SOLV Energy (MWH) Q2 FY26 earnings call: guidance and Q&A

What drove the significant increase in backlog, and can you provide more granularity on the base backlog and energy storage component?

Management explained that the backlog growth is driven by a large funnel of projects in late-stage discussions and LNTP conversions, moving in on plan. They noted a significant increase in energy storage opportunities, with the majority of projects now being solar plus storage, driving the storage-specific backlog number.

“The backlog is continuing to grow. As we have spoken about before, we have a large funnel above the backlog that we report. We have a lot of projects that are in later-stage discussions and moving into LNTP, which is when we show them as backlog.”

asked by Julien Dumoulin-Smith · answered by George Hershman

How much visibility does the current backlog provide into 2027 and 2028, and how are O&M attach rates trending?

Management stated that the backlog traditionally provides 24 to 30 months of visibility, giving good insight into 2027 and 2028, with a large portion of 2027 looking strong. For O&M, they noted an increase in megawatts under contract to 23 GW, with revenue lagging until projects are operational. Attach rates oscillate but show incremental growth.

“So our backlog traditionally is about a 24 to 30-month look. And so that has stayed pretty traditional over the years. And so I think that gives us good visibility into '27 and into '28.”

asked by Michael Fairbanks · answered by George Hershman

How much of the awarded backlog is subject to Section 232 risk, and is the revenue guidance raise conservative given the substantial backlog?

Management indicated no near-term impact from 232 tariffs on awarded backlog, as customers were prepared and most projects have modules secured. They are not seeing project schedules slip. Regarding revenue guidance, they explained that the raise reflects pull-forward revenue and additional pacing, but much of the new backlog sets up for 2027 and 2028, not just the current year.

“Well, first, on 232, we are working with our customers as we work through the implications of it. Early on, we see that not a lot of near-term impact as most of our projects are in late-stage development, modules secured and moving forward.”

asked by Philip Shen · answered by George Hershman

Were there any cash disbursements related to the Tax Receivable Agreement (TRA) in Q2, given the re-measurement?

Management clarified that the TRA revaluation was primarily due to a secondary transaction, and there were no cash disbursements under the TRA in Q2. Actual TRA payments are not expected until 2028, after the 2026 corporate tax return filing.

“As far as disbursements under the TRA, the answer is no. The provisions under the TRA kind of drags out until you would get past the first period of corporate tax return. So actual TRA payments probably don't really manifest until 2028”

asked by Jonathan Windham · answered by Chad Plotkin

Should we expect a pause in bookings due to 232 tariffs, and what is the M&A strategy regarding scope expansion and valuations?

Management does not expect a pause in bookings, as customers are sophisticated, have modules secured, and want to secure capacity. For M&A, they are building an operating model for success and will continue to look at transactions of various sizes. Strategically, they seek expertise for regional support or specific trades, and are open to supporting hybrid generation plants with other forms of generation if it fits their ecosystem.

“I think there's a couple of things. One, there's a lot of evidence of a significant amount of modules already in the country. As George mentioned, there is domestic supply. And we work with a lot of very sophisticated and large-scale developers that have been planning for this for quite some time.”

asked by Ben Kallo · answered by Chad Plotkin