803 | $ | 45,119 | ||||||||
Stock-based compensation expense | 940 | 842 | 2,790 | 2,222 | ||||||||||||
Intangible amortization | 63 | 541 | 1,145 | 7,924 | ||||||||||||
Adjustment for taxes | (193 | ) | (157 | ) | (1,983 | ) | (2,502 | ) | ||||||||
Legal costs (1) | — | — | 1,528 | — | ||||||||||||
Other | — | — | (87 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Non-GAAP net income | $ | 43,396 | $ | 13,772 | $ | 97,196 | $ | 52,763 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income | $ | 42,586 | $ | 12,546 | $ | 93,803 | $ | 45,119 | ||||||||
Interest, net | (215 | ) | 1 | (380 | ) | 35 | ||||||||||
Provision for income taxes | 18,442 | 4,469 | 35,218 | 12,840 | ||||||||||||
Depreciation expense | 887 | 634 | 2,450 | 1,965 | ||||||||||||
Intangible amortization | 63 | 541 | 1,145 | 7,924 | ||||||||||||
Stock-based compensation expense | 940 | 842 | 2,790 | 2,222 | ||||||||||||
Legal costs (1) | — | — | 1,528 | — | ||||||||||||
Other | — | — | (87 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted EBITDA | $ | 62,703 | $ | 19,033 | $ | 136,467 | $ | 70,105 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (% of revenue) | 8.3 | % | 3.7 | % | 6.8 | % | 4.4 | % | ||||||||
Adjusted EBITDA (% of revenue) | 12.2 | % | 5.6 | % | 9.9 | % | 6.9 | % | ||||||||
Net cash provided by (used in) operating activities | $ | 19,921 | $ | (74,555 | ) | $ | 72,382 | $ | (105,742 | ) | ||||||
Purchase of property and equipment | (1,318 | ) | (1,684 | ) | (2,653 | ) | (5,123 | ) | ||||||||
Proceeds from the disposition of property and equipment | — | — | 24 | 167 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Adjusted free cash flow | $ | 18,603 | $ | (76,239 | ) | $ | 69,753 | $ | (110,698 | ) | ||||||
|
|
|
|
|
|
|
|
|
33
Three-month periods ended | |||||||||||||||||||||||||||||
(In thousands, except percentages) | June 30, 2023 | July 1, 2022 | |||||||||||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Financial Measures: | (Unaudited) | ||||||||||||||||||||||||||||
GAAP gross profit | $ | 113,744 | $ | 49,863 | |||||||||||||||||||||||||
Stock-based compensation expense | 1,926 | 410 | |||||||||||||||||||||||||||
Intangible amortization | 63 | 63 | |||||||||||||||||||||||||||
Non-GAAP gross profit | $ | 115,733 | $ | 50,336 | |||||||||||||||||||||||||
GAAP operating income | $ | 73,880 | $ | 29,769 | |||||||||||||||||||||||||
Stock-based compensation expense | 8,460 | 1,005 | |||||||||||||||||||||||||||
Intangible amortization | 63 | 541 | |||||||||||||||||||||||||||
Non-GAAP operating income | $ | 82,403 | $ | 31,315 | |||||||||||||||||||||||||
GAAP net income | $ | 63,645 | $ | 24,130 | |||||||||||||||||||||||||
Stock-based compensation expense | 8,460 | 1,005 | |||||||||||||||||||||||||||
Intangible amortization | 63 | 541 | |||||||||||||||||||||||||||
Adjustment for taxes | (1,225) | (921) | |||||||||||||||||||||||||||
Non-GAAP net income | $ | 70,943 | $ | 24,755 | |||||||||||||||||||||||||
Net income | $ | 63,645 | $ | 24,130 | |||||||||||||||||||||||||
Interest, net | 1,420 | (64) | |||||||||||||||||||||||||||
Provision for income taxes | 9,101 | 5,700 | |||||||||||||||||||||||||||
Depreciation expense | 983 | 728 | |||||||||||||||||||||||||||
Intangible amortization | 63 | 541 | |||||||||||||||||||||||||||
Stock-based compensation expense | 8,460 | 1,005 | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | 83,672 | $ | 32,040 | |||||||||||||||||||||||||
Net income (% of revenue) | 13.3% | 6.0% | |||||||||||||||||||||||||||
Adjusted EBITDA (% of revenue) | 17.4% | 7.9% | |||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 225,767 | $ | 2,794 | |||||||||||||||||||||||||
Purchase of property and equipment | (694) | (427) | |||||||||||||||||||||||||||
Adjusted free cash flow | $ | 225,073 | $ | 2,367 |
Comparison of the three-month periods ended December 31, 2022
discussion that follows, represent our results from operations.
Revenue increased by $175.8$76.3 million, or 52%19%, for the three-month period ended December 31, 2022June 30, 2023 compared to the three-month period ended December 31, 2021. Approximately $130 million of the July 1, 2022. The increase was the result ofmainly driven by a 37%30% increase in gigawatts delivered as we delivered 5.2 GW for the three-month period ended December 31, 2022, compared to 3.8 GW for the three-month period ended December 31, 2021, coupled with a slight increase in our average sellingoffset by slightly lower sales price directly associated with higher freight and logistics costs included in our selling price compareddue to the prior year period.decline in logistics costs. Revenue increased approximately $165.8 million, or 103%,remained somewhat flat in the U.S. and $9.9while increasing $75.4 million or 6%56% in the Rest of the World for the three-month period ended December 31, 2022June 30, 2023 compared to the three-month period ended July 1, 2022. The growth from the Rest of the World was driven primarily from larger projects in Brazil, our largest market, and increased sales in Europe, Australia and Canada.
Cost of sales increased by $127.3 million, or 42%, for the three-month period ended December 31, 2022 compared to the three-month period ended December 31, 2021 primarily due to the increase in sales noted above, partially offset by a substantial decrease in freight and logistics costs.costs as compared to the three-month period ended July 1, 2022. Freight and
Selling, general and administrative expenses increased $5.6nses was approximately$34.2 million, or 43%, to $18.6 million for 7.1% of revenue during the three-month period ended December 31, 2022,June 30, 2023, increasing $18.1 million from approximately $13.0$16.1 million, inor 4.0% of revenue during the three-month period ended December 31, 2021, while remaining somewhat flat at approximately 4% as a percent of revenue in both periods.July 1, 2022. The increase in selling, general and administrative expenses was primarily the result of an increase in stock-based compensation expense incurred in conjunction with our 2022 equity incentive plan, incremental costs related to our continued expansion of our sales organization in line with the growth in the global market.
market, and due to the growth of our supporting functions as a public company.
Income tax expense
We accrue and pay the appropriate amount of
34
Comparison of the nine-month periods endedDecember 31, 2022and2021
Revenue
Revenue increased by $366.0 million, or 36%, for the nine-month period ended December 31, 2022 compared to the nine-month period ended December 31, 2021. Approximately $250 million of the increase was the result of a 23% increase in gigawatts delivered as we delivered 13.2 GW for the nine-month period ended December 31, 2022, compared to 10.7 GW for the nine-month period ended December 31, 2021. The remaining increase was a result of an approximate 9% increase in our average selling price directly associated with higher freight and logistics costs included in our selling price compared to the prior year period. Revenue increased approximately $302.6 million, or 50%, in the U.S. and $63.3 million or 15% in the Rest of the World for the nine-month period ended December 31, 2022 compared to the nine-month period ended December 31, 2021. The growth from the Rest of the World was driven primarily from larger projects in Brazil.
Cost of sales and gross profit
Cost of sales increased by $277.4 million, or 30%, for the nine-month period ended December 31, 2022 compared to the nine-month period ended December 31, 2021 primarily due to the increase in sales noted above, and to a lesser extent, an increase in freight and logistics costs. Freight and logistics costs as a percentage of cost of sales increased by approximately 190 basis points for the nine-month period ended December 31, 2022 compared to the nine-month period ended December 31, 2021.
Gross profit increased by $88.6 million, or 82%, for the nine-month period ended December 31, 2022 compared to the nine-month period ended December 31, 2021 primarily resulting from the increase in sales noted above coupled with improved pricing on contracts allowing higher recovery of freight and logistics costs.
Selling, general and administrative expenses
Selling, general and administrative expenses increased $16.3 million, or 42%, to $55.5 million for the nine-month period ended December 31, 2022, from approximately $39.1 million in the nine-month period ended December 31, 2021, while remaining somewhat flat at approximately 4% as a percent of revenue in both periods. The increase in selling, general and administrative expenses was primarily the result of our continued expansion of our sales organization in line with the growth in the global market.
Research and development
Research and development expenses increased $2.7 million, or 25%, to $13.3 million for the nine-month period ended December 31, 2022 from approximately $10.6 million in the nine-month period ended December 31, 2021 as a result of continuous product innovation and development, including software enhancements.
35
Income tax expense
We accrue and pay the appropriate amount of income taxes according to the laws and regulations of each jurisdiction in which we operate. The majoritycalculation of our revenue and profits are generatedtax liabilities involves dealing with uncertainties in the United States withapplication of complex tax rules and regulations in a statutory income tax ratenumber of approximately 21%jurisdictions. Due to such complexity of these uncertainties, the ultimate resolution may result in the nine-month periods ended December 31, 2022 and 2021. For the nine-month periods ended December 31, 2022 and 2021, we recorded total income tax expense of $35.2 million and $12.8 million, respectively, which reflected effective tax rates of 27.3% and 22.2%, respectively. These effective tax rates differ from the U.S. domestic statutory income tax rate of 21% primarily due to the U.S state and local income taxes coupled with the jurisdictional mix of income between the U.S. and other operating jurisdictions. We may in the future be subject to tax return audits and examinations by various taxing jurisdictions around the world, and there can be no assurancea payment or refund that the final determination of any tax examinations will not beis materially different than thatfrom our estimates.
statements.
Credit Facilities
other general corporate purposes.
as of June 30, 2023.
ratio below a certain threshold. As of June 30, 2023, we were in compliance with all applicable covenants under the 2023 Credit Agreement, the Term Loan and the RCF.
36
We believe that our cash provided by operations and other existing and committed sources of liquidity, including our revolving credit facility, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments, potential debt service requirements and payments under the Tax Receivable Agreement for at least the next 12 months. We did not retain the proceeds of the IPO.
Nine-month periods ended | ||||||||
(In thousands) | December 31, 2022 | December 31, 2021 | ||||||
(Unaudited) | ||||||||
Net cash provided by (used in) operating activities | $ | 72,382 | $ | (105,742 | ) | |||
Net cash used in investing activities | (2,629 | ) | (4,956 | ) | ||||
Net cash provided by (used in) financing activities | 1,258 | (14,872 | ) |
Nine-month
Three-month periods ended | ||||||||
(In thousands) | June 30, 2023 | July 1, 2022 | ||||||
(Unaudited) | ||||||||
Net cash provided by operating activities | $ | 225,767 | $ | 2,794 | ||||
Net cash used in investing activities | (694) | (427) | ||||||
Net cash used in financing activities | — | (309) |
June 30, 2023
Net cash provided by financing activities was $1.3 million resulting from net cash transfers from Flex primarily pursuant to the centralized cash management function performed by Flex.
37
Nine-month period ended December 31, 2021
Net cash used in operating activities was $105.7 million during the nine-month period ended December 31, 2021. Net working capital and other was a net use of approximately $160.8 million. Cash used for inventory, accounts receivable and contract assets was approximately $234.9 million in the nine-month period ended December 31, 2021, as we funded increased operations and expansion of supplier capacity in the United States. Additionally, approximately $13.7 million in cash was used for other current and noncurrent assets during the nine-month period ended December 31, 2021, primarily due to increased advance payments made to suppliers for future procurement of inventory. This increase was offset by increased accounts payable of approximately $78.0 million directly associated with the increased inventory level, in addition to increased deferred revenue of approximately $19.2 million, primarily resulting from upfront funding of new contracts and timing of cash collections coupled with delays in projects as a result of logistics constraints. Further offsetting cash used for net working capital and other, net was net income of approximately $45.1 million adjusted for noncash charges of approximately $9.9 million related to depreciation and amortization.
Net cash used in investing activities was approximately $5.0 million and directly attributable to the purchase of property and equipment.
Net cash used in financing activities was $14.9 million resulting primarily from net cash transfers to Flex pursuant to the centralized cash management function performed by Flex.
Cash management and financing
We have
June 30, 2023.
As discussed
our contractual obligations and commitments as of June 30, 2023.
CriticalJune 30, 2023.
Our unaudited condensed combined financial statements and the related notes thereto included elsewhere in this Quarterly Report are prepared in accordance with GAAP. The preparation of condensed combined financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs, and expenses during the reporting period. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
38
Our critical- Recently issued accounting policies and significant management estimates are described under the heading “Management’s discussion and analysis of financial condition and results of operations—Critical accounting policies and significant management estimates” in the Prospectus and the notes to the audited combined financial statements appearing elsewhere in the Prospectus. During the three- and nine months ended December 31, 2022, there were no material changes to our critical accounting policies and significant management estimates from those discussed in our Prospectus, except for the estimated additional product warranty reserve of $8.7 million as discussed in Note 2, “Summary of accounting policies–Product warranty,”pronouncement" in the notes to our unaudited condensed combined financial statements included elsewhere in this Quarterly Report.
Recently adopted accounting pronouncements
See Note 2 “Summary of accounting policies - Recently issued accounting pronouncement” in the notes to our unaudited condensed combinedconsolidated financial statements included elsewhere in this Quarterly Report for recently adopted accounting pronouncements.
|
June 30, 2023.
2023.
Three-month periods ended | Nine-month periods ended | |||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | |||||||||||||
Customer A* | 25.7 | % | 10.5 | % | 21.3 | % | 13.8 | % | ||||||||
Top five largest customers | 56.1 | % | 41.4 | % | 40.6 | % | 37.6 | % |
|
Three-month periods ended | |||||||||||||||||||||||||||||||||||
June 30, 2023 | July 1, 2022 | ||||||||||||||||||||||||||||||||||
Customer A* | 5.3% | 10.5% | |||||||||||||||||||||||||||||||||
Top five largest customers | 35.0% | 38.6% |
39
The following table sets forth the total accounts receivable, net of allowance for doubtful accounts and contract assets, from our largest customers that exceeded 10% of such total, and the total accounts receivable, net of allowance and contract assets, from our top five customers by percentage during the periods included below:
As of | ||||||||
December 31, 2022 | March 31, 2022 | |||||||
(Unaudited) | ||||||||
Customer A* | 16.3 | % | 10.3 | % | ||||
Customer E | — | 13.0 | % | |||||
Customer F | 10.0 | % | — | |||||
Top five largest customers | 42.5 | % | 45.5 | % |
|
As of | ||||||||||||||
June 30, 2023 | March 31, 2023 | |||||||||||||
(Unaudited) | ||||||||||||||
Customer A* | 13.8% | 15.2% | ||||||||||||
Customer F | 8.2% | 14.0% | ||||||||||||
Top five largest customers | 37.5% | 43.5% |
ITEM 4.CONTROLS AND PROCEDURES a. |
|
Evaluation of Disclosure Controls and Procedures
40
Changeb.Changes in Internal Control Over Financial Reporting
|
|
There
|
On December 19, 2022, we issued 100 shares of common stock, par value $0.001 per share, to Yuma in exchange for $0.10, which shares were repurchased from Yuma and cancelled upon the filing our amended and restated certificate of incorporation and the completion of the Transactions. The issuance was exempt from registration under Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving any public offering.
41
Use of Proceeds
On February 13, 2023, the Company closed the IPO and issued 30,590,000 shares of its Class A common stock to the purchaser of the offering (including 3,990,000 shares of Class A common stock issued to the underwriters upon exercise in full of their option to purchase such additional shares), at a public offering price of $24.00 per share. The Company received net proceeds of $693.8 million, after deducting $40.4 million in underwriting discount, and before offering expenses. The estimated total expenses for the IPO were $8.3 million which were paid by Flex. The underwriters agreed to pay a portion of the expenses incurred in the IPO.
The Company used all of the net proceeds from the IPO as consideration for Yuma’s transfer to the Company of 30,590,000 LLC common units at a price per unit equal to $22.68, representing the initial public offering price per share of Class A common stock, less the underwriting discount. Yuma is an indirect, wholly-owned subsidiary of Flex Ltd. which owns through one or more subsidiaries 60.91% of the Company’s total outstanding shares of Class A common stock. J.P. Morgan Securities LLC, BofA Securities, Inc., Citigroup Global Markets Inc. and Barclays Capital Inc. acted as joint book-running managers in the IPO.
For additional details on the IPO, refer to the section “The Initial Public Offering” in Note 1, “Organization of Nextracker,” and to the section “The Transactions” in Note 10 “Subsequent events” in the notes to the unaudited condensed combined financial statements included elsewhere in this Quarterly Report.
Dividend Restrictions
Restrictions Relating to the 2023 Credit Agreement
The 2023 Credit Agreement includes covenants limiting our ability to pay dividends or make distributions on our capital stock if a default exists under the 2023 Credit Agreement or would be caused by giving effect to such dividend.
Restrictions Relating to the Separation Agreement
Pursuant to the Second Amended and Restated Separation Agreement by and among Flex, the Company, the LLC, and Flextronics International USA, Inc., the Company may not declare or pay any dividend on Nextracker securities without the prior written consent of Flex unless expressly authorized by the Company’s governing documents in effect as of February 1, 2022.
|
|
|
|
Incorporated by reference | ||||||||||||
Exhibit Number | Description | Filed Herewith | Form | File No. | Exhibit | Filing Date | ||||||
3.1 | Amended and Restated Certificate of Incorporation of Nextracker Inc. | x | ||||||||||
3.2 | Restated Bylaws of Nextracker Inc. | x | ||||||||||
10.1 | Form of Third Amended and Restated Limited Liability Company Agreement of Nextracker LLC. | S-1/A | 333-269238 | 10.1 | February 1, 2023 | |||||||
10.2 | Form of Exchange Agreement. | S-1 | 333-269238 | 10.2 | January 13, 2023 | |||||||
10.3 | Form of Tax Receivable Agreement. | S-1/A | 333-269238 | 10.3 | January 24, 2023 | |||||||
10.4 | Form of Letter Agreement. | S-1/A | 333-269238 | 10.4 | January 24, 2023 |
42
43
Incorporated by reference | ||||||||||||||||||||
Exhibit Number | Description | Filed Herewith | Form | File No. | Exhibit | Filing Date | ||||||||||||||
3.1 | Amended and Restated Certificate of Incorporation of Nextracker Inc. | 10-Q | 001-41617 | 3.1 | March 9, 2023 | |||||||||||||||
3.2 | Restated Bylaws of Nextracker Inc. | 10-Q | 001-41617 | 3.1 | March 9, 2023 | |||||||||||||||
10.1† | Form of Restricted Stock Unit Award Agreement under the 2022 Nextracker Inc. Equity Incentive Plan for time-based vesting awards (Executive) | x | ||||||||||||||||||
10.2† | Form of Restricted Stock Unit Award Agreement under the 2022 Nextracker Inc. Equity Incentive Plan (Director) | x | ||||||||||||||||||
10.3† | Form of Performance Stock Unit Award Agreement under the 2022 Nextracker Inc. Equity Incentive Plan (Executive) | x | ||||||||||||||||||
10.4† | Form of Stock Option Award Agreement under the 2022 Nextracker Inc. Equity Incentive Plan for time-based vesting awards (Executive) | x | ||||||||||||||||||
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | x | |||||||||||||||||||
31.2∗ | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | x | ||||||||||||||||||
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | x | |||||||||||||||||||
32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | x | ||||||||||||||||||
101 | The following financial statements from Nextracker Inc.’s Quarterly Report on Form 10-Q for the three months ended June 30, 2023, filed with the Securities and Exchange Commission on August [8] 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Unaudited Condensed Consolidated Statements of Redeemable Interest and Stockholders' Deficit / Parent Company Equity (Deficit), (iv) the Unaudited Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Unaudited Condensed Consolidated Financial Statements. | x | ||||||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | x |
| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
|
|
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: | August 9, 2023 | By: | ||||||||||||
| ||||||||||||||
| ||||||||||||||
| ||||||||||||||
(Principal Financial and Accounting Officer) |
45