Liberty Energy (LBRT) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Oct. 22, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations - Anjali Ramnath Voria
• Chief Executive Officer - Ron Gusek
• Chief Financial Officer - Michael Stock

TAKEAWAYS

• Revenue -- $1.2 billion, representing 26% growth year over year driven by strong operational execution and modest price increases.
• Adjusted EBITDA -- $142 million, which decreased 6% from the previous quarter due to drilling-related delays and cost inflation.
• Net Loss -- $39 million, primarily reflecting $62.9 million in tax-effected unrealized fair value losses on noncore equity investments.
• Adjusted Net Income -- $10 million, compared to $14 million in the second quarter of 2026.
• Adjusted Net Income per Diluted Share -- $0.06, which excludes the impact of unrealized investment losses and transaction costs.
• Quarterly Cash Dividend -- $0.10 per share, an 11% increase over the previous dividend reflecting management's confidence in long-term strategy.
• Natural Gas Substitution -- over 60%, a record for the company's frac fleets that reflects continued investment in gas-fueled equipment.
• Annualized Customer Fuel Savings -- over $1 billion, resulting from record natural gas replacement and the fuel price arbitrage between natural gas and diesel.
• Strategic Power Agreement -- 1.2 gigawatts, encompassing integrated power services for data center campuses with a leading frontier AI lab.
• Energy Service Agreement Execution -- 500 megawatts, representing the first phase of the power development agreement targeted for execution by December 2026.
• Prepayment Amount -- hundreds of millions of dollars, received as capacity fee prepayments to support the deployment of the 1.2-gigawatt power platform.
• Net Capital Expenditures -- $621.9 million, which included $450 million in power generation deposits and other investments in distributed power.
• Total Liquidity -- $669 million, consisting of $119 million in cash and available capacity under the secured asset-based revolving credit facility.
• Net Debt -- $1.2 billion, primarily consisting of senior convertible notes issued during the first quarter of 2026.
• General and Administrative Expenses -- $69.5 million, an increase from $67.2 million in the prior quarter due to higher compensation and corporate overhead.
• Frac Market Crew Demand -- 15 to 18 crews, reflecting the incremental capacity absorbed by the industry as the completions market tightens.
• Adjusted Pre-Tax Return on Capital Employed (ROCE) -- 2%, calculated based on the average capital employed over the 12 months ending Sept. 30, 2026.
• Full-Year Capital Expenditure Guidance -- $1.5 billion, which management reaffirmed remains intact despite heavy third-quarter spending.
• Project Equity Target -- 20%, representing the company's targeted equity stake in special purpose vehicles for project-level financing.
• ESA Contract Term -- 15 years, established as the standard duration for new energy service agreements in the power segment.
• Tax Expense Rate -- 24%, expected for the remainder of 2026 based on projected pretax income.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Ron Gusek reported that third-quarter performance was "partially offset by drilling related delays and cost inflation headwinds," which slowed the replenishment of customer well inventory.
• Ron Gusek warned that the company expects to "continue to face inflationary headwinds, particularly on the labor side of things," as well as increased costs for trucking and fluids.
• Michael Stock indicated that "interest expense of approximately $6 million" for the quarter included non-cash amortization related to convertible bond issuances.

SUMMARY

Liberty Energy Inc. (NYSE:LBRT) reported third-quarter results for 2026, highlighted by a strategic agreement to provide 1.2 gigawatts of integrated power for data center campuses. Management reported that the company is transitioning its portfolio to include a durable power generation business while maintaining its leading position in the hydraulic fracturing market. The company stated that while quarterly earnings were impacted by seasonal drilling delays and cost inflation, the completions market remains tight due to equipment attrition and high demand for next-generation, gas-fueled fleets. Management indicated that strengthening market fundamentals and a more constructive oil forward curve support an improved outlook for energy services in 2027.

• The company's strategic power agreement includes a phased energization schedule from Q4 2027 through Q1 2029 for data center campuses.
• CEO Gusek noted that natural gas substitution has widened the performance gap between industry fleets: "This achievement reflects continued investment in natural gas fueled equipment and a concerted focus on the digital intelligence layer that drives meaningful operational efficiency of equipment."
• The company completed advanced grid integration testing with the National Laboratory of the Rockies to validate its physical generation assets and tempo controls against real-world electric system behaviors.
• CFO Stock detailed a financing strategy for the power business that includes a "non recourse project level financing strategy designed to recycle capital as projects progress" through special purpose vehicles.
• Management reported that 15 to 18 incremental frac crews have been absorbed by the market, leading to strong utilization and providing a backstop for modest price increases.
• Ron Gusek indicated that the strategic power agreement marks a milestone for the company: "The agreement marks the culmination of months of work on engineering and design between our teams, defining the integrated power architecture tailored to the generation, power quality, reliability, and dynamic AI load requirements."

INDUSTRY GLOSSARY

• DigiPrime: Liberty's advanced, next-generation hydraulic fracturing equipment designed to run on natural gas or electric power.
• ESA (Energy Service Agreement): A long-term contract between a power provider and a customer for the delivery of electricity and related services.
• Frac: Short for hydraulic fracturing, a technique used to extract oil and gas from unconventional rock formations.
• Gigawatt (GW): A unit of power equal to one billion watts.
• LPI (Liberty Power Innovations): The company's dedicated subsidiary focused on distributed power and infrastructure solutions.
• Megawatt (MW): A unit of power equal to one million watts.
• Proppant: Sand or similar material used in hydraulic fracturing to keep fissures open so that oil and gas can flow.
• ROCE (Return on Capital Employed): A financial ratio that measures a company's profitability and the efficiency with which its capital is employed.
• SPV (Special Purpose Vehicle): A subsidiary created for a specific financial purpose, such as non-recourse project financing.

Full Conference Call Transcript

Operator: Welcome to the Liberty Energy Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Anjali Ramnath Voria, Vice President of Investor Relations. Please go ahead.

Anjali Ramnath Voria: Thank you, Nick. Good morning, and welcome to the Liberty Energy Third Quarter 2026 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer and Michael Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include forward looking statements reflecting the company's view about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward looking statements. These statements reflect the company's beliefs, based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings.

Our comments today also include non GAAP financial and operational measures. These non GAAP measures, EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pretax return on capital employed and cash return on capital invested are not a substitute for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income and adjusted net income per diluted share, and the calculation of adjusted pretax return on capital employed, cash return on capital invested as discussed on the call are available on our Investor Relations website. I will now turn the call over to Ron.

Ron Gusek: Good morning and thank you for joining us for our third quarter earnings call. Liberty's completions trajectory has improved meaningfully from early year cyclical lows. Third quarter revenue of $1.2 billion and adjusted EBITDA of $142 million reflected strong operational execution and modest price increases partially offset by drilling related delays and cost inflation headwinds. During the quarter, we delivered significantly lower fuel costs for our customers. Record natural gas substitution of over 60% of the total fuel consumed by our fleets provided annualized fuel savings equating to over $1 billion for our customers.

This achievement reflects continued investment in natural gas fueled equipment and a concerted focus on the digital intelligence layer that drives meaningful operational efficiency of equipment and widens the performance gap amongst industry frac fleets. In power, we are excited to share that LPI entered into a strategic development agreement earlier this week with a leading frontier AI lab and a dedicated infrastructure platform. For 1.2 gigawatts of integrated power services at data center campuses. The agreement includes a significant prepayment of capacity fees and targeted execution of the first energy service agreement contract approximately 500 megawatts by December 2026.

The agreement also establishes a phased energization schedule from Q4 2027 through Q1 2029 and includes the substantive commercial terms for the additional long term ESAs. The agreement marks the culmination of months of work on engineering and design between our teams. Defining the integrated power architecture tailored to the generation, power quality, reliability, and dynamic AI load requirements. We are expanding this relationship and are already working together to advance additional projects across other sites including gas supply, interconnection, permitting, and construction planning. We continue to advance the capabilities of our integrated power platform for increasingly sophisticated on-site power systems. Reliable power at this scale requires more than generation alone.

It requires seamless coordination across generation, controls, customer load and the broader electric grid. Building on the extensive modeling, hardware in the loop and integrated system validation conducted within our own facilities we recently completed advanced grid integration testing with the National Laboratory of the Rockies controllable grid interface. Connecting LPI's physical generation assets and tempo controls to a synthetic grid modeled on a specific real world electric system the Southern United States. Replicating its relevant characteristics and operating behaviors.

While traditional grid studies can rely on modeled representations of both the grid and generation assets, this testing went a step further by pairing the representative grid model with LPI's actual generation hardware and controls allowing us to evaluate how our physical system responds under realistic grid conditions. The testing demonstrated grid operability expected changes over the life of an islanded to grid participating project. It also validated our control methodology and compliance with applicable IEEE standards while defining the performance characteristics of our generation assets to further inform system modeling and optimization. Together, these results advance our ability to reliably coordinate on-site generation with the broader grid including capabilities such as peak shaving.

This work builds on our trusted relationship with NLR and provides another important step in translating our integrated power architecture into the flexible, reliable solutions required to serve increasingly complex large scale customer loads. We are building a durable portfolio across completions and power. Anchored by the principles that have long defined liberty. A relentless focus on our customers continuous technology innovation and disciplined execution. In completions, these capabilities have helped our customers improve performance and economics year after year. And we are applying that same approach in power as we develop differentiated solutions to meet the increasingly complex objectives of technology customers.

These dual investments are strengthening our competitive advantage and expanding our market opportunities, positioning us to generate strong returns through cycles. Earlier this week, we announced an 11% increase in our quarterly cash dividend, reflecting confidence in our strategy and a continued commitment to delivering long term shareholder value. Global oil and refined product prices strengthened during the third quarter as the ongoing conflicts in The Middle East and Ukraine continue to impact markets. While flows through the Strait Of Hormuz partially recovered, golf exports remained vulnerable to operational disruption sustaining a risk premium in crude oil prices.

Renewed attacks on energy infrastructure have exacerbated refined product shortages with low diesel inventories emerging as a critical constraint Elevated maritime freight costs and longer trade routes have further compounded these pressures. Increasing delivered crude and product costs. Expectations for a prolonged supply disruption and an eventual replenishment of strategic petroleum reserves have sustained the oil risk premium and lifted forward prices. North American natural gas fundamentals remain more balanced as strong summer power demand was outpaced by record production and ample inventories. Disruptions to Qatari gas supply have also increased reliance on U. S. LNG including replacement cargoes required to fulfill existing customer required commitments.

Longer term LNG exports and growing power from AI and data center developments are expected to drive significant demand growth. Against this backdrop, producer well economics have strengthened meaningfully. With a more constructive forward curve providing attractive 2027 oil hedging opportunities and enhancing E&P revenue These improving fundamentals further reinforce already tight frac market dynamics where modestly higher completions activity has absorbed much of the industry's available capacity Ongoing fleet attrition, equipment cannibalization and industry underinvestment have constrained supply particularly in next generation equipment with compelling gas arbitrage economics. Increasing completion intensity and complexity also favors scaled providers, with integrated services and advanced digital technologies. Together, these dynamics are supporting more durable frac markets and continued improvement in service pricing.

As AI accelerates demand for compute capacity infrastructure developers are increasingly leveraging colocated integrated power solutions for data center campuses and other large load sites to address growing community considerations around power costs, availability, and other concerns. Beyond accelerating energization timelines and enabling tailored energy configurations, colocation can reduce pressure on existing grid infrastructure and limit the need for costly transmission investment. Helping mitigate impacts on local ratepayers and communities. Liberty's partnerships broaden the capabilities we can bring to these projects combining our power services with complementary technologies and infrastructure solutions. Including hybrid power systems, advanced energy management and waste heat recovery.

Over time, this integrated approach creates opportunities to address overall energy efficiency while providing customers greater flexibility to address environmental and community priorities specific to each site. Today's announcement with the Frontier AI Lab underscores the strength of our integrated power platform and its ability to advance our customers' broader strategic objectives. Our relationship has been built on trust collaboration and a shared commitment to advancing AI infrastructure at scale. Over the past year, we have built a strong foundation spanning our design and architecture, our quality and load management, testing and validation, and long term operations needed to support this project and others like it.

We are excited to support a growing base of customers seeking reliable, high performance power infrastructure for data centers and other industrial applications. As global energy consumers place greater emphasis on secure, reliable North American energy supplies, our disciplined investment in leading edge digital and equipment technologies through cycles expands our competitive advantage and increases our market opportunities over the coming years Strong customer engagement and strengthening market fundamentals provide a more constructive outlook as we close out the year and look ahead to 2027. Looking forward, we expect fourth quarter weather and holiday seasonality to be partially offset by continued strength in demand, including activity deferred from the third quarter.

We are proud of the Liberty team's continued focus on ingenuity, innovation and execution. We are well positioned today to serve the demand for energy services in the years ahead. I will now turn the call over to Michael to discuss our financial results and outlook.

Michael Stock: Good morning, everyone. The third quarter was defined by exceptional operational execution driving solid financial results. The third quarter of 2026 revenue was $1.2 billion relatively flat with the prior quarter. Results reflected strong utilization and a modest pricing uplift. Partially offset by drilling related delays as drilling crews work to replenish customer well inventory following accelerated completions in the second quarter. Third quarter net loss of $39 million compared to net income of $43 million in the prior quarter. Adjusted net income of $10 million compared to $14 million in the prior quarter and excludes $49 million of tax-effected unrealized loss on investments. and transaction and other costs.

Fully diluted net loss per share in the third quarter was $0.24 compared to net income per share of $0.26 in the prior quarter. Adjusted net income per diluted share was $0.06 compared to $0.09 in the prior quarter. Third quarter adjusted EBITDA was $142 million General and administrative expenses totaled $69 million in the third quarter compared to $67 million in prior quarter. And included non cash stock based compensation of $5 million. Excluding stock based compensation, G&A increased $3 million primarily due to increased compensation and other corporate overhead.

Other expense items totaled $69 million for the quarter inclusive of $63 million of unrealized fair value losses on non core equity investments and interest expense of approximately $6 million which included $2 million of non cash amortization of costs associated with our convertible bond issuances earlier in the year. Third quarter tax benefit was $10 million We expect tax expense rate in the remainder of 2026 to be approximately 24% of pretax income and do not expect to pay material cash taxes this year.

We ended the quarter with a cash balance of $119 million and net debt of $1.2 billion primarily consisting of senior convertible notes issued in the first quarter We have no balance drawn on our revolving credit facility other than $30 million of letters of credit outstanding. Total liquidity at the end of the quarter including availability under the credit facility was $669 million Third quarter uses of cash included capital expenditures and cash dividends, net capital expenditures and long term deposits were $622 million which included approximately $450 million in power generation deposits and other investments in power generation.

DG fleets, capitalized maintenance spending and other projects, We also returned approximately $15 million to shareholders through cash dividends, Earlier this week, the Board declared an 11% increase in the quarterly cash dividend to $0.10 per share. Today's announcement with the Frontier AI Lab represents a meaningful step forward in advancing Liberty's power strategy. The substantial capacity fee prepayment for the 1.2 gigawatts solidifies customer commitment to the development process. This structure provides greater commercial alignment and supports accelerated execution to deliver power at scale. I would like to revisit how we are funding the significant growth opportunities ahead of us.

Our strategy is built around 3 pillars that are designed to maintain financial flexibility, securing long lead items that are necessary to meet our customers' strategic objectives and deploy power infrastructure at scale. First, our core business generates strong free cash flow. Providing an important source of capital to support growth. Second, we opportunistically accessed the convertible market earlier this year, approximately $1.3 billion in gross proceeds at 0% coupon. Both offerings were upsized amid strong investor demand and the CAT call structures increased the effective conversion prices to approximately $65 and $72 per share respectively. Capital enabled us to invest in early and long lead equipment and position ourselves to meet the deployment timelines that our customers require.

Third, we are advancing non recourse project level financing strategy designed to recycle capital as projects progress. Our pipeline continues to attract strong engagement from a diverse group of capital providers including project finance or bonds, dedicated infrastructure funds and private credit markets. We expect project level financing to launch in early 2027 as projects advance. We are energized by the customer partnership we have shared today and incredible progress that the Liberty team and our power partners have achieved to date. We look forward to what we can achieve together in the coming years. Will now turn it back to the operator for Q&A, after which Ron will have some closing comments at the end of the call.

Operator: Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to withdraw your question, please press star and then 2. will come from Arun Jayaram with JPMorgan. Please go ahead.

Arun Jayaram: Good morning, team. Ron, in terms of the competitive dynamics, there are clearly several players, including Liberty, that are providing behind the meter solutions. This agreement that you described in the press release looks to encompass the entire molecule-to-watt lifecycle. cycle And love to see if you could talk about what are the key differentiators that Liberty that helps you secure what looks to be kind of a landmark agreement, for LPI?

Ron Gusek: Good morning, Arun. I think you have summarized it very, very nicely. I would use the words of our customer when they went ahead with giving us notice that we were going execute this landmark agreement that expressed the amount of trust they have built in Liberty over the time we have been working together. And that trust is built upon, I think, a very strong foundation that really is a function of all of these capabilities that we bring to the table. The hyperscalers and parties that are looking to build this generation to find co located power, of course, are also new to this world.

They have typically in their history, relied on the grid to provide power and now they are finding themselves in a little bit of a different space. And they are looking for strong partners who can make that transition as seamless as possible for them. To make this. The ability to stand up a data center as effortless as possible. We recognize that early on and so have been incredibly focused on building a strong foundation that includes all of the components that are necessary to deliver success in this space. That includes everything from, as you noted, the gas molecule and the interconnection that is required there, the maybe the contracting exercise with the gas.

Through the design, construction, and operation of not just a power plant but also a complex balance of plant that incorporates power quality systems designed to meet the highly volatile load requirements that come with the data center And ultimately, as we noted on the call today, allow us to integrate with the grid down the road. Managing not only the requirements of our scale customer and their data center load, but also the strict requirements that come with being connected to the grid, the ability to synchronize with and meet the voltage and frequency constraints that are necessary to keep our grid up and running.

And then to layer on top of that the commercial intricacies that come with that, the ability to interact with the grid, from a commercial standpoint to leverage the attributes that brings to the table. As you think about all of those capabilities, then built on top of a strong supply chain packaging capabilities that ensure deliverability. You see in Liberty an organization that I would argue is really unrivaled in the space. And as a result, I think we are seeing strong trust and a real vote of confidence from our customers in that regard and ultimately leading to an agreement of this sort of scale.

Arun Jayaram: Great. And my follow-up, Ron, sounds like we are going to have to wait until December to understand maybe more details on the first ESA. Was wondering if you could give us maybe some broad thoughts on the potential duration of this award maybe speak to the credit quality of the Frontier Lab and the ability of this award to unlock the project financing opportunities for Liberty to which Michael described in his prepared remarks.

Ron Gusek: Yes. So first to the question about the counterparty of course, we have said very clearly that we are only going to do business with high quality counterparties that have a strong financial position that allows us to access the necessary financing we were to build out this power business at scale. And so you can trust that the counterparty is somebody that allows us access to the financing we have been talking about and our path forward for project level dollars there to go ahead and execute on this. As far as the term, it does not look any different than we have suggested in the past.

This is a 15 year, would contemplate a 15 year term for the ESA. With the renewal opportunity on top of that. As you have noted, certainly once we get to that place where we have executed on this, we will be in a position to provide further details. Great. Thank you. I will pass it back. Thanks, everyone.

Operator: The next question will come from Stephen Gengaro with Stifel. Please go ahead.

Stephen Gengaro: Thanks. Good morning, everybody.

Ron Gusek: Good morning, Stephen.

Stephen Gengaro: So thanks for taking the question. So 2, the first maybe following up on Arun's questions. You talk a little bit about the prepayment, the capacity prepayment, and the nature of that and how we should be thinking about that over the next several months and quarters?

Michael Stock: Steven, so, yeah, the prepayment is significant. And when we think of significant, we think in the terms of hundreds of millions of dollars. It is a prepayment of capacity fees that will be amortized over probably the first 5 years of the contract. So therefore, it will be a source of cash for that period of time. And we will likely execute before. It will certainly execute before the final ESA is paid. Okay.

Stephen Gengaro: Thanks, Michael. And then on the legacy pressure pumping business, can you talk a little bit about the sort of pricing dynamics you mentioned the massive amount of money you are saving customers and how is that playing into sort of the pricing that you are able to push for? Or is it more just a matter of supply demand and kind of stair step of price as market tightens? Like, how do we think about kind of you getting paid for the massive amount of savings you are bringing to the table?

Ron Gusek: I would say there are a couple of things that you would think about there. First of all, it guarantees or affects of effectively guarantees the utilization of that particular fleet. So you think about the opportunities that you have going through a very challenged environment like we did for the last couple of years. You have this concept of last fleet standing Liberty's utilization remained very strong for all of our fleets through that entire period of time as a function of a couple of things. Number 1, the service quality we bring to the table, but certainly, number 2, level of technology that we bring to the table.

Fleets like that remain in high demand through ups and downs. And so we have that underpinning demand that is always there. Those fleets tend to be more resilient from a pricing standpoint. So even when we go through an environment like we did over the last 2 years, the pricing that we get for the Digi assets tends to be more resilient than you might find for a diesel fleet. Where we might find a little more competition in the space, and as a result, a little more price competitiveness and a bit more of a dynamic environment. The dual fuel assets tend to sit somewhere in the middle there.

The nice thing about an asset like that and the arbitrage opportunity from a fuel standpoint is that it allows us an opportunity to have a conversation with a customer about a pricing change without meaningfully changing the economics of their wells. In other words, if we can move them from a diesel fuel fleet to a natural gas fuel fleet, enabling maybe $50 million a year in annualized savings given the arbitrage as it sits today. We can ask for, like, price increase required to earn us a return on that invested capital. We have always said we want a less than a 3 year cash on cash payback. And they can get fuel savings.

We can get a price increase. And it is a win-win situation for both teams. An environment like this where there is course, very strong savings opportunities for them, it is an opportunity for us to go to go back to them and have a conversation about price. There, of course, are still limits to that. The market is the market, and we live inside of that market. While I believe we always earn a premium to many of the players in the space, there is still a limit beyond which we cannot go So we will continue to we will continue to work pricing upwards over the coming quarters, given the strength in the market.

And certainly with a particular focus on those fleets that are enabling those savings for our Great. Thanks for all the details, Ron.

Operator: The next question will come from Scott Gruber with Citigroup. Please go ahead. Go ahead.

Scott Gruber: Yes. Good morning, Ron and Michael.

Michael Stock: Good morning.

Ron Gusek: Good morning.

Scott Gruber: So congrats on the deal. And would seem pretty logical that securing the first ESA under a larger development agreement would obviously ease the path to future ESAs. How do we think about timing of those additional ESAs to kind of build to the 1.2 gigawatts deployed by 2029 and given that there is been pushback at certain data center sites how do you think about working with this hyperscaler and their kind of array of projects? And your ability to kind of pivot capacity if there is pushback at certain sites and still secure those ESAs in a timely fashion to facilitate the proposed energization schedule.

Ron Gusek: Scott, you got a lot of things to unpack there, but I am going to try to get through them all. If I miss something, do not hesitate to come back on that. So starting with the first part of that, further ESAs. We have talked about the fact that we have a number of projects that we are advancing in parallel with 1 another. That our top 8 projects represented significantly more than the 3 gigawatts of generation that we had available Those conversations continue to progress. At pace. And so we remain excited about those opportunities as well.

Certainly, we will continue to update the market as we make meaningful strides on those and have something that is worthy of bringing to, to you in the form of a press release or something like that. So, we remain excited about those opportunities and certainly continue to see those advance. I tend to agree with your sentiment that making an announcement around 1.2 gigawatts being tied up on top of the previous reservations we have maybe adds a little incentive to move ahead, recognizing that we have got a limited amount of capacity.

As far as the potential concerns out there around some sites being able to move ahead or not, We have talked about the means by which we can build some insurance. For lack of a better term into our business.

Analyst: That involves a couple of things. First of all, we like multiple legs on the stool from a customer standpoint. And so we have aimed to be engaged in conversation and ultimately advance potential projects with a number of end customers, a number of hyperscalers. Recognizing that at any 1 time, there. Somebody could have a change in sentiments, and we want to make sure that is not, something that would have a meaningful impact on our business.

At the same time, we have also worked to make sure that we have access to a range of sites in a range of states and a range of counties inside of those states to ensure that no 1 decision in a particular state or in a particular locale could impact our business. So for example, even in this conversation, this deal that we have announced here today, there is a front running series of sites for that in a particular locale, we have a couple of backup opportunities identified that we could pivot to. They are in different states and would allow us to maybe with a slight delay, still have the project move ahead.

And so we have worked hard to build that into our world so that regardless of how things play out over the coming weeks and months, we have the ability to advance this business, confidently.

Scott Gruber: I appreciate all that color. And then a quick 1, there was a recent permit filing for project in Wyoming called Buffalo Run. Is that 1 of those separate projects with a separate customer that you referred to? The ultimate capacity looks larger but appears separate or is it contemplated within this agreement and any color you can provide on that project since the permit hit recently?

Michael Stock: I can take a little bit of that 1, Scott. As you know, we have been working on this people know that we have worked on this Wyoming site for a while, and we have just initiated the large load permit. That permitting timeline is generally between about a 16 to 18 month period of time. And this really rolls into our plan. We are building a pipeline of projects and potential plants that go all the way into the 2030s. Right? You know, the earliest that project would probably start to execute is the back end of 28. Into 2029 and into 2030.

So as we go through the permitting process, the data center partner on there will sort of refine down its marketing with the hyperscalers We will partner with the final hyperscaler and then potentially move forward on that side. But this is part of what we are doing now is we are building a pipeline for the next decade for a multi gigawatt non geographic specific IPP. So we are working on near term projects as you have seen with the 1.2 gigawatt with very quick and early determinations and moving to ESAs to these larger longer term projects that are setting us up into the 2030s. that is good color. I appreciate it, Ron and Michael.

I will turn it back. Thanks, Scott.

Operator: The next question will come from Joshua Silverstein with UBS. Please go ahead.

Joshua Silverstein: Yes. Hi. Good morning, guys. Want to see if you can help us match up the capacity you have coming in with the deployment schedule for the 400 megawatt Vantage deal and the 1.2 gigawatt deal. Are you guys now kind of looking out to 2029 for the remaining capacity deployment? Or do you still have some room for 2027 and 2028. Look, still have some room for 2027 and 28 deployment.

Ron Gusek: We started taking delivery of generation early. And so we put ourselves in a strong position to be able to meet the needs of some folks who do want to stand up power beginning as early as the back half of next year. So from a ramp standpoint, we do have in our inbound supply chain capacity still to allocate for the last part of 2027 and ramping through 2028.

Michael Stock: Certainly engaged in conversations to put that to work at this point in time. Yeah. The vast majority of what we are working on, as well as that sort of early stage is really the late 28 and through 2029, the last gigawatt or so that will kind of just a bit over a gigawatt that will come energized in 2029. So, yeah, those conversations are now moving further and further along. The conversations regarding the sort of early. Late 27, early 28 are very far advanced. Yes.

Joshua Silverstein: Got it. And then just on this 1.2 gigawatt announcement, once the initial 500 is signed, do you expect the remaining 700 to be covered? Does it come in 1 single ESA? Is it in multiple contracts? Like and why in multiple agreements versus just 1 big 1 for the 1.2? Thanks.

Ron Gusek: So that is really about the way that they tend to build data centers. What we find is that these tend to be a very phased approach. And so, while you hear these very large numbers on sites, whether it is the 1.9 gigawatts in Wyoming or these sites that are all gigawatt plus in scale. The buildings tend to be building blocks of maybe 3, 4, 500 megawatts of IT load at a time. And the ESA is directly a attached to a single building in this case.

So what we are what you are going to see is that as our customer stands up subsequent phases of this, the next building, there will be an ESA associated with that, and we will attach the appropriate megawatts to that. So you will see this happen over a couple of phases. Building by building, site by site.

Michael Stock: Just a little color on that allows for efficiency and permitting and efficiency in finance.

Operator: The next question will come from Marc Bianchi with Cowen. Please go ahead.

Marc Bianchi: Hi, thanks. I just wanted to go back and clarify something. I think Ron, that you mentioned on when the question was asked about the prepayments. I think you said hundreds of millions of dollars and that applies to the 1.2 gigawatts of first question is just 1, correct me if that is wrong. And then the second question is, when would you anticipate seeing that prepayment occur? Is that something that happens in the near term or is sort of ratably as these ESAs get across the finish line?

Ron Gusek: No, you characterized that correct. Correctly. It is hundreds of millions of dollars against the 1.2 gigawatts. As Michael said, that will be ratably applied to the capacity payments over the first 5 years of the contract. And we would expect receipt of that in the near term. it is not contingent on execution of the ESA. Got it. Got it. Thanks for that, Ron.

Marc Bianchi: And then maybe just switching over the frac side of the business. And I guess another earlier question had kind of discussed that you have got some better than market pricing in your fleet because of the quality of service and the ability to, you know, have a lower cost fuel. How should we externally think about leading edge pricing moving higher and how that could ultimately translate into like a material increase in EBITDA level? Do we need to see a 10% or 20% increase in market prices and then that shows up in EBITDA sometime in the middle of 2027? Or maybe just talk to us about the progression there.

Ron Gusek: Yes. I certainly the market has gotten to a stronger spot, I would say from my standpoint as we look out into 2027. To a position where I think we are confident that the market will be supportive of an upward trajectory for pricing. I mentioned in my remarks the strength of the forward curve now. We had been challenged through much of this year with a situation where front month oil price was quite strong, but the curve forward curve fell off relatively rapidly. that there just was not that ability to lock in strong economics through 2027 and even out into 2028. But in the last few weeks, we have really seen a strengthening of the forward curve.

We have got 2027, I think, up above $85 through the end of the year now. And up above 70, maybe even above 75 through 2028. That helps us in that. It gives us confidence around our E&P customers outlook and their confidence around their financial returns for activity in the coming year. As a result, I think puts us in a stronger position around being able to go out and continue to look for price increases on a quarter by quarter basis. Of course, we do not move pricing for all of our fleets at the same sort of rate in some cases. That could happen as frequently as quarterly.

In some cases, it is more of an a semiannual or annual event. And so we will work through those case by case. Customer by customer, but, yes, I would say sitting here today feeling more confident about our ability to go and get some additional price as we head into 2027. I would say that we expect to continue to face inflationary headwinds, particularly on the labor side of things. We have seen input costs climb this year as a result of the tariff situation and also the cost of things like fluids. Obviously, we use a lot of oil and lubricants and things like that. They have climbed pretty meaningfully.

But labor is going to be a big 1 in the coming years. Trucking, we are feeling that on as well. So we are going to be working to pass that through and then on top of that seek to add some additional margin to our bottom line. Thanks for the comments.

Operator: I will turn it back. The next question will come from Caitlin Donohue with Goldman Sachs. Please go ahead.

Analyst: Thank you. Good morning, team. Appreciate you taking our question. I think yesterday's update was positive on the power side. Can you just talk a little bit about what needs to happen now between yesterday's announcement and then final contract execution? What are some of the remaining milestones? And then how much of this is in your control versus maybe the customers or other parties?

Michael Stock: Yeah, Alexa, I can take a little bit of that. We are in the final stages. All the major commercial terms are agreed upon. We are now in the final legal drafting of the ESAs. And we are getting into the site specific portions that are affected that the. That affect the contract. So those are things that need to finalize at the moment, and they take a little while. But sort of feel. We are at that point where we have to trust We have enough of the major terms for a standard ESA, I would say, for the whole 1.2 gigawatts that basically becomes rinse and repeat.

So, you know, once we finalize this first ESA, really the lift for the second or third or fourth with this client you know, will be very. Will be relatively light and only be site specific after that. Okay. that is very helpful. And then just an update on financing. You talked a little bit about conversations there. As you just move towards the contract on the power projects, How much upfront capital should we think about being committed And then will we get financing updates along with the contract or any color on how we should think about it? Yes. So I mean, I think what we are doing there is we are obviously negotiating these ESAs in concert.

With our financial advisers. And as we are moving now even prior to the ESA, we are accelerating the financing conversations, you know, with our financial advisors and the capital sources to try and accelerate their findings as much as possible after the signing of the ESA. Now it still does take a while. That can be anything from 8 weeks to, you know, 3 to 4 months depending on the type of financing and, you know, owners, engineers reports and other bits and pieces. But in. I think we are accelerating there by doing the prework. And I think we can we can have that financing in place in relatively in relative short order.

After the signing of the ESA. Thanks, Michael. We will turn it over.

Operator: The next question will come from Keith MacKey with RBC Capital Markets. Please go ahead.

Keith MacKey: Hey, good morning and thanks for taking my question. Michael, you mentioned the core business generating strong free cash flow. Wondering if you can kind of help us unpack the quarter a little bit more in that respect. So how much of the EBITDA was associated with the frac business versus CapEx and potentially how we should think about that going a little going forward a little bit further as well.

Michael Stock: Yeah. We look at things over the year really, Keith, you know, capital, you know, capital moves in quarter on quarter. EBITDA moves you know, is a solid upswing at this present point in time. They will have reasonably strong free cash flow as we have gone through this year while we are reinvesting in the base business for DigiFront. And so we had positive free cash flow from the base business this quarter. We have had it every other quarter. And the same going into next year where I think we will have good solid free cash flow from the completions business. Well, even while reinvesting in our DG in our DG fleet. Okay.

Keith MacKey: Got it. And just as you think about Q4, sounds like we need to be thinking about a seasonal decline. Can you give us any context around the magnitude of where we think Q4 should shake out from an EBITDA standpoint?

Michael Stock: As we have kind of previewed you are going to see we always see a holiday slowdown. Again, if you are finishing a job just before Christmas, people like to give the people time off around the Christmas holidays, etcetera. You see the onset of Christmas weather. But that is offset by the fact that we have strong commodity prices and we are not seeing any budget exhaustion or anything of that like this year. And I think our customers are gonna drive through the end of the year in their completions programs. So you would expect that, you know, you would have a slightly smaller than normal seasonal breakdown for Q4. Okay. Thanks very much.

Operator: The next question will come from Saurabh Pant with Bank of America. Please go ahead.

Saurabh Pant: Hi. Good morning, Ron and Mike. Good morning. Ron, Mike, apologies if I missed this, but did you update on the CapEx number for this year? I think it was $1.5 billion last quarter, if that number is still the same.

Michael Stock: And then just correct me if I am wrong.

Saurabh Pant: The way I am thinking about financing is you would get this prepayment relatively soon, I am assuming, before the end of the year. Or by the time the ESA is announced or not announced. Right? So that is imminent. Should we think that is enough of a bridge financing and then when the ESA is signed you will put that into a project finance, and we do not need to worry about financing. Right? Is that the right way to think about that?

Michael Stock: I will unpack that a little bit. Yes. CapEx guide for the year is still intact. We are not changing that Yes, we are going to be receiving a significant pre capacity fees that will be booked onto the balance sheet as deferred revenue. And will be a significant source of cash for the fourth quarter. And, you know, we do not anticipate needing to access through the financing in the fourth quarter. Okay.

Saurabh Pant: Fantastic. No, Mike, that is very clear. And then 1 in terms of just on the 1.2 gigawatt deal how should we think about profitability? Are we still thinking high teens unlevered IRR? 1.7, 1.75 in terms of CapEx. Is this along similar lines?

Ron Gusek: Yeah. Nothing has changed there. We continue to target those high teens rate of return on the invested capital. The ultimate capital deployed on any given project is just going to be a function of the complexity of the balance of plan. We have got the base generation that will be a part of any project we do. And then you are going to find, on the very simple end of things where we might have a basic commercial or industrial project, a much lower multiple on the cost of generation to get us to total deployed capital.

And on the other end of that scale for a very, very complex inference data center with a volatile load profile, you are going to see us push up to those higher numbers that approach and head up towards 2 times the cost of generation for full deployment of the facility. So We will be able to give you some color on that on a case by case basis as we start to announce ESAs and some specifics around individual projects.

Michael Stock: Well, the amount of the CapEx does not dilute the earnings. Though. I will reiterate that a couple or 3 times today. The high teens is on all of our capital deployed. We are still targeting approximately that somewhere between, you know, around a 5-times cash on cash payback, you know, for the capital. So sometimes if it is a longer term contract, if it is a 20 year contract, that might move out towards the 6 year mark, 15 year we are in that 5. So, yeah.

So again, just to reiterate, you know, when we undertake extended scope for a client because we are the good partner that we are for them, we do not dilute our capital returns. No, that makes a ton of sense, Mike. Risk and return and capital intensity go all hand in hand. So thank you. Thanks for that clarification. I will turn it back.

Operator: The next question will come from Derek Podhaizer with Piper Sandler. Please go ahead.

Derek Podhaizer: Hey. Good morning. I just want to follow up on Saurabh's question just about the mechanics behind the financing. So it sounds like the significant prepayment will be your source of cash. To kick off this initial 500 megawatts. But then how do we think about the mechanics and the steps to then drop the project into an SPV level financing when you do execute that ESA. As far as potentially refinancing some financing or just trying to work through the mechanics and how we think about that once the ESA and the SPV are set up?

Michael Stock: Right. So let me just clarify. The prepayment is not specific to this project. it is a form of commitment from the client for the whole 1.2 gigawatts, and, yes, it is a source of cash for the corporation for the quarter. So the corporation undertakes long lead time item spending Those initially funded by a convertible bonds in the first quarter of this year. As we signed the ESAs, those assets are dropped down or purchase contracts then dropped down into a dedicated SPV. And that SPV undertakes project financing at that level and then reimburses the corporation for money spent at the corporate level up until that point.

Now we will have a significant amount of equity in those SPVs. We are probably targeting on the order of around 20% equity and about 80% debt at the SPV level. And so therefore, you will see that is that cash recycle back to the corporation being reinvested in long lead time items to generate more projects in the future. Great. Thank you very much. That was super clear. Appreciate that.

Derek Podhaizer: Guess switching over to frac. Just curious about the conversations as we progress into 2027, thinking about activity and pricing, a lot of your customers have been pretty quiet as far as what they are expecting for next year. 85%, and I imagine there is some hedges that have been put into place. You have talked about in your opening remarks the enhancing of E&P revenue visibility. Earlier this week, big peer of yours called for North America to be flat with no recovery in U. S. Fracs.

Just would love to get your comments on how we should start thinking about 2027 and maybe the different moving pieces and levers, if we could think about a real recovery in frac or if it is just too early to tell from right here?

Ron Gusek: Look, I would say, I am not going to say we are going to go back to mid cycle economics or anything like that next year. That would be a step too far. That said, the increase in rig count has ultimately supported an increase in demand for frac equipment, on the order of 15 to 18 incremental frac crews. And that has led to a relatively tight frac market. There is not capacity sitting around looking for work to complete. Our calendar is full. I think you will hear from our peers probably over the course of the coming weeks that their calendars are full and utilization remains strong.

That puts us in a position to look for modest pricing increases quarter on quarter. I would have told you maybe a quarter ago that I was not sure that the fundamentals were there or clarity was there around 2027 yet. Now as we have noted, we have seen the forward curve strengthen that hedge opportunity is there. I think we have confidence in our customers' economics for the coming year. Mhmm. And I think that provides us a backstop for continuing to seek some modest additional price increases. Over and above the inflationary impact.

I expect we are going to continue to feel as we as we work our way through the tail end of this year and into 2027. Many of those conversations are going on right now. We are in RFP season. We have gotten through many of those. But not complete at this point in time. Still got a little more work to do before we have the complete picture for 2027. We will be able to give you that outlook on the next call. Great. Understood. Look forward to that. Ron and Michael, thank you for all the comments. I will turn it back Thanks, Derek.

Operator: The next question will come from Eddie Kim with Barclays. Please go ahead.

Eddie Kim: Hi, good morning. Congratulations on the agreement announced yesterday. Just curious if there is any concern on the timing of that ESA potentially getting pushed out to early 2027 in light of data centers now being a political headwind? Or if your confidence level on that ESA by December is pretty firm at this point?

Ron Gusek: Look, I would say that while we cannot predict what the future holds here over the coming weeks and months, at this point in time, we are confident around our ability to get there. There does not at this point appear to be an issue with finalizing that before the end of the year. As we have said, even in this case, we have made sure we have contingency options in place in the event something were to happen with the primary site such that we could, we could pivot to another site. That might introduce a modest delay if we were to have to do that.

But we have built those contingencies in to make sure that we can navigate whatever potential headwinds might come our way. Understood. Understood.

Eddie Kim: Just shifting over to pressure pumping, you mentioned sort of drilling related delays here in the third quarter. Just wondering if you could provide some more color on that. Is it just the pace of drilling has slowed down? Or does it speak more to your completions operations? Just being so efficient that you are bumping up against the rigs at this point. And just curious if you expect this dynamic to sort of linger for the upcoming quarters or if this was really isolated to 3Q?

Ron Gusek: I think this was a bit of a unique set of circumstances. We went through a situation where coming out of Q1 and headed into Q2, utilization jumped up pretty meaningfully across the broader industry. That incremental activity was driven by uncompleted inventory. And so we had this swath of wells out there that we are waiting for frac crew to come and work on them. That allowed us to accelerate activity levels pretty quickly and have a meaningful runway in front of us. But with the efficiency of our world these days, we work through that inventory pretty quickly. You saw rig count come up. But ultimately, it meant that we were chasing rigs.

And in a couple of particular situations, we actually did catch up to the rig, and it meant some space on our calendar we had not anticipated to push a little work into the into the subsequent quarter. I do not view that as a regular occurrence. Typically, we are in a position where we have got a bit of breathing room between us and the and the rig. Or we have some other option to move the fleet to. In this case, we got caught without either of those, and so we had a bit of an impact on the quarter.

But I would call it a bit of a singularity rather than something we should expect to carry on. Got it. Thanks for that color. I will turn it back.

Operator: The next question will come from Jeffrey LeBlanc with TPH Research. Please go ahead.

Jeffrey LeBlanc: Good morning, Ron and team. Thank you for taking my question. Good morning. Wanted to see if we could briefly revisit your progress on securing the full 3 gigawatts by 2029 and if there is been any incremental capacity since the CAT announcement that was Disclosed in the 10 Q?

Michael Stock: No, so we are very confident that we have the 3 gigawatts available to us to execute and have energized by the end of 29. We have not added or announced any additional capacity on that. Obviously, we continuously work on supply chain. And continuously work with our data center partners who in some ways are looking for earlier generation and we are sort of exploring partnerships and potential ways to satisfy the growing need for power. But nothing else has been announced or committed to. Okay. Thank you very much. I will hand the call back to you, operator.

Operator: The next question will come from Daniel Cutts with Morgan Stanley. Please go ahead.

Daniel Kutz: Hey, thanks. Good morning. I just wanted to come back to the fourth quarter outlook. I think Keith had asked a question on that. I just wanted to maybe dive in a little bit deeper there. If you look historically, think that you guys have commented that fourth quarter top line seasonality is normally maybe a mid maybe mid to high single digit decline. Do you think that given the dynamics that you described, low single digit decline could be a better bogey for this fourth quarter? Or do you think that is too optimistic?

And then how do you think about the associated decremental margins for this fourth quarter? there is obviously different factors that you guys have highlighted some cost pressure, but then incremental pricing traction that helps mute decremental margins. But, yeah, just do you think low single digit revenue decline is too optimistic and how would you characterize incremental margins or decremental margins relative to normal levels for this quarter? Thanks.

Ron Gusek: Look, I would say we are not prepared to give a specific number around that. So I am maybe not going to answer the question that way. Would tell you as we have indicated with our guidance that we do have a positive view to the quarter that we do expect it is not going to be quite as meaningful as we would typically experience in a normal year, given some of the push-through activity, given the strength of demand from the private. So we definitely got some tailwinds from that regard, but will not will not commit to a specific number there. Yep. Fair enough.

Daniel Kutz: And then maybe just, Michael, I think you would alluded to the fact that the plan is to continue investing in incremental DigiPrime assets at least at the kind of replacement level. How do you think about that? And the more near term as you are how do you think about capital allocation towards DigiPrime investments relative to the heavy capital requirements to build out the power business.

Michael Stock: We are very, very bullish on both sides of our business. And, you know, we. Our completions business is a. You know, has very strong returns, and we will continue to build that over the next decade. And the same on the power side where we do not find ourselves to be limited at this point. We have access to many forms of capital to help build that business. We are gonna build a long and lasting decades long business in the power sector. Now, we are not know, again, we are very much about building a long term businesses that are sort of, you know, sort of that we can grow over time.

So we are not looking for the. Maybe the quickest hit, the quickest return. We are going to continue to invest through the cycle in both power and completions, and grow the business over the next 20 years.

Ron Gusek: Daniel, as you can imagine, there are an awful lot of hands up for generation equipment in this particular environment just given the arbitrage between diesel and natural gas. We have, I think, as Michael alluded to, always been clear that this is a is a both and, not an either or. We have spent 15 years building an immense amount trust and strong relationship with our customers on that side. And we will continue to support them with leading edge technology and the service quality that we are well known for. That will mean we will continue to invest in next generation technology at a cadence that is reasonable and appropriate for the market.

And certainly, at this point in time, we have got a lot of asks for it. So we will. We will work to find a balance between the demand that we have there and the cadence at which we are prepared to. Continue to build that equipment. Great. that is all really helpful. Thank you both. I will turn it back.

Operator: The next question will come from John Daniel with Daniel Energy Partners. Please go ahead.

John Daniel: Hey, guys. Thanks for having me. Ron, just to follow on to Derek's questions, but on the core business and recognizing you are in the normal RFP season, but how would you characterize that customer urgency to secure fleets for next year? And really just trying to understand, like, what is happened in last 2 to 3 weeks with respect to inbound calls versus maybe what you are seeing in Q3.

Ron Gusek: Look, I would say well, we did not see it move forward as early as it has in some past years. We have had some situations where I think our next year's RFP season happened in the summertime. We were through a good number of those conversations. We already know the homes for most of our fleets for 2027. I would say that in some cases, there was not even an RFP for that. The trust and strength in the relationship has meant that, our customers are just chosen to carry on with us moving into next year, recognizing there is probably a conversation around price to be had. But Yeah.

But beyond that, committed to committed to having liberty at the table. So we have a few more of those to wrap up, but I think we are we are most of the way through that at this point in time.

John Daniel: Okay. You might not have the math in front of you on this question, but if you had to guess, and I will you know, underline guess, what is the minimum price increase range you think you would need to just simply cover inflationary costs and ballpark is fine. Just trying to understand the magnitude.

Ron Gusek: Magnitude. Oh gosh. I do not know that I know that answer off the top of my head. All right. Fair enough.

John Daniel: Well, that is all I got. Thanks for guys.

Ron Gusek: Unless you. Maybe I will I will I will add 1 thought to that. I would say that we have probably offset much of that now. If you thought about some of the increases that were driving that, I would say tariffs were 1 of them. We have seen an increase in fluids as an example, so lubricants and things like that. That stuff is mostly stabilized now. We got a pretty steep increase through the middle of this year, and we have settled in on that. We are gonna be dealing with labor inflation as I noted, but I think we have got an outlook on that and are being a little proactive around that. So we.

I think we have covered a lot of that. And then layer on top of that some ability to offset those things mostly through technology and innovation. So if you think about if you think about the deployment of DigiPrime and what we have seen there in terms of component longevity, through the deployment of that asset and then also leveraging of AI as a software monitoring tool on top of that. We are we are we are able to blunt some of those impacts somewhat. Mitigate what we might have felt in a more traditional fleet going forward. So I think all of those things together, we are probably in not too bad a spot headed into next year.

We will continue to keep an eye on it. Particularly labor and trucking, I think, are the are the 2 we are gonna see out in the field. Directly influenced by the whole data center build. Fair enough. Okay. Thanks for having me.

Operator: Thank you. I will now turn it back to Ron for closing remarks.

Ron Gusek: America stands at an inflection point. The same nation that led the world through the industrial Revolution, the Digital Revolution and the shale Revolution is now entering a new era of unprecedented energy demand. Artificial intelligence, advanced manufacturing, data centers, reshoring of industry and continued economic growth are all increasing the need for affordable, reliable energy. and modern infrastructure. The challenge before us is straightforward. If we want to remain the world's leading economy, we must ensure that we can produce and deliver the energy that powers it. This should not be a partisan issue. Americans will continue to debate climate policy, environmental priorities, and the composition of our future energy mix. Those discussions are important and necessary.

Equally important are the concerns raised by local communities about how energy infrastructure is developed its impact on the places they call home. These concerns deserve to be taken seriously. Successful projects are built not only with engineering and capital, but with trust transparency, and meaningful engagement. Yet acknowledging those concerns cannot become an excuse for inaction. Reality is that the United States needs more energy infrastructure. We need new generation capacity. We need transmission. We need pipelines. We need storage. We need the infrastructure required to support both traditional and emerging energy resources. Put simply, we need to build. Too often, however, our conversation devolves into a choice between unrestricted development and outright opposition.

Neither approach offers a durable path forward. A moratorium mentality may postpone difficult decisions but it does not solve the underlying challenge. Americans will still need affordable electricity. Businesses will still require reliable power. Communities will still depend on the economic opportunities that energy development can create. The question is not whether demand will exist. The question is whether we will meet it responsibly and proactively or react to shortages rising costs, and declining competitiveness after the fact. What America needs today is not less scrutiny, but more certainty. We need decision making processes that are transparent, rigorous, and efficient. We need policies that encourage investment, while respecting community interests.

Most importantly, we need leaders willing to focus on solutions rather than stalemate. Throughout our history, the United States has succeeded when we confronted challenges with confidence rather than retreat. From railroads to highways, from rural electrification to the Internet, each generation invested in the infrastructure that made future prosperity possible. Energy is the infrastructure challenge of our generation. Regardless of political affiliation, we should be able to agree on a fundamental principle. A growing nation requires a growing energy system. The path forward will require compromise, innovation, and cooperation.

But it must start with a shared commitment to build the infrastructure necessary to secure America's economic future strengthen its energy security, and improve the lives of the people who depend on it every day. The greatest risk is not disagreement. The greatest risk is allowing disagreement to prevent progress. Thanks very much for joining us on the call today. Enjoy the rest of your day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.