Nextracker Inc

1. Description of business and organization of Nextracker Inc.

Nextracker Inc. and its subsidiaries (“Nextracker,” “we,” the “Company”) is a leading provider of integrated solar trackers, foundations, and software solutions used in ground-mounted utility-scale and distributed generation solar projects around the world. Nextracker's product portfolio enables solar photovoltaic power plants to follow the sun’s movement across the sky and optimize plant performance. Nextracker has operations in the United States, Brazil, Argentina, Peru, Mexico, Spain and other countries in Europe, India, Australia, the Middle East and Africa.

2. Summary of accounting policies

Variable interest entities (“VIE”) and consolidation

The Company’s sole material asset is its member’s interest in Nextracker LLC. In accordance with the Nextracker LLC Operating Agreement, the Company was named the managing member of Nextracker LLC. As a result, the Company has all management powers over the business and affairs of Nextracker LLC and to conduct, direct and exercise full control over the activities of Nextracker LLC. The Company has concluded that Nextracker LLC is a VIE. Due to the Company’s power to control the activities most directly affecting the results of Nextracker LLC, the Company is considered the primary beneficiary of the VIE. Accordingly, the Company consolidates the financial results of Nextracker LLC and its subsidiaries. On January 2, 2024, Flex Ltd. (“Flex”) closed the spin-off of all its remaining interests in Nextracker LLC common units held by Yuma, Inc., a Delaware corporation (“Yuma”), Yuma Subsidiary, Inc., a Delaware corporation and wholly-owned subsidiary of Yuma (“Yuma Sub”), to Flex shareholders. As a result of the spin-off, Flex no longer directly or indirectly holds a financial interest in the Company. Nextracker LLC common units held by Yuma, Yuma Sub, TPG Rise Flash, L.P. (“TPG Rise”) and the following affiliates of TPG Inc. (“TPG”): 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”) were presented on the consolidated balance sheets as temporary equity under the caption “Redeemable non-controlling interests,” up until January 2, 2024 as redemption was outside of the control of the Company. Post January 2, 2024, redemption is no longer outside the control of the Company subsequent to the spin-off from Flex and, therefore, the non-controlling interests owned by the TPG Affiliates are now presented on the consolidated balance sheets as permanent equity under the caption “non-controlling interests.”

Basis of presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC for reporting financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements, and should be read in conjunction with the Company’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2024, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (the “Form 10-K”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary to present the Company’s financial statements fairly have been included. Operating results for the three and nine-month periods ended December 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2025 or any future period. The condensed consolidated balance sheet as of March 31, 2024 was derived from the Company’s audited consolidated financial statements included in the Form 10-K. All intercompany transactions and accounts within Nextracker have been eliminated.

The first quarters for fiscal years 2025 and 2024 ended on June 28, 2024 (89 days) and June 30, 2023 (91 days), respectively. The second quarters for fiscal years 2025 and 2024 ended on September 27, 2024 (91 days) and September 29, 2023 (91 days), respectively. The third quarters for fiscal years 2025 and 2024 ended on December 31 of each year, which are comprised of 95 days and 93 days, respectively.

Translation of foreign currencies

The reporting currency of the Company is the United States dollar (“USD”). The functional currency of the Company and its subsidiaries is primarily the USD. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other (income) expense, net in the accompanying condensed consolidated statements of operations and comprehensive income. The Company recognized foreign currency exchange gains of $3.6 million during the three-month period ended December 31, 2024 driven by favorable exchange rate fluctuations in Europe. Additionally, during the nine-month period ended December 31, 2024, the Company recognized foreign currency exchange losses of $3.8 million due to unfavorable exchange rate fluctuations primarily in Latin America. The Company recognized foreign currency exchange gains of $5.2 million and $2.6 million during the three and nine-month periods ended December 31, 2023, respectively, due to favorable exchange rate fluctuations in certain currencies.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires management 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. Due to geopolitical conflicts (including the Russian invasion of Ukraine and the Israel-Hamas conflict), there has been and will continue to be uncertainty and disruption in the global economy and financial markets. The Company has made estimates and assumptions taking into consideration certain possible impacts due to the Russian invasion of Ukraine and the Israel-Hamas conflict. These estimates may change as new events occur and additional information is obtained. Actual results may differ from previously estimated amounts, and such differences may be material to the condensed consolidated financial statements. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they occur. Management believes that these estimates and assumptions provide a reasonable basis for the fair presentation of the condensed consolidated financial statements.

Accounting for business acquisitions

From time to time, the Company pursues business acquisitions. The fair value of the net assets acquired and the results of the acquired businesses are included in the Company’s condensed consolidated financial statements from the acquisition dates forward. The Company is 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.

The Company estimates the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information available at that time. The valuation of these tangible and identifiable intangible assets and liabilities is subject to further review from management and may change materially between the preliminary allocation and end of the purchase price allocation period. Any changes in these estimates may have a material effect on the Company’s condensed consolidated financial position and results of operations.

Product warranty

Nextracker offers an assurance type warranty for its products against defects in design, materials and workmanship for a period ranging from five toten years, depending on the component. For these assurance type warranties, a provision for estimated future costs related to warranty expense is recorded when they are probable and reasonably estimable, which is typically when products are delivered. The estimated warranty liability is based on our warranty model, which relies on historical warranty claim information and assumptions based on the nature, frequency and average cost of claims for each product line by project. When little or no experience exists, the estimate is based on comparable product lines and/or estimated potential failure rates. These estimates are based on data from Nextracker specific projects. Estimates related to the outstanding warranty liability are re-evaluated on an ongoing basis using best-available information and revisions are made as necessary.

The following table summarizes the activity related to the estimated accrued warranty reserve for the nine-month periods ended December 31, 2024 and December 31, 2023:

Inventories

Inventories are stated at the lower of cost, determined on a weighted average basis, or net realizable value. Nextracker’s inventory primarily consists of finished goods to be used and to be sold to customers, including components procured to complete the tracker system projects.

Other current assets

Other current assets includes short-term deposits and advances of $69.7 million and $104.7 million as of December 31, 2024 and March 31, 2024, respectively, primarily related to advance payments to certain vendors for procurement of inventory. In addition, it includes $209.9 million and $125.4 million as of December 31, 2024 and March 31, 2024, respectively, in vendor rebates receivable related to the 45X Credit as described under the section “Inflation Reduction Act of 2022 Vendor Rebates” of Note 2 in the notes to the consolidated financial statements in the Form 10-K.

Deferred tax assets

Deferred tax assets of $472.2 million and $438.3 million as of December 31, 2024 and March 31, 2024, respectively, are primarily related to the Company’s investment in Nextracker LLC as described in Note 13 in the notes to the consolidated financial statements included in the Form 10-K and release of valuation allowance related to the foundations business acquisitions described in Note 11.

Accrued expenses

Accrued expenses include accruals primarily for freight and tariffs of $32.1 million and $43.2 million as of December 31, 2024 and March 31, 2024, respectively. In addition, it includes $40.8 million and $39.2 million of accrued payroll as of December 31, 2024 and March 31, 2024, respectively.

TRA liability

TRA liability related to the amount expected to be paid to Flex, TPG and the TPG Affiliates pursuant to the Tax Receivable Agreement, were $394.6 million and $391.6 million, as of December 31, 2024 and March 31, 2024, respectively, of which $19.6 million andzero, respectively, were included in other current liabilities on the condensed consolidated balance sheets. During the nine-month period ended December 31, 2024, a payment of $15.5 million was made to Flex, TPG and the TPG Affiliates, which is presented as financing activity on the condensed consolidated statement of cash flows.

Other liabilities

Other liabilities primarily consist of the long-term portion of standard product warranty liabilities of $6.4 million and $6.4 million, and the long-term portion of deferred revenue of $94.8 million and $69.3 million as of December 31, 2024 and March 31, 2024, respectively.

Recently issued accounting pronouncement

Accounting Standards Update 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures: In November 2024, the Financial Accounting Standards Board issued a new accounting standard requiring a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The annual reporting requirements of the new standard are effective for the Company beginning in fiscal year 2028 and interim reporting requirements are effective beginning in the first quarter of fiscal year 2029, with early adoption permitted. The Company is still in the process of evaluating the impact of the new standard on its consolidated financial statements and expects to adopt the new guidance in its fiscal year 2028 annual report.

Accounting Standards Update 2023-07, Segment Reporting—Improvement to Reportable Segment Disclosures: In November 2023, the Financial Accounting Standards Board issued a new accounting standard which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. The annual reporting requirements of the new standard are effective for the Company beginning in fiscal year 2025 and interim reporting requirements beginning in the first quarter of fiscal year 2026, with early adoption permitted. The Company expects to adopt the new guidance in the fourth quarter of fiscal year 2025 with an immaterial impact on its consolidated financial statements.

3. Revenue

Based on Accounting Standards Codification (“ASC”) 606 provisions, the Company disaggregates its revenue from contracts with customers by those sales recorded over time and sales recorded at a point in time. The following table presents Nextracker’s revenue disaggregated based on timing of transfer-point in time and over time for the three and nine-month periods ended December 31, 2024 and December 31, 2023:

Contract balances

The timing of revenue recognition, billings and cash collections results in contract assets and contract liabilities (deferred revenue) on the condensed consolidated balance sheets. Nextracker’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project. When billing occurs subsequent to revenue recognition, a contract asset results. Contract assets of $279.0 million and $397.1 million as of December 31, 2024 and March 31, 2024, respectively, are presented in the condensed consolidated balance sheets, of which $140.6 million and $141.4 million, respectively, will be invoiced at the end of the projects as they represent funds withheld until the products are installed by a third party, arranged by the customer, and the project is declared operational. The remaining unbilled receivables will be invoiced throughout the project based on a set billing schedule such as milestones reached or completed rows delivered. Contract assets decreased $118.1 million from March 31, 2024 to December 31, 2024 due to fluctuations in the timing and volume of billings for the Company’s revenue recognized over time.

During the nine-month periods ended December 31, 2024 and December 31, 2023, Nextracker converted $182.7 million and $141.8 million of deferred revenue to revenue, respectively, which represented 62% and 67%, respectively, of the beginning period balance of deferred revenue.

Remaining performance obligations

As of December 31, 2024, Nextracker had $391.8 million of the transaction price allocated to the remaining performance obligations. The Company expects to recognize revenue on approximately 76% of these performance obligations in the next 12 months. The remaining long-term unperformed obligation primarily relates to extended warranty and deposits collected in advance on certain tracker projects.

4. Goodwill and intangible assets

Goodwill

During the nine-month period ended December 31, 2024, the additions to the Company’s goodwill is driven by its acquisitions of Ojjo, Inc. (“Ojjo”) and the solar foundations business held by Solar Pile International (“SPI”) as further described in Note 11.

The following table summarizes the activity in the Company’s goodwill during the nine-month period ended December 31, 2024 (in thousands):

Other intangible assets

During the nine-month period ended December 31, 2024, the total gross value of other intangible assets increased by $49.7 million as a result of the Company’s estimated value of other intangible assets from its business acquisitions, which contributed an additional $31.7 million of developed technology and $18.0 million of customer relationships. Refer to Note 11 for additional information.

The components of identifiable intangible assets are as follows:

The gross carrying amount of other intangible assets are removed when fully amortized. The Company amortized $3.7 million of intangible assets during the nine-month period ended December 31, 2024, of which $1.9 million is included in cost of sales and $1.8 million is included in selling, general and administrative expenses, on the condensed consolidated statements of operations and comprehensive income. Animmaterial amount of intangible assets was amortized during the nine-month period ended December 31, 2023.

The estimated future annual amortization expense for other intangible assets is as follows:

(1)Represents estimated amortization for the remaining fiscal three-month period ending March 31, 2025.

5. Stock-based compensation

The Company adopted the First Amended and Restated 2022 Nextracker LLC Equity Incentive Plan in April 2022 (the “LLC Plan”), which provides for the issuance of options, unit appreciation rights, performance units, performance incentive units, restricted incentive units and other unit-based awards to employees, directors and consultants of the Company. Additionally, in connection with the Company’s initial public offering in February 2023 (the “IPO”), the Company approved the Second Amended and Restated 2022 Nextracker Inc. Equity Incentive Plan (together with the LLC Plan, the “2022 Plan”) to reflect, among other things, that the underlying equity interests with respect to awards issued under the LLC Plan shall, in lieu of common units of Nextracker LLC, relate to Class A common stock of Nextracker for periods from and after the closing of the IPO.

The following table summarizes the Company’s stock-based compensation expense:

During the nine-month period ended December 31, 2024, the Company granted 1.7 million time-based unvested restricted share units (“RSU”) awards to certain of its employees under the 2022 Plan. The vesting for these unvested RSU awards is contingent upon time-based vesting with continued service over athree-year period from the grant date, with a portion of the awards vesting at the end of each year. The weighted average fair value per share of the RSUs granted during the period was estimated to be $41.39 per award.

In addition, the Company also granted 0.4 million performance-based vesting (“PSU”) awards whereby vesting is generally contingent upon (i) time-based vesting with continued service through March 31, 2027, and (ii) the achievement of certain metrics specific to the Company, which could result in a range of 0-300% of such PSUs ultimately vesting. The weighted average fair value per share of the PSUs granted during the period was estimated to be $58.30 per award. The fair value of these PSU awards granted during the nine-month period ended December 31, 2024 was determined using Monte-Carlo simulation models, which is a probabilistic approach for calculating the fair value of the awards. Also,0.3 million PSU awards related to the third tranche of performance-based awards granted in fiscal year 2023 met the criteria for a grant date under ASC 718 as the performance metrics for these awards were determined during the nine-month period ended December 31, 2024. The weighted average fair value per share of these PSU awards granted in fiscal year 2023 was estimated to be $111.56 per award, determined using a Monte-Carlo simulation model.

Further, the Company granted 0.3 million option awards that will cliff-vest on the third anniversary of the grant date, subject generally to continuous service through such vesting date. The exercise price for the shares underlying such option is equal to $47.05 per award, which corresponds to the Company’s closing price per share as of the grant date of the awards. The fair value of these option awards granted during the nine-month period ended December 31, 2024 was estimated to be $29.05 based on a Black-Scholes option pricing model.

Additionally, during the nine-month period ended December 31, 2024, an immaterial number of awards were forfeited due to employee terminations.

The total unrecognized compensation expense related to unvested awards under the 2022 Plan as of December 31, 2024 was approximately $134.2 million, which is expected to be recognized over a weighted-average period of approximately 1.6 years.

6. Earnings per share

Basic earnings per share excludes dilution and is computed by dividing net income attributable to Nextracker Inc. common stockholders by the weighted-average number of shares of Class A common stock outstanding during the applicable periods.

Diluted earnings per share reflects the potential dilution from stock-based compensation awards. The potential dilution from awards was computed using the treasury stock method based on the average fair market value of the Company’s common stock for the period. Additionally, the potential dilution impact of Class B common stock convertible into Class A common stock was also considered in the calculation.

The computation of earnings per share and weighted average shares outstanding of the Company’s common stock for the period is presented below:

(1)During the three-month periods ended December 31, 2024 and December 31, 2023, approximately 0.8 million and 0.5 million Options awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

(2)During the three-month periods ended December 31, 2024 and December 31, 2023, approximately 0.8 million andzero RSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

(3)During the three-month periods ended December 31, 2024 and December 31, 2023, approximately 0.7 million and 0.4 million PSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

(1)During the nine-month periods ended December 31, 2024 and December 31, 2023, approximately 0.8 million and 0.5 million Options awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

(2)During the nine-month periods ended December 31, 2024 and December 31, 2023, approximately 0.6 million andzero RSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

(3)During the nine-month periods ended December 31, 2024 and December 31, 2023, approximately 0.7 million and 0.4 million PSU awards, respectively, were excluded from the computation of diluted earnings per share due to their anti-dilutive impact on the weighted-average ordinary share equivalents.

7. Bank borrowings and long-term debt

On June 21, 2024, the Company and Nextracker LLC (the “LLC”), as the borrower, entered into an amendment (the “Amendment”) to the credit agreement, dated as of February 13, 2023 (“2023 Credit Agreement” and, together with the Amendment, the “Amended 2023 Credit Agreement”). The Amendment amended the 2023 Credit Agreement to, among other things: (i) increase the aggregate revolving commitments from $500.0 million to $1.0 billion; (ii) provide for a $1.0 billion secured debt basket for surety bonds; (iii) increase the letter of credit capacity from $300.0 million to $500.0 million; and (iv) update various covenants, baskets and thresholds to provide more financing capacity and operational flexibility to the Company and the LLC. Subject to the satisfaction of certain conditions, the LLC may be permitted to request incremental term loan facilities under the credit facility from one or more lenders. As a result of the Amendment, the Company capitalized $6.0 million of issuance cost for the revolver included in other assets in the condensed consolidated balance sheets. As of December 31, 2024, no amounts were drawn under the revolving facility, and the Company was in compliance with all applicable covenants under its Amended 2023 Credit Agreement, the term loan and the revolving credit facility.

8. Commitments and contingencies

Litigation and other legal matters

Nextracker has accrued for a loss contingency to the extent it believes that losses are probable and estimable. The amounts accrued are not material, but it is reasonably possible that actual losses could be in excess of Nextracker’s accrual. Any related excess loss could have a material adverse effect on Nextracker’s results of operations or cash flows for a particular period or on Nextracker’s financial condition.

On February 6, 2024, pursuant to the Third Amended and Restated Limited Liability Company Agreement of Nextracker LLC (the “LLC Agreement”), Nextracker LLC made pro rata tax distributions in an aggregate amount of $94.3 million to the common members of the LLC, including an aggregate of $48.5 million to Yuma Acquisition Sub LLC and Yuma Subsidiary, Inc. As of the date of the tax distribution, Yuma Acquisition Sub LLC and Yuma Subsidiary Inc. were wholly-owned subsidiaries of Nextracker Inc. On February 1, 2024, Flex sent a dispute notice to Nextracker Inc. asserting that Flex is entitled to the distribution that was subsequently made to Yuma Acquisition Sub LLC and Yuma Subsidiary, Inc. and demanding payment of that amount to Flex. It is too early to determine the likelihood that the Company will be required to make any such payments to Flex in the future.

On December 27, 2024, a class action lawsuit alleging violations of federal securities laws was filed by a purported stockholder in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of the Company’s officers, alleging that defendants made false and misleading statements about our business, financial results and prospects. The plaintiff seeks unspecified monetary damages and other relief on behalf of the purported class.

On January 23, 2025, a derivative action was filed against the Company’s directors and certain of the Company’s officers in the U.S. District Court for the Northern District of California based on factual allegations similar to those underlying the securities class action lawsuit. The action asserts claims for, among other things, violations of the federal securities laws and breaches of fiduciary duties, and seeks damages and restitution to be paid to the Company by the individual defendants, governance changes and attorney’s fees and costs.

Based on the preliminary nature of these proceedings, the Company is unable to reasonably estimate a loss or range of loss, if any, arising from the above-referenced matters.

Antidumping and Countervailing Duties

On August 18, 2023, the U.S. Department of Commerce issued final affirmative determinations of circumvention with respect to certain crystalline solar photovoltaic (“CSPV”) cells and modules produced in Cambodia, Malaysia, Thailand and Vietnam using parts and components from China. As a result, certain CSPV cells and modules from Cambodia, Malaysia, Thailand and Vietnam are now subject to antidumping duty and countervailing duty (“AD/CVD”) orders on CSPV cells and modules from China that have been in place since 2012. Subject to certain certification and utilization conditions, imports of CSPV cells and modules covered by the circumvention determinations that entered the United States during the two-year period prior to June 6, 2024 were not subject to AD/CVD cash deposit or duty requirements. Imports of CSPV cells and modules from the four Southeast Asian countries covered by the circumvention determination that entered the United States on or after June 6, 2024 are subject to AD/CVD cash deposit requirements of the China AD/CVD orders and, possibly, final AD/CVD duty liability. Cash deposit rates for CSPV modules covered by the China AD/CVD orders vary significantly depending on the producer and exporter of the modules and may amount to over 250% of the entered value of the imported merchandise.

In December 2024, in connection with the circumvention final determination, U.S. Customs and Border Protection (“CBP”) instructed the Company to pay AD/CVD cash deposits totaling approximately $1 million, relating to a small number of our imports of CSPV modules from Malaysia and Thailand prior to June 6, 2024, representing 250% of the entered value of such imports. These CSPV modules are Nextracker's proprietary modules that sit on each tracker row to power batteries providing electricity to our controller. CBP based its instruction to make the cash deposit payment due to alleged deficiencies with respect to certifications regarding the imports. If CBP were to instruct us to make AD/CVD cash deposit payments relating to other past imports of our proprietary CSPV modules covered by the circumvention determinations, which are much larger in volume than the number of imports related to the $1 million cash deposits, the Company could be required to pay additional cash deposits, and these cash deposits could be material and may not be ultimately refunded to the Company. Management cannot reasonably estimate a range of potential loss.

9. Income taxes

The Company follows the guidance under ASC 740-270, “Interim Reporting,” which requires a company to calculate the income tax associated with ordinary income using an estimated annual effective tax rate.

During the nine-month period ended December 31, 2024, Ojjo updated its forecasted pre-tax earnings to account for the economic arrangement in accordance with its transfer pricing policy, which reflects forecasted profits into the future. As a result, the Company released the valuation allowance recorded against Ojjo’s deferred tax assets given that it is more likely than not that the deferred tax assets will be realized. A $8.5 million income tax benefit was recorded as a discrete item in the nine-month period ended December 31, 2024 as it relates to a change in management’s assertion related to the realization of deferred tax assets in periods beyond the current tax year.

The following table presents income tax expense recorded by the Company along with the respective consolidated effective tax rates for each period presented.

The increase in tax expense as well as effective tax rate from the three and nine-month periods ended December 31, 2023 to the three and nine-month periods ended December 31, 2024 is driven by a reduction in tax benefit related to stock based compensation associated with the non-deductible executive compensation, 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.

During the three and nine-month periods ended December 31, 2024 and three and nine-month periods ended December 31, 2023, the Company recorded $4.4 million and $4.4 million, and $12.9 million and $7.3 million, respectively, of other tax related income as a result of the reduction in its liability under the TRA due to a decrease in its forecasted estimated effective tax rate. The amounts are reflected in the condensed consolidated statements of operations and comprehensive income within other income, net.

Tax distributions

During the nine-month period ended December 31, 2024, and pursuant to the LLC Agreement, Nextracker LLC made pro rata tax distributions to its non-controlling interest holder (TPG) in the aggregate amount of approximately $6.1 million.

10. Segment reporting

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or a decision-making group, in deciding how to allocate resources and in assessing performance. Resource allocation decisions and Nextracker’s performance are assessed by its Chief Executive Officer, identified as the CODM.

For all periods presented, Nextracker hasone operating and reportable segment. The following table sets forth geographic information of revenue based on the locations to which the products are shipped:

The United States is the principal country of domicile.

11. Business acquisitions

Foundations business

During the nine-month period ended December 31, 2024, the Company completedtwo acquisitions. On June 20, 2024, as part of an all-cash transaction, the Company acquired 100% of the interest in Ojjo, a renewable energy company specializing in foundations technology and services used in ground-mount applications for solar power generation. Additionally, on July 31, 2024, the Company closed the acquisition of the solar foundations business held by SPI through the purchase of Spinex Systems Inc. and assets held by other SPI affiliates.

The acquisitions of Ojjo and the foundations business of SPI (“Foundations acquisitions”) expand the Company’s foundations offering by accelerating its 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. The Company believes there is additional value for its customers in combining tracker systems and foundations to form an integrated solution, particularly for difficult and unique soil conditions.

The aggregate cash consideration of the Foundations acquisitions was approximately $144.7 million, net of $4.4 million cash acquired. Additionally, the aggregate total purchase price of $164.7 million includes $14.0 million of deferred consideration expected to be paid within a 12-month period, a $3.4 million release of a loan obligation previously owed by the seller and a $2.6 million contingent earnout.

The contingent earnout has a maximum possible consideration of $6.0 million upon the achievement of future revenue performance targets, measured in megawatts (“MW”), over afour-year period starting October 1, 2024. The fair value of the contingent earnout liability as of the acquisition date was estimated to be $2.6 million based on a Monte-Carlo simulation model, which is a probabilistic approach used to simulate future revenue and calculate the potential contingent consideration payments for each simulated path. The inputs are unobservable in the market and therefore categorized as Level 3 inputs in the fair value measurement. At each reporting period, the Company evaluates the fair value of contingent earnout obligations and records any changes in fair value of such liabilities in other income, net in its condensed consolidated statements of operations and comprehensive income. As of December 31, 2024, no change in the fair value of the contingent earnout liabilities was identified by management, and as such, the $2.6 million was included in other liabilities in the condensed consolidated balance sheets.

The Company incurred approximately $4.7 million of acquisition costs which are presented as selling, general and administrative expenses on the condensed consolidated statement of operations and comprehensive income. The preliminary allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed was based on their preliminary estimated fair values as of the date of acquisitions. The excess of the purchase price over the tangible and identifiable intangible assets acquired and liabilities assumed has been allocated to goodwill. Goodwill is not deductible for income tax purposes. The results of operations of the acquisitions were included in the Company’s condensed consolidated financial statements beginning on the date of acquisition and were not material for all periods presented.

Additional information, which existed as of the acquisition dates, may become known to the Company during the remainder of the measurement period, a period not to exceed 12 months from the date of the relevant acquisition. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill during the respective measurement period.

The following represents the Company’s preliminary allocation of the Foundations acquisitions total aggregate purchase price to the acquired assets and liabilities (in thousands):

Intangible assets are comprised of $31.7 million of developed technology to be amortized over an estimated useful life often years, and $18.0 million of customer relationships to be amortized over an estimated useful life offive years. The fair value assigned to the identified intangible assets was estimated based on an income approach, which provides an indication of fair value based on the present value of cash flows that the acquired business is expected to generate in the future. Key assumptions used in the valuation included forecasted revenues, cost of sales and operating expenses, royalty rate, discount rate and weighted average cost of capital. The useful life of the acquired intangible assets for amortization purposes was determined by considering the period of expected cash flows used to measure the fair values of the asset, adjusted for certain factors that may limit the useful life.

Pro-forma results of operations have not been presented because the effects were not material to the Company’s condensed consolidated financial results for all periods presented.