So I mean that is tremendous 300 gigawatts of new power needed in five years in the United States. With the EIA predicting most of that’s going to come from solar. That’s a big deal. Thank you, Phil.
Philip Shen: Right. Thanks, Dan, just — Yeah. Okay. Thanks.
Operator: Our next question comes from Kashy Harrison with Piper Sandler. Please proceed.
Kashy Harrison: Good afternoon. Great quarter and thanks for taking the questions. So my first one is just on the margin. 30%, it’s a pretty big number and I was wondering if you could just provide more specifics precisely on how you got to 30% this quarter. And then, Dave, I know you mentioned mid-20s is more of a sustainable level but is there a scenario in which Nextracker is generating 30% gross margins, ex credits, while simultaneously generating a lower LCOE than some of your peers? And I have a follow-up.
David Bennett: Yeah. Thanks for the question, Kashy. Obviously, is there a scenario where we just printed it. So I can say that there isn’t a scenario. The higher gross margin for the quarter driven by some level of leverage, we were at a record revenue was at $710. We benefited from a regional mix that we already alluded to, with a high U.S. concentration that generally drives a higher margin profile. And finding better software attach rate. So that’s going to move our margin profile up as well. The year-over-year increase we spoke about before but in terms of the sequential increase, it’s just execution over and over, the biggest factor in my opinion is pricing discipline and cost discipline. So some of the innovations that we talked to and everyone aligns to the new product introductions that’s real, but it’s also about innovating our supply chain, our cost downs in enabling us to maintain that higher profitability.
But to close, you really should look at it on a greater than one quarter window, if you look at the full year to date. Actually, we are at 27% gross margin and 20% EBITDA which is in that range of what we see as sustainable.
Kashy Harrison: Thank you. [Multiple Speakers]
Daniel Shugar: My apologies. We need to go to next question.
David Bennett: Thank you, Kashy.
Kashy Harrison: Thank you.
Operator: Our next question comes from Christine Cho with Barclays. Please proceed.
Christine Cho: Good evening. Thank you for taking my question. Great quarter. If I could just go back to your comments on the 45X for fiscal ’25, you mentioned that you expect it to be meaningful. And the objective is to reduce costs. So can you just talk through how you expect that to impact margins, years back expected in equal offset or do you anticipate it to be more and you would keep it has higher margin or do you adjust for a demand (ph)?
Daniel Shugar: Hi, Christine. This is Shugar. Thanks for your questions. Look, the 45X was about rapidly spinning off the U.S. supply chain to deal with all the disruptions in the pandemic and create a bunch of jobs here. That was the premise of the 45X, be it in tracker or solar panels. And we have accomplished that. Products are competitive here. With things that are made overseas, with a 45X, and we’re delivering on the U.S. product with steel sourced domestically was higher. Quality steel, it’s also cleaner. Okay. With respect to our position on the 45X, Nextracker has an extremely diverse domestic supply chain across multiple manufacturing partners with a huge amount of capacity we’ve announced over 25 gigawatts. With comparison we’ve operationalize that.
Which one would then have to presume or in a very strong position with respect to supporting but also negotiating position with respect to suppliers. So we’re going to leave it at that. And we’ll be speaking to our FY ’25 guidance for the next quarter.
Howard Wenger: Thank you for your question.
Christine Cho: Okay. Great.
Operator: Our next question comes from Praneeth Satish with Wells Fargo. Please proceed.
Praneeth Satish: Thanks. I guess with the separation from Flex behind you, I’m just interested in your perspective on M&A, whether you’d be more or less inclined to pursue acquisitions now and then I guess just broadly what gaps do you see in your portfolio and what businesses do you think would be complementary and synergistic?
David Bennett: Thanks, Praneeth. We don’t see gaps in our offering. We could expand our offering. We will be very discerning as we were when we did an acquisition of a machine learning company, seven or eight years ago that helped us accelerate our TrueCapture technology. So we just completed the Flex spin off and we are open to a variety of options, we’re evaluating things but we’re going to be — have a lot of discipline about how we proceed on that. Thank you.
Operator: Our final question comes from Steve Fleishman with Wolfe Street Research. Please proceed.
Steve Fleishman: Great. Excuse me. Thank you. Two quick questions. First, the strong U.S. growth. Any sense on how much that is market growth versus you taking market share? And then just would like more color on your thoughts on the commentary on the trade issues on panels and a lot of that seems backward looking, but what’s the risk might be to forward-looking? Thank you.
David Bennett: We focus on our customers in winning and partnering with them. We’re doing that with our EPC customers, we’re doing that with owners developers directly and power plant owners. And we have a lot of capacity for growth. And we don’t really pay attention to whether we’re taking share or we’re just — we’re just focused on delivering value for our customers and improving our products, investing in innovation. And doing as much solar as we possibly can. We’ve dedicated our whole careers to solar mainstream solar power. Dan and I have worked in the solar power industry for more than 35 years each. And that’s our focus. What we do find, when we do that, but when we have that focus and when the company focuses on value, we do win and it seems like we’ve win disproportionately.
