Nextpower Inc.

Previous wording

Unless the context requires otherwise, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Nextpower,” the “Company,” “we,” “us” and “our” shall mean, prior to the initial public offering (“IPO”), Nextpower LLC (the “LLC”, formerly Nextracker LLC) and its consolidated subsidiaries, and following the IPO and the related transactions completed in connection with the IPO, Nextpower Inc. and its consolidated subsidiaries. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Flex” refer to Flex Ltd., a Singapore incorporated public company limited by shares and having a registration no. 199002645H, and its consolidated subsidiaries, unless the context otherwise indicates.

Current wording

Unless the context requires otherwise, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Nextpower,” the “Company,” “we,” “us” and “our” shall mean, prior to the initial public offering (“IPO”), Nextpower LLC (“Nextpower LLC” or the “LLC”) and its consolidated subsidiaries, and following the IPO and the related transactions completed in connection with the IPO, Nextpower Inc. and its consolidated subsidiaries. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “Flex” refer to Flex Ltd., a Singapore incorporated public company limited by shares and having a registration no. 199002645H, and its consolidated subsidiaries, unless the context otherwise indicates.

Previous wording

We have shipped more than 150 GW of solar tracker systems as of January 30, 2026 to projects on six continents for use in utility-scale and distributed generation solar applications. Our customers include engineering, procurement and construction firms (“EPCs”), as well as solar project developers and owners. Developers originate projects, select and acquire sites, obtain permits, select EPC contractors, negotiate power offtake agreements, and oversee the building of projects. EPCs design and optimize the system, procure components, build and commission the plant, and operate the plant for a limited time until transfer to a long-term owner. Owners, which are often developers and/or independent power producers, own and operate the plant, typically as part of a portfolio of similar assets. Owners generate cash flows through the sale of electricity to utilities, wholesale markets, or end users.

Current wording

We have shipped more than 160 GW of solar tracker systems as of July 3, 2026 to projects on six continents for use in utility-scale and distributed generation solar applications. Our customers include engineering, procurement and construction firms (“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, procure components, build and commission the plant, and operate the plant for a limited time until transfer to a long-term owner. Owners, which are often independent power producers, own and operate the plant, typically as part of a portfolio of similar assets. Owners generate cash flows through the sale of electricity to utilities, wholesale markets, or end users.

Previous wording

For the majority of our projects, our direct customer is the EPC. We also engage with developers and project owners and enter into master supply agreements that cover multiple projects. We are a qualified, preferred provider to some of the largest solar EPCs, developers and project owners in the world. We had revenues of $2.7 billion for the nine-month period ended December 31, 2025 and $3.0 billion for fiscal year 2025.

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 $0.9 billion for the three-month period ended July 3, 2026 and $3.6 billion for fiscal year 2026.

Previous wording

We derive our revenue primarily from the sale of solar trackers and energy yield management systems 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. We also derived our revenue from TrueCapture, eBOS, foundations business, robotic solutions, and other.

Current wording

We derive our revenue primarily from the sale of solar trackers and energy yield management systems to our customers. To a lesser extent, we also derived our revenue from foundations, steel frames, eBOS, AI and robotic services, and other. 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.

Previous wording

Research and development expenses consist primarily of personnel-related costs associated with our engineering employees, stock-based compensation, third-party consulting and supporting our new business acquisitions. Research and development activities include improvements to our existing products, development of new tracker products such as energy yield management systems and innovations expand our technology platform. We expense substantially all research and development expenses as incurred. We expect that the dollar amount of research and development expenses will increase in amount over time.

Current wording

Research and development expenses consist primarily of personnel-related costs associated with our engineering employees, stock-based compensation, third-party consulting and supporting our new business acquisitions. Research and development activities include improvements to our existing products, development of new tracker products and energy yield management systems and innovations to expand our technology platform. We expense substantially all research and development expenses as incurred. We expect that the dollar amount of research and development expenses will increase in amount over time.

Previous wording

Our taxable income is primarily from the allocation of taxable income from the LLC. The provision for income taxes primarily represents the LLC’s U.S. federal, state, and local income taxes as well as foreign income taxes payable by its subsidiaries. We expect to receive a tax benefit for foreign tax credits in the United States for the foreign tax paid.

Current wording

The provision for income taxes primarily represents the Company’s U.S. federal, state, and local income taxes as well as foreign income taxes payable by its subsidiaries. We expect to receive a tax benefit for foreign tax credits in the United States for the foreign tax paid.

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, intangible amortization and non-recurring integration activities related to acquisitions. We define Adjusted net income as net income (loss) plus stock-based compensation expense, intangible amortization, various non-recurring tax adjustments, and non-recurring integration activities related to acquisitions. We define Adjusted EBITDA as net income (loss) plus (i) interest, net, (ii) revolver extinguishment costs, (iii) provision for income taxes, (iv) depreciation expense, (v) intangible amortization, (vi) stock-based compensation expense and (vii) non-recurring integration activities related to acquisitions. 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 acquisitions. We define Adjusted net income as net income (loss) plus stock-based compensation expense, intangible amortization, non-recurring tax adjustments, and non-recurring integration activities related to acquisitions and other discrete events as applicable, net of their tax effects. We define Adjusted EBITDA as net income (loss) plus (i) interest, net, (ii) debt extinguishment costs, (iii) provision for income taxes, (iv) depreciation expense, (v) intangible amortization, (vi) stock-based compensation expense, (vii) non-recurring integration activities related to acquisitions and (viii) 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

The following table provides a reconciliation of gross profit to Adjusted gross profit, operating income to Adjusted operating income, net income to Adjusted net income, net income to Adjusted EBITDA, gross margin to Adjusted gross margin, net income margin to Adjusted net income margin, and net income margin to Adjusted EBITDA margin for each period presented. The Adjusted measures presented in the table are inclusive of non-controlling interests.

Current wording

The following table provides a reconciliation of gross profit to Adjusted gross profit, operating income to Adjusted operating income, net income to Adjusted net income, net income to Adjusted EBITDA, gross margin to Adjusted gross margin, net income margin to Adjusted net income margin, and net income margin to Adjusted EBITDA margin for each period presented.

Previous wording

Revenue increased by $230.0 million, or 34%, for the three-month period ended December 31, 2025 compared to the three-month period ended December 31, 2024, driven by a 26% increase in GW delivered, most notably in the U.S. driven by increased customer demand, including an increase of $129.6 million in point in time revenue due to a year over year increase in components directly shipped to our customers designated locations including software licenses, coupled with additional revenue generated from our recent business acquisitions. Revenue increased by approximately $284.6 million, or 63%, in the U.S. during the three-month period ended December 31, 2025 compared to the three-month period ended December 31, 2024 as the number of projects and volume of shipments increased year over year, Rest of the World decreased by $54.6 million, or 24%, primarily resulting from decreased shipments to Latin America, and the Middle East, partially offset with increased shipments to Europe and Australia.

Current wording

Revenue increased by $70.9 million, or 8%, for the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, driven by a higher average selling price resulting from increasing costs per watt coupled with increased customer demand in the U.S, offset with lower GW delivered most notably in Rest of the World. Revenue increased by approximately $176.1 million, or 29%, in the U.S. during the three-month period ended July 3, 2026 compared to the three- month period ended June 27, 2025 as the number of projects and volume of shipments increased year over year, Rest of the World decreased by $105.2 million, or 40%, primarily resulting from decreased shipments to Latin America, and the Middle East, partially offset with increased shipments to Europe.

Previous wording

Cost of sales increased by $182.8 million, or 42%, during the three-month period ended December 31, 2025 compared to the three-month period ended December 31, 2024, primarily driven by the 26% increase in GW delivered noted above, along with higher cost associated with the increase in headcount as a result of our recent business acquisitions, coupled with the impact from a $39.2 million increase in tariffs, partially offset by the impact from a $44.6 million increase in Internal Revenue Code Section 45X tax credit (“45X Credit”) that is earned over time for certain clean energy components domestically produced and sold by a manufacturer. We recognize a reduction in cost of sales for 45X Credits earned on components manufactured in the U.S. During the three-month periods ended December 31, 2025 and December 31, 2024, we recognized approximately $96.8 million and $52.2 million, respectively, of reduction to cost of sales related to the 45X Credit earned on production of eligible components shipped during the period, which offset tariffs of approximately $43.6 million and $4.5 million respectively. Freight and logistics costs also increased slightly as a percentage of revenue during the three-month period ended December 31, 2025 compared to the three-month period ended December 31, 2024.

Current wording

Cost of sales increased by $16.8 million, or 3%, during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, primarily driven by the volume of shipment increase in the U.S., and to a lesser extent, higher freight and logistics costs as a result of the U.S.-Iran war, along with higher cost associated with the increase in headcount as a result of our recent business acquisitions, partially offset by the impact from a $10.1 million increase in Internal Revenue Code Section 45X tax credit (“45X Credit”) that is earned over time for certain clean energy components domestically produced and sold by a manufacturer, coupled with the impact from a $6.9 million decrease in tariffs, net of refunds. We recognize a reduction in cost of sales for 45X Credits earned on components manufactured in the U.S. During the three-month periods ended July 3, 2026 and June 27, 2025, we recognized approximately $103.3 million and $93.2 million, respectively, of reduction to cost of sales related to the 45X Credit earned on production of eligible components shipped during the period, which offset tariffs of approximately $3.9 million and $10.8 million respectively. Freight and logistics costs also increased slightly as a percentage of revenue during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025.

Previous wording

Gross profit increased by $47.2 million, or 20%, during the three-month period ended December 31, 2025 compared to the three-month period ended December 31, 2024, primarily resulting from the volume of shipment increase in the U.S. noted above and the impact from the 45X Credit recognized in the period, which offset the higher tariffs noted above.

Current wording

Gross profit increased by $54.1 million, or 19%, during the three-month period ended July 3, 2026 compared to the three-month period ended June 27, 2025, primarily resulting from the volume of shipment increase in the U.S. noted above and the impact from the 45X Credit recognized in the period, which more than offset the higher freight and logistics costs noted above.

Previous wording

Selling, general and administrative expenses increased by $12.2 million, or 17%, to $82.7 million for the three-month period ended December 31, 2025 from approximately $70.6 million for the three-month period ended December 31, 2024 while decreasing 129 basis points from approximately 10% to approximately 9% 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 costs of approximately $11.8 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 current and planned growth.

Current wording

Selling, general and administrative expenses increased by $26.5 million, or 36%, to $100.4 million for the three-month period ended July 3, 2026 from approximately $73.9 million for the three-month period ended June 27, 2025 while increasing 219 basis points from approximately 9% 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 costs of approximately $20.7 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 current and planned growth. In addition, acquisition-related costs and stock-based compensation expense increased $3.1 million and $2.7 million, respectively.

Previous wording

Research and development expenses increased by $9.2 million, or 46%, to $29.3 million for the three-month period ended December 31, 2025 from approximately $20.1 million during the three-month period ended December 31, 2024, primarily driven by our continued investment in innovation, expanding our engineering team and supporting our new business acquisitions.

Current wording

Research and development expenses increased by $22.9 million, or 106%, to $44.5 million for the three-month period ended July 3, 2026 from approximately $21.6 million during the three-month period ended June 27, 2025, primarily driven by our continued investment in innovation, increasing our engineering team and supporting our recent business acquisitions.

Previous wording

Other income, net was $4.7 million for the three-month period ended December 31, 2025, which primarily included $9.6 million of interest income, partially offset by $5.3 million of unfavorable foreign currency exchange losses and other. Other income, net was $13.8 million income for the three-month period ended December 31, 2024, which primarily included

Current wording

Other income, net was $8.3 million for the three-month period ended July 3, 2026, which primarily included $9.3 million of interest income, partially offset by $1.0 million of unfavorable foreign currency exchange losses and other. Other income, net was $6.0 million income for the three-month period ended June 27, 2025, which primarily included $6.3 million of interest income, partially offset by $0.3 million of unfavorable foreign currency exchange losses.

Previous wording

For the three-month periods ended December 31, 2025 and December 31, 2024, we recorded total income tax expense of $49.3 million and $42.8 million, respectively, which reflected consolidated effective income tax rates of 27.3% and 26.7%, respectively. The increase in tax expense as well as effective tax rate from the three-month period ended December 31, 2024 to the three-month period ended December 31, 2025 is driven by an increase in income before income taxes for the corresponding period, a change in domestic and foreign earnings mix and non-deductible stock-based compensation expense.

Current wording

For the three-month periods ended July 3, 2026 and June 27, 2025, we recorded total income tax expense of $33.6 million and $33.8 million, respectively, which reflected consolidated effective income tax rates of 16.9% and 17.7%, respectively. The decrease in tax expense as well as effective tax rate from the three-month period ended June 27, 2025 to the three-month period ended July 3, 2026 is driven by jurisdictional mix of income and stock-based compensation deductions.

Previous wording

From time to time, we are subject to income and non-income based tax audits in the jurisdictions in which we operate. The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax rules and regulations in a number of jurisdictions. Due to such complexity of these uncertainties, the ultimate resolution may result in a payment or refund that is materially different from our estimates.

Current wording

From time to time, we are subject to income tax audits in the jurisdictions in which we operate. The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax rules and regulations in a number of jurisdictions. Due to such complexity of these uncertainties, the ultimate resolution may result in a payment or refund that is materially different from our estimates.

Previous wording

Our principal uses of cash have been to fund the growth in our operations and invest in research and development and our cash flow generation and credit facilities have continued to provide adequate liquidity for our business. We enhanced our capital structure with a$1.0 billion unsecured revolving credit facility expanding our total liquidity toapproximately $1.8 billionas of December 31, 2025. In January 2026, Fitch Ratings (“Fitch”) issued inaugural investment grade credit ratings for the Company and assigned a Long-Term Issuer Default Rating of BBB- to us with a Stable outlook.

Current wording

Our principal uses of cash have been to fund our operations and invest in research and development and our cash flow generation and credit facilities have continued to provide adequate liquidity for our business. We enhanced our capital structure with a$1.0 billion unsecured revolving credit facility expanding our total liquidity toover $2.0 billionas of July 3, 2026.

Previous wording

As a result of the New Credit Agreement, we capitalized approximately $2.0 million of issuance costs related to the New Revolving Credit Facility, which were included in other assets in the unaudited condensed consolidated balance sheets and will be amortized over the term of the New Credit Agreement. As of December 31, 2025, we had approximately $891.4 million available under the New Revolving Credit Facility, net of $108.6 million of outstanding letters of credit. We were in compliance with all applicable covenants as of December 31, 2025.

Current wording

As of July 3, 2026, we had approximately $919.4 million available under the revolving credit facility, net of $80.6 million of outstanding letters of credit. We were in compliance with all applicable covenants as of July 3, 2026.

Previous wording

In connection with the IPO, on February 13, 2023, Nextpower entered into a Tax Receivable Agreement (the “Tax Receivable Agreement” or “TRA”) that provided for the payment by us to Flex, TPG Inc. (“TPG”), and the following affiliates of 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”) (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, Inc. (“Yuma”) and Yuma Subsidiary, Inc. (“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, Nextpower Inc. also entered into a Tax Receivable Agreement (the “Tax Receivable Agreement”) that provided for the payment by us to Flex, TPG Rise Flash, L.P (“TPG Rise”), and 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 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, Inc. (“Yuma”) and Yuma Sub assigned their respective rights under the Tax Receivable Agreement to an entity that remains an affiliate of Flex.

Previous wording

We believe that our cash provided by operations and other existing and committed sources of liquidity, including our New 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.

Current wording

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.

Previous wording

Net cash provided by operating activities was $391.5 million during the nine-month period ended December 31, 2025. Total cash provided during the period was driven by net income of $435.3 million adjusted for non-cash charges of approximately $129.0 million primarily related to stock-based compensation expense, depreciation and amortization, and write-off of unamortized revolver issuance costs. 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 $172.8 million as we continue to fund our current and planned growth.

Current wording

Net cash provided by operating activities was $121.1 million during the three-month period ended July 3, 2026. Total cash provided during the period was driven by net income of $165.4 million adjusted for non-cash charges of approximately $45.1 million primarily related to stock-based compensation expense, depreciation and amortization, and deferred income taxes costs. 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 $89.4 million as we continue to fund our current and planned growth.

Previous wording

Net cash used in investing activities was approximately $158.3 million and directly attributable to the $124.1 million payment for all business acquisitions in fiscal year 2026 net of cash acquired, coupled with $31.5 million paid for the purchase of property and equipment.

Current wording

Net cash used in investing activities was approximately $21.9 million and directly attributable to $15.9 million paid for the purchase of property and equipment, coupled with $6.0 million paid for the purchase of intangible assets.

Previous wording

Net cash used in investing activities was approximately $168.5 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.

Current wording

Net cash used in investing activities was approximately $98.1 million and directly attributable to the $86.8 million payment for the business acquisitions net of cash acquired, coupled with the purchase of property and equipment.

Previous wording

Net cash used in financing activities was $46.6 million primarily resulting from a $27.4 million payment to Flex, TPG and the TPG Affiliates pursuant to the Tax Receivable Agreement, a $14.2 million payment of acquisition deferred purchase price, and a $3.0 million tax distribution to our former non-controlling interest holder pursuant to the LLC Agreement.

Current wording

Net cash used in financing activities was $6.0 million primarily resulting from a $3.0 million tax distribution to our former non-controlling interest holder pursuant to the LLC Agreement, and a $2.9 million payment to Flex, TPG and the TPG Affiliates pursuant to the Tax Receivable Agreement.

Previous wording

We had a total liquidity of approximately $1.8 billion as of December 31, 2025, primarily related to unutilized amounts under the New Revolving Credit Facility net of cumulative letters of credit issued in conjunction with our customer contracts, and our cash and cash equivalents.

Current wording

We had a total liquidity of over $2.0 billion as of July 3, 2026, primarily related to unutilized amounts under the revolving credit facility net of cumulative letters of credit issued in conjunction with our customer contracts, and our cash and cash equivalents.