Nextracker Inc

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our unaudited condensed consolidated financial statements with a narrative from the perspective of the Company’s management. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three-month period ended June 28, 2024 (this “Quarterly Report”) and our audited consolidated financial statements and the related notes and other information included in our Annual Report on Form 10-K for the year ended March 31, 2024, filed with the SEC on May 28, 2024, as amended by our Annual Report on Form 10-K/A, filed with the SEC on June 6, 2024. In addition to historical financial information, the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based upon current expectations that involve risks, uncertainties and assumptions. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. For example, the words “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements. Our actual results and timing of selected events may differ materially from those results anticipated and discussed in the forward-looking statements as a result of many factors. Factors that might cause such a discrepancy include, but are not limited to, those discussed under the sections below titled “Liquidity and Capital Resources” and “Risk Factors.” All forward-looking statements in this document are based on information available to us as of the date of this Quarterly Report and we assume no obligation to update any such forward-looking statements, except as required by law.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of our unaudited condensed consolidated financial statements with a narrative from the perspective of the Company’s management. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three-month period ended September 27, 2024 (this “Quarterly Report”) and our audited consolidated financial statements and the related notes and other information included in our Annual Report on Form 10-K for the year ended March 31, 2024, filed with the SEC on May 28, 2024, as amended by our Annual Report on Form 10-K/A, filed with the SEC on June 6, 2024. In addition to historical financial information, the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the

Previous wording

We are a leading provider of intelligent, integrated solar tracker and software solutions used in utility-scale and distributed generation solar projects around the world. Our products enable solar panels to follow the sun’s movement across the sky and optimize utility-scale power plant performance. With power plants operating in more than 40 countries worldwide, we offer solar tracker technologies that increase energy production while reducing costs for significant plant return on investment ("ROI"). We are the global market leader based on gigawatts ("GW") shipped for eight consecutive years.

Current wording

We are a leading provider of intelligent, integrated solar tracker, foundations, and software solutions used in utility-scale and ground-mounted distributed generation solar projects around the world. Our products enable solar PV power plants to follow the sun’s movement across the sky and optimize plant performance. With power plants operating in more than 40 countries worldwide, we offer solar tracker technologies that increase energy production while reducing costs for significant plant return on investment (“ROI”). We are the global market leader based on gigawatts (“GW”) shipped for eight consecutive years.

Previous wording

For the majority of our projects, our direct customer is the EPC. We also engage with project owners and developers and enter into master supply agreements that cover multiple projects. We are a qualified, preferred provider to some of the largest solar EPCs, project owners, and developers in the world. We had revenues of $0.7 billion for the three-month period ended June 28, 2024 and $2.5 billion in fiscal year 2024.

Current wording

For the majority of our projects, our direct customer is the EPC. We also engage with project owners and developers and enter into master supply agreements that cover multiple projects. We are a qualified, preferred provider to some of the largest solar EPCs, project owners and developers in the world. We had revenues of $1.4 billion for the six-month period ended September 27, 2024 and $2.5 billion for fiscal year 2024.

Previous wording

The acquisitions of Ojjo and Solar Pile international expand our foundation offering by accelerating our capability to offer customers a more complete integrated solution for solar trackers and foundations. The development of any utility-scale project is a long and complex process. Foundations are a key part of every utility-scale solar project installation. In addition, projects are often confronted with unique challenges related to land use considerations and exceptional variation in subsurface conditions. We believe there is additional value for our customers in combining tracker systems and foundations to form an integrated solution, particularly for difficult and unique soil conditions.

Current wording

The acquisitions of Ojjo and the foundations business of SPI (“Foundations acquisitions”) expand our foundations offering by accelerating our capability to offer customers a more complete integrated solution for solar trackers and foundations. The development of any utility-scale project is a long and complex process. Foundations are a key part of every utility-scale solar project installation. In addition, projects are often confronted with unique challenges related to land use considerations and exceptional variation in subsurface conditions. We believe there is additional value for our customers in combining tracker systems and foundations to form an integrated solution, particularly for difficult and unique soil conditions.

Previous wording

We have executed agreements with certain suppliers to ramp up our U.S. manufacturing footprint. These suppliers produce 45X Credit eligible parts, including torque tubes and structural fasteners, that will then be incorporated into a solar tracker. The 45X Credit was eligible for domestic parts manufactured after January 1, 2023. We have contractually agreed with these suppliers to share a portion of the economic value of the credit related to our purchases in the form of a vendor rebate. We account for these vendor rebate amounts as a reduction of the purchase price of the parts acquired from the vendor and therefore a reduction of inventory until the control of the part is transferred to the customer, at which point we recognize such amounts as a reduction of cost of sales on the consolidated statements of operations and comprehensive income. For certain immaterial vendor rebates related to purchases that occurred prior to the execution of the agreement, we capitalized the cumulative impact of the vendor rebates, the total of which is to be amortized over the life of the associated contract with the supplier, as a reduction of the prices of future purchases. During the fourth quarter of fiscal 2024, we determined the amount and collectability of the 45X vendor rebates we expect to receive in accordance with the vendor contracts and recognized a cumulative reduction to cost of sales of $121.4 million related to 45X Credit vendor rebates earned on production of eligible components shipped to projects starting on January 1, 2023 through March 31, 2024.

Current wording

We have executed agreements with certain suppliers to ramp up our U.S. manufacturing footprint. These suppliers produce 45X Credit eligible parts, including torque tubes and structural fasteners, that will then be incorporated into a solar tracker. The 45X Credit was eligible for domestic parts manufactured after January 1, 2023. We have contractually agreed with these suppliers to share a portion of the economic value of the credit related to our purchases in the form of a vendor rebate. We account for these vendor rebate amounts as a reduction of the purchase price of the parts acquired from the vendor and therefore a reduction of inventory until the control of the part is transferred to the customer, at which point we recognize such amounts as a reduction of cost of sales on the consolidated statements of operations and comprehensive income. During the fourth quarter of fiscal 2024, we determined the amount and collectability of the 45X Credit vendor rebates we expect to receive in accordance with the vendor contracts and recognized a cumulative reduction to cost of sales of $121.4 million related to 45X Credit vendor rebates earned on production of eligible components shipped to projects starting on January 1, 2023 through March 31, 2024.

Previous wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. 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 and expenses during the reporting period. Actual results could differ materially from those estimates. Estimates are used in accounting for, among other things: impairment of goodwill, impairment of long-lived assets, allowance for credit losses, provision for excess or obsolete inventories, valuation of deferred tax assets, warranty reserves, contingencies, operation-related accruals, fair values of awards granted under stock-based compensation plans, valuation of goodwill and fair values of assets obtained and liabilities assumed in business combinations. We periodically review estimates and assumptions, and the effects of our revisions are reflected in the period they occur. We believe that these estimates and assumptions provide a reasonable basis for the fair presentation of the unaudited condensed consolidated financial statements.

Current wording

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. 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 and expenses during the reporting period. Actual results could differ materially from those estimates. Estimates are used in accounting for, among other things: impairment of goodwill, impairment of long-lived assets, allowance for credit losses, provision for excess or obsolete inventories, valuation of deferred tax assets, warranty reserves, contingencies, operation-related accruals, fair values of awards granted under stock-based compensation plans and fair values of assets obtained and liabilities assumed in business combinations. We periodically review estimates and assumptions, and the effects of our revisions are reflected in the period they occur. We believe that these estimates and assumptions provide a reasonable basis for the fair presentation of the unaudited condensed consolidated financial statements.

Previous wording

Refer to the critical accounting policies and significant management estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, where we discussed our more significant policies and estimates used in the preparation of the unaudited condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since our Annual Report on Form 10-K for the fiscal year ended March 31, 2024, other than our accounting for business acquisitions as disclosed below.

Current wording

Refer to the critical accounting policies and significant management estimates under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (the “Form 10-K”), where we discussed our more significant policies and estimates used in the preparation of the unaudited condensed consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the Form 10-K, other than our accounting for business acquisitions as disclosed below.

Previous wording

From time to time, we pursue business acquisitions. The fair value of the net assets acquired and the results of the acquired businesses are included our unaudited condensed consolidated financial statements from the acquisition dates forward. We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and results of operations during the reporting period. Estimates are used in accounting for, among other things, the fair value of acquired net operating assets, property and equipment, intangible assets, useful lives of plant and equipment and amortizable lives for acquired intangible assets. Any excess of the purchase consideration over the fair value of the identified assets and liabilities acquired is recognized as goodwill.

Current wording

From time to time, we pursue business acquisitions. The fair value of the net assets acquired and the results of the acquired businesses are included in our unaudited condensed consolidated financial statements from the acquisition dates forward. We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and results of operations during the reporting period. Estimates are used in accounting for, among other things, the fair value of acquired net operating assets, property and equipment, intangible assets, contingent earnout, useful lives of plant and equipment and amortizable lives for acquired intangible assets. Any excess of the purchase consideration over the fair value of the identified assets and liabilities acquired is recognized as goodwill.

Previous wording

We present Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin as supplemental measures of our performance. We define Adjusted gross profit as gross profit plus stock-based compensation expense and intangible amortization. We define Adjusted operating income as operating income plus stock-based compensation expense and intangible amortization. We define Adjusted net income as net income (loss) plus stock-based compensation expense, intangible amortization, and certain nonrecurring legal costs and other discrete events as applicable, net of their tax effects. We define Adjusted EBITDA as net income (loss) plus (i) interest, net, (ii) provision for income taxes, (iii) depreciation expense, (iv) intangible amortization, (v) stock-based compensation expense, (vi) various non-recurring tax adjustments and (vii) certain nonrecurring legal costs and other discrete events as applicable. We define Adjusted gross margin as the percentage derived from Adjusted gross profit divided by revenue. We define Adjusted net income margin as the percentage derived from Adjusted net income divided by revenue. We define Adjusted EBITDA margin as the percentage derived from Adjusted EBITDA divided by revenue.

Current wording

We present Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted gross margin, Adjusted net income margin and Adjusted EBITDA margin as supplemental measures of our performance. We define Adjusted gross profit as gross profit plus stock-based compensation expense and intangible amortization. We define Adjusted operating income as operating income plus stock-based compensation expense, intangible amortization and non-recurring integration activities related to our current year acquisitions. We define Adjusted net income as net income (loss) plus stock-based compensation expense, intangible amortization, non-recurring integration activities related to acquisitions and certain nonrecurring legal costs and other discrete events as applicable, net of their tax effects. We define Adjusted EBITDA as net income (loss) plus (i) interest, net, (ii) provision for income taxes, (iii) depreciation expense, (iv) intangible amortization, (v) stock-based compensation expense, (vi) various non-recurring tax adjustments and (vii) certain nonrecurring legal costs, integration activities related to acquisitions and other discrete events as applicable. We define Adjusted gross margin as the percentage derived from Adjusted gross profit divided by revenue. We define Adjusted net income margin as the percentage derived from Adjusted net income divided by revenue. We define Adjusted EBITDA margin as the percentage derived from Adjusted EBITDA divided by revenue.

Previous wording

(1)Represents transaction costs incurred in relation to the Ojjo acquisition. We do not believe that the acquisition transaction costs are normal, recurring operating expenses indicative of our core operating performance, nor were these charges taken into account as factors in evaluating management’s performance when determining incentive compensation or to evaluate the effectiveness of our business strategies.

Current wording

(1)Represents transaction and integration costs incurred in relation to our Foundations acquisitions. We do not believe that the acquisition transaction costs are normal, recurring operating expenses indicative of our core operating performance, nor were these charges taken into account as factors in evaluating management’s performance when determining incentive compensation or to evaluate the effectiveness of our business strategies.

Previous wording

Revenue increased by $240.4 million, or 50%, for the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, driven by a 65% increase in gigawatts delivered, most notably in the U.S. driven by increased demand coupled with an acceleration of deliveries to meet customers updated project schedules. Revenue increased approximately $241.1 million, or 89%, in the U.S. during the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023 while remaining flat in the Rest of the World during the same period.

Current wording

Revenue increased by $62.2 million, or 11%, for the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023, resulting primarily from a 27% increase in gigawatts delivered, most notably in the U.S. driven by increased demand coupled with an acceleration of deliveries to meet customers’ updated project schedules, partially offset by continued declines in average selling prices resulting from declining costs per watt. Revenue increased approximately $79.6 million, or 21%, in the U.S. during the three-month period ended September 27, 2024 compared to the three-month period ended September 29, 2023 while decreasing $17.4 million, or 9%, in the Rest of the World during the same period, primarily due to a reduction in shipments in Latin America. Quarterly variability occurs based on specific project timing and may be impacted negatively by delays in construction caused by multiple factors including permitting, interconnection, weather and labor issues.

Previous wording

Selling, general and administrative expenses increased $26.6 million, or 78%, to $60.8 million for the three-month period ended June 28, 2024 from approximately $34.2 million for the three-month period ended June 30, 2023 while also increasing approximately 131 basis points from approximately 7% to over 8% as a percentage of revenue during the same period. The increase in selling, general and administrative expenses was primarily the result of an increase in stock-based compensation expense of $8.6 million incurred in conjunction with our 2022 equity incentive plan, the remaining costs of approximately $18.0 million related to our continued expansion of our sales organization in line with the growth in the global market, and due to the expansion of our supporting functions as a public company.

Current wording

Selling, general and administrative expenses increased $24.3 million, or 51%, to $72.1 million for the three-month period ended September 27, 2024 from approximately $47.9 million for the three-month period ended September 29, 2023 while also increasing approximately 300 basis points from approximately 8% to approximately 11% as a percentage of revenue during the same period. The increase in selling, general and administrative expenses was primarily the result of an increase in stock-based compensation expense of $10.4 million incurred in conjunction with our 2022 equity incentive plan, the remaining increase in costs of approximately $13.9 million related to our continued expansion of our sales organization in line with the growth in the global market and the expansion of our supporting functions also required to support our planned growth.

Previous wording

Research and development expenses increased $10.9 million, or 193%, to $16.5 million for the three-month period ended June 28, 2024 from approximately $5.6 million during the three-month period ended June 30, 2023 as a result of our commitment to product innovation and development including software enhancements through additional headcount, coupled with increase in stock-based compensation expense of $2.8 million.

Current wording

Research and development expenses increased $12.0 million, or 169%, to $19.2 million for the three-month period ended September 27, 2024 from approximately $7.1 million during the three-month period ended September 29, 2023 as a result of our commitment to product innovation and development, including software enhancements and additional headcount, coupled with an increase in stock-based compensation expense of $2.0 million.

Previous wording

Interest expense remained relatively flat at approximately $3.0 million for both three-month periods ended June 28, 2024 and June 30, 2023, respectively.

Current wording

Interest expense remained relatively flat at approximately $3.7 million for both three-month periods ended September 27, 2024 and September 29, 2023, respectively.

Previous wording

Cost of sales increased by $116.7 million, or 32%, during the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily driven by the increase in GWs delivered during the quarter. As noted in the overview, we now recognize a reduction in cost of sales for 45X credits earned on components manufactured in the U.S. During the first quarter of fiscal year 2025, we recognized approximately $47.0 million of reduction to cost of sales related to the 45X Credits earned on production of eligible components shipped during the period.

Current wording

Cost of sales increased by $103.2 million, or 13%, during the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily driven by the 44% increase in GW delivered noted above, partially offset by the impact from the 45X Credit. As noted in the overview, we now recognize a reduction in cost of sales for the 45X Credit earned on components manufactured in the U.S. During the first half of fiscal year 2025, we recognized approximately $98.0 million of reduction to cost of sales related to the 45X Credit earned on production of eligible components shipped during the period. Additional incremental cost savings, primarily related to materials we procured from our vendors, were achieved through our expanded global supply chain that allows us to source local materials and provide better lead times for customers. Freight and logistics costs remained flat as a percentage of revenue during the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023.

Previous wording

Gross profit increased by $123.7 million, or 109%, during the three-month period ended June 28, 2024 compared to the three-month period ended June 30, 2023, primarily resulting from the U.S. revenue growth noted above and the impact from the 45X tax credits recognized in the quarter. In addition, throughout fiscal 2024 we implemented structural enhancements to our overall margin structure that include maintaining pricing discipline and expanding our global supply chain that allows sourcing local material which provides flexibility servicing our customers and cost savings, which as a percentage of revenue increased gross margin by about approximately 700 basis points during the three-month period ended June 28, 2024, compared to the three-month period ended June 30, 2023. The increase in gross profit was partially offset by competitive pressures that have lowered prices and increases in freight and logistics costs, which as a percentage of cost of sales, increased by about 400 basis points during the same period.

Current wording

Gross profit increased by $199.4 million, or 76%, during the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023, primarily resulting from the U.S. revenue growth noted above and the impact from the 45X Credit recognized in the first half of fiscal year 2025. In addition, throughout fiscal year 2024 and into fiscal year 2025, we continue to implement enhancements to our overall margin structure that include maintaining pricing discipline, expanding our global supply chain and other innovations that drive cost savings. As a percentage of revenue, these efforts increased gross margins by approximately 200 basis points during the six-month period ended September 27, 2024 compared to the six-month period ended September 29, 2023 and were net of the impact from competitive pressures that have lowered prices.

Previous wording

We accrue and pay income taxes according to the laws and regulations of each jurisdiction in which we operate. Most of our revenue and profits are generated in the United States with a statutory income tax rate of approximately 21% for the three-month periods ended June 28, 2024 and June 30, 2023. For the three-month periods ended June 28, 2024 and June 30, 2023, we recorded total income tax expense of $27.2 million and $9.1 million, respectively, which reflected consolidated effective income tax rates of 17.9% and 12.5%, respectively. The increase in tax expense as well as effective tax rate from the three-month period ended June 30, 2023 to the three-month period ended June 28, 2024 is driven by an increase in income before income taxes for the corresponding period and an increase in ownership of Nextracker LLC.

Current wording

We accrue and pay income taxes according to the laws and regulations of each jurisdiction in which we operate. Most of our revenue and profits are generated in the United States with a statutory income tax rate of approximately 21% for the six-month periods ended September 27, 2024 and September 29, 2023. For the six-month periods ended September 27, 2024 and September 29, 2023, we recorded total income tax expense of $47.1 million and $13.1 million, respectively, which reflected consolidated effective income tax rates of 16% and 8%, respectively. The increase in tax expense as well as effective tax rate from the six-month period ended September 29, 2023 to the six-month period ended September 27, 2024 is driven by an increase in income before income taxes for the corresponding period and an increase in tax rate due to the separation from Flex as further described in Note 6 in the notes to the consolidated financial statements in the Form 10-K.

Previous wording

Borrowings in U.S. dollars under the Amended 2023 Credit Agreement bear interest at a rate based on either (a) a term secured overnight financing rate (“SOFR”) based formula (including a credit spread adjustment of 10 basis points) plus a margin of 162.5 basis points to 200 basis points, depending on the LLC’s total net leverage ratio, or (b) a base rate formula plus a margin of 62.5 basis points to 100 basis points, depending on the LLC’s total net leverage ratio. Borrowings under the RCF in euros bear interest based on the adjusted EURIBOR rate plus a margin of 162.5 basis points to 200 basis points, depending on the LLC’s total net leverage ratio. The LLC is required to pay a quarterly commitment fee on the undrawn portion of the RCF commitments of 20 basis points to 35 basis points, depending on the LLC’s total net leverage ratio. The interest rate for the Term Loan was 6.92% (SOFR rate of 5.20% plus a margin of 1.72%) as of June 28, 2024.

Current wording

Borrowings in U.S. dollars under the Amended 2023 Credit Agreement bear interest at a rate based on either (a) a term secured overnight financing rate (“SOFR”) based formula (including a credit spread adjustment of 10 basis points) plus a margin of 162.5 basis points to 200 basis points, depending on the LLC’s total net leverage ratio, or (b) a base rate formula plus a margin of 62.5 basis points to 100 basis points, depending on the LLC’s total net leverage ratio. Borrowings under the RCF in euros bear interest based on the adjusted EURIBOR rate plus a margin of 162.5 basis points to 200 basis points, depending on the LLC’s total net leverage ratio. The LLC is required to pay a quarterly commitment fee on the undrawn portion of the RCF commitments of 20 basis points to 35 basis points, depending on the LLC’s total net leverage ratio. The interest rate for the Term Loan was 6.53% (SOFR rate of 4.80% plus a margin of 1.73%) as of September 27, 2024.

Previous wording

Affiliates") (or certain permitted transferees thereof) of 85% of the tax benefits, if any, that we are deemed to realize under certain circumstances, as more fully described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2024. There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, the payments under the Tax Receivable Agreement exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement or distributions to us by the LLC are not sufficient to permit us to make payments under the Tax Receivable Agreement after we have paid taxes. Prior to the separation from Flex, Yuma and Yuma Sub assigned their respective rights under the Tax Receivable Agreement to an entity that remains an affiliate of Flex.

Current wording

In connection with the IPO, on February 13, 2023, Nextracker Inc. also entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) that provided for the payment by us to Flex, TPG Rise and the following affiliates of TPG Rise: TPG Rise Climate Flash Cl BDH, L.P., TPG Rise Climate BDH, L.P. and The Rise Fund II BDH, L.P. (collectively, the “TPG Affiliates”) (or certain permitted transferees thereof) of 85% of the tax benefits, if any, that we are deemed to realize under certain circumstances, as more fully described in the Form 10-K. There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, the payments under the Tax Receivable Agreement exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement or distributions to us by the LLC are not sufficient to permit us to make payments under the Tax Receivable Agreement after we have paid taxes. Prior to the separation from Flex, Yuma and Yuma Sub assigned their respective rights under the Tax Receivable Agreement to an entity that remains an affiliate of Flex.

Previous wording

Net cash provided by operating activities was $120.8 million during the three-month period ended June 28, 2024. Total cash provided during the period was driven by net income of $124.8 million adjusted for non-cash charges of approximately $4.1 million primarily related to stock-based compensation expense, depreciation and amortization, provision for credit losses, offset by deferred income taxes associated with our tax receivable agreement. Cash from net income was further decreased by the overall increase in our net operating assets and liabilities, primarily our net working capital accounts, resulting in an outflow of approximately $8.0 million. Accounts payable decreased $71.0 million, partially associated with timing and a decrease in payment cycle. Other liabilities decreased $32.1 million primarily due to decrease in accrued expense. Partially offsetting the cash outflows were decreases in inventory of $40.3 million as we continue to transfer production to the U.S. and shrink lead times, decreases in account receivable and contract assets in the aggregate of $16.7 million due to the timing of billings and deliveries, increases in deferred revenue of $10.2 million driven primarily by increased deposits on higher bookings during the quarter, and increases in other assets of $27.9 million primarily driven by recognition of the 45X credits receivable from our vendors.

Current wording

Net cash provided by operating activities was $274.6 million during the six-month period ended September 27, 2024. Total cash provided during the period was driven by net income of $242.1 million adjusted for non-cash charges of approximately $57.2 million primarily related to stock-based compensation expense, depreciation and amortization and provision for credit losses, partially offset by deferred income taxes associated with the Tax Receivable Agreement. Cash from net income was further decreased by the overall increase in our net operating assets and liabilities, primarily our net working capital accounts, resulting in an outflow of approximately $24.6 million. Accounts payable decreased $53.3 million, partially associated with timing and a decrease in payment cycle, other liabilities decreased $67.2 million primarily due to decrease in accrued expense, and other assets increased $16.1 million driven by advance payments to suppliers. Partially offsetting the cash outflows were decreases in inventory of $27.2 million as we continue to transfer production to the U.S. and shrink lead times, decreases in account receivable, contract assets in the aggregate of $61.6 million due to a reduction in revenue, the timing of billings and deliveries, and increases in deferred revenue of $23.3 million driven primarily by increased deposits on higher bookings during the period.

Previous wording

Net cash used in investing activities was approximately $113.1 million and directly attributable to the $110.2 million payment for the Ojjo acquisition net of cash acquired, coupled with the purchase of property and equipment.

Current wording

Net cash used in investing activities was approximately $159.6 million and directly attributable to the $144.7 million payment for the Foundations acquisitions net of cash acquired, coupled with the purchase of property and equipment.

Previous wording

Net cash used in financing activities was $10.0 million primarily resulting from a $5.3 million tax distributions to our non-controlling interest holders pursuant to the LLC Agreement, and a $3.7 million payment of the RCF issuance costs.

Current wording

Net cash used in financing activities was $27.2 million primarily resulting from a $15.5 million payment to Flex, TPG and the TPG Affiliates pursuant to the Tax Receivable Agreement, $6.1 million of tax distributions to our non-controlling interest holders pursuant to the LLC Agreement and a $3.7 million payment of the RCF issuance costs.

Previous wording

We had a total liquidity of over $1.4 billion as of June 28, 2024, primarily related to unutilized amounts under the RCF net of cumulative letters of credit issued in conjunction with our customer contracts, and our cash and cash equivalents balance as of June 28, 2024.

Current wording

We had a total liquidity of over $1.5 billion as of September 27, 2024, primarily related to unutilized amounts under the RCF net of cumulative letters of credit issued in conjunction with our customer contracts, and our cash and cash equivalents balance as of September 27, 2024.

Previous wording

As discussed in the "Credit Facilities" section above, we entered into an amendment to the 2023 Credit Agreement, which, among other things, increased our revolving commitment.

Current wording

As discussed in the “Credit Facilities” section above, in June 2024, we entered into an amendment to the 2023 Credit Agreement, which, among other things, increased our revolving commitment.

Previous wording

Information regarding our debt obligation, operating lease commitments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024.

Current wording

Information regarding our debt obligation, operating lease commitments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K.