0002080126-26-000018
SEC filingRevenue surged 103% YoY to $378.7M, driven by data center and grid demand, while gross margin fell due to under-absorbed costs at new campuses.
For the three months ended March 31, 2026, revenues increased 103% to $378.7 million from $186.2 million in the prior year period. The growth was driven by strong demand across end markets, particularly data center and grid customers, with increased sales of Custom Products and Powertrain Solutions. New campuses that commenced production in the current year also contributed.
Gross profit rose 92% to $131.2 million, but gross margin declined from 36.6% to 34.6%. The margin compression was primarily due to under-absorbed labor costs from accelerated headcount growth, under-absorbed fixed overhead at new campuses ramping toward target production rates, and one-time startup costs.
Operating expenses increased 101% to $91.9 million, driven by higher selling, general and administrative costs (up 145%) due to headcount growth, sales and marketing, professional services, IT, and IPO-related bonuses. Depreciation and amortization decreased slightly. As a result, income from operations increased 76% to $39.3 million.
Net income grew 190% to $24.5 million, boosted by lower interest expense (down 18%) due to lower rates and higher operating income. The effective tax rate fell to 15.2% from 18.3% due to non-controlling interest not being subject to income taxes and favorable discrete adjustments.
The MD&A does not provide a formal segment breakdown. However, the company categorizes products into Custom Products, Powertrain Solutions, and Standard Products. Revenue growth was led by Custom Products and Powertrain Solutions, which are engineered-to-order and typically yield higher margins. Standard Products also contributed but were not separately quantified. The revenue mix shift toward custom solutions is positive for long-term profitability, but near-term margins were pressured by costs associated with scaling new capacity.
Management highlighted that capacity utilization is currently high, and the company is investing in new campuses to meet demand. The recent IPO and follow-on offerings provided net proceeds of $491.8 million and $308.6 million, respectively, which were used to purchase membership interests and strengthen the balance sheet. The company expects capital expenditures for capacity expansion to be completed by end of fiscal year 2026. While no formal guidance was issued, management believes operating cash flows will be sufficient to meet needs for the next twelve months. Key risks include raw material price volatility, tariffs, and labor availability. The company is not hedged against commodity price changes. Overall, the outlook remains positive given robust demand from data centers and grid infrastructure, but margin recovery depends on successful ramp-up of new factories.