Innio (INIO) Q3 2026 Earnings Call Transcript

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DATE

Tuesday, Oct. 27, 2026

CALL PARTICIPANTS

• Vice President of Investor Relations - Timothy Joseph J. Furcillo
• Chief Executive Officer - Olaf Berlien
• Chief Financial Officer - Dennis Schulze
• Global Sales for Data Centers and Power Solutions - Martin Widner
• Product Management and Marketing - Andreas Eberharder
• Global Services - Carl Richards

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TAKEAWAYS

• Revenue -- $1.2 billion, representing 57% year-over-year growth and marking the first quarter in the company's history to exceed the $1 billion threshold.
• Net Income -- $109.2 million, a 176% increase from the prior-year period driven by higher revenue and improved production efficiency.
• Adjusted EBITDA -- $245.4 million, up 70% year over year reflecting significant operating leverage as revenue growth outpaced overhead.
• Adjusted EBITDA Margin -- 21%, an expansion of 1 percentage point due to better pricing in the backlog and improved absorption of growth investments.
• Equipment Revenue -- $777.6 million, an 86% increase year over year fueled by disciplined backlog conversion and large-scale data center deliveries.
• Services Revenue -- $390.3 million, up 20% year over year supported by a growing installed base and a high share of parts sales relative to labor.
• Equipment Order Backlog -- $8.0 billion, a 142% increase from $3.3 billion last year, providing multiyear visibility for the equipment segment.
• Equipment Order Intake -- $2.2 billion, growing 10% year over year with $6.1 billion generated in the first nine months of 2026.
• Data Center Market Share -- 60% of equipment revenue during the quarter, identifying it as the primary driver of growth compared to 2025 levels.
• Book-to-Bill Ratio -- 3.3x for the last 12 months, reflecting equipment orders consistently exceeding rising delivery volumes.
• Full-Year 2026 Revenue Guidance -- $3.9 billion to $4.0 billion, raised from the previous forecast of $3.8 billion to $3.9 billion.
• Full-Year 2026 Adjusted EBITDA Guidance -- $780 million to $800 million, an increase of $60 million at the midpoint from the prior guidance.
• Delivery Guidance -- 4.5 gigawatts total for 2026, with management targeting 1.5 gigawatts in the fourth quarter.
• Net Leverage -- 2.1x, a reduction from 3.6x at the end of 2025, approaching the medium-term target of below 2.0x.
• SG&A Efficiency -- 11% of total revenue, down from 19% in the first quarter of 2026 as the company absorbed previously made growth investments.
• Equipment Adjusted EBITDA per GW -- $106 million, more than triple the $33 million reported in the first quarter of 2026 due to improved pricing and scope.
• Service Opportunity Value -- $50,000 per megawatt per year for the new installed base, representing a 70% increase over the $30,000 generated by the existing fleet.
• Combined Backlog and Reservations -- 19 gigawatts, a 4-gigawatt increase from the previous quarter, including noncancelable and nontradable slot reservations.
• Water Consumption -- 0.1 liter per megawatt hour for type 6 engines, compared to 200 liters for simple cycle gas turbines.
• Equipment ASP -- Over $600 per kilowatt, representing a ramp from the second quarter driven by higher containerization levels and scope.
• Grid Constraint Context -- Grid connection waiting times in the U.S. have increased to more than 6 years, driving demand for behind-the-meter power solutions.
• Strategic Order Milestone -- 620-megawatt follow-on order from a leading data center developer, accompanied by a 500-megawatt long-term service agreement.
• Liberty Energy Order -- 450 megawatts for next-generation data center projects in North America, with deliveries scheduled through 2028.
• Aggreko Partnership -- Strategic partnership extended through 2031, including a minimum of 450 megawatts of Jenbacher engine capacity to be delivered by late 2027.

SUMMARY

Innio N.V. (NASDAQ:INIO) reported record quarterly revenue of $1.2 billion for the third quarter of 2026, the first time the company has exceeded $1 billion in a single quarter. Management stated that performance was driven by a significant ramp-up in equipment deliveries to the data center sector, which now accounts for 60% of equipment revenue. The company reported that adjusted EBITDA reached $245.4 million, representing 70% year-over-year growth as the business realized substantial operating leverage from previous investments in manufacturing capacity. Management indicated that it is scaling annual capacity from 3.5 gigawatts in 2025 toward a target of 10 gigawatts by 2030 to meet accelerating demand for AI infrastructure. The company confirmed that its equipment order backlog has expanded to $8.0 billion, providing multiyear revenue visibility and anchoring a high-margin services flywheel.

• The Waukesha manufacturing facility reached a milestone by assembling its first Jenbacher generator, a key step in expanding global production capacity.
• Management reported that its type 6 engines require 0.1 liter of water per megawatt hour, providing a competitive advantage over turbines that require 200 liters in water-constrained regions.
• Chief Financial Officer Schulze indicated that the company expects to quadruple adjusted services EBITDA by the mid-2030s as the 19-gigawatt backlog and slot reservations enter operation.
• The company entered into a long-term service agreement for 500 megawatts with a major data center operator, covering major overhauls and extending into a second engine lifetime.
• Management noted that gas engines offer a marginal generation cost of $43 per megawatt hour, which is 51% lower than the $89 estimated cost for U.S. grid power.
• The company confirmed that it has no meaningful volumes or financial exposure allocated to NeoCloud operators, prioritizing customers with long-term take agreements from hyperscalers.

INDUSTRY GLOSSARY

• Behind-the-meter: Power generation located on the customer side of the utility meter, allowing direct use without reliance on the public electricity grid.
• Jenbacher: A brand of gas engines manufactured by Innio, primarily used for power generation, cogeneration, and stabilizing utility grids.
• Waukesha: A brand of gas engines manufactured by Innio, specialized in gas compression and power generation for remote and demanding environments.
• Book-to-bill ratio: The ratio of orders received to units shipped and billed, used to measure demand and future revenue visibility.
• NeoCloud: A category of cloud service providers often characterized by rapid expansion through speculative infrastructure build-outs.
• Levelized Cost of Electricity (LCOE): The average total cost of building and operating an asset per unit of total electricity generated over its lifetime.
• Energy as a Service (EaaS): A business model where customers pay for energy services through a subscription or service agreement rather than making an upfront capital investment in equipment.
• Gigawatt (GW): A unit of electric power equal to 1 billion watts.
• type 6 engine: A specific model of Jenbacher gas engine known for its high power density and near-zero water consumption.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the INEO Third Quarter 26 Results Webcast and Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press *1. You will then hear an automated message advising your hand is raised. If you join via a device audio, click the raise hand button on your screen. To withdraw your question or click the lower hand button. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Timothy Joseph J. Furcillo.

VP Investor Relations at INEO. Please go ahead.

Timothy Joseph J. Furcillo: Hello, everyone, and welcome to INEO's Third Quarter 26 Earnings Call. My name is Timothy Joseph J. Furcillo, Vice President of Investor Relations at INEO. I am joined by our CEO, Olaf Berlien, and our CFO, Dennis Schulze. With us in the room are also Martin Widner, leading global sales for data centers and power solutions at INEO, Andreas Eberharder, responsible for product management and marketing, and Carl Richards, heading global services. Let's have a quick look at today's agenda. First, Olaf and Dennis will present the third quarter results. Then you will have approximately 30 minutes for your questions. Please note that this conference call is being recorded today, October 27, 2026.

Before we get started, please do mind the disclaimer. Our conference call remarks will include both GAAP and non-GAAP financial results. Reconciliations of our non-GAAP measures to the most directly comparable GAAP measures can be found in our Form 10 Q for the period ended September 30, 2026, our quarterly earnings release and the corresponding presentation slides, all of which are available on our IR website. We will be making forward looking statements about our business, market position, and future performance. These statements are made only as of today's date. We do not undertake any obligation to update these statements, except as may be required by law.

These statements involve known and unknown risks and uncertainties that may cause our actual results to differ materially from those anticipated or implied today. Additional information on risks and uncertainties, please refer to our SEC filings. Unless otherwise specified, all comparisons refer to Q3 26 versus Q3 25. They are presented using AI generated voice replicas. The Q&A session will be conducted live with the CEO and CFO. And with that, I will hand the call over to Olaf.

Olaf Berlien: Thank you, Timothy. Hello, everyone, and welcome to INEO's third quarter earnings call. INEO delivered a record quarter, exceeding $1 billion in revenue for the first time. Our teams continued to execute with great discipline, driving growth while improving productivity across the business. The market environment remains highly supportive. Our strong order momentum reflects long term customer demand. With more than $6 billion in equipment order intake year-to-date. As AI and data center expansion accelerates, the need for power continues to grow. INEO is well positioned to capture this opportunity with reliable, flexible, and sustainable power solutions. And we are expanding capacity to meet that demand.

Just recently, we reached an important milestone at our Waukesha site. assembling our first Jenbacher generator. With that, let's turn to the key highlights of the quarter. Let me walk you through the key figures on the top of this page. First, record revenue. Total revenue for the quarter was up 57% year-over-year. Second, profitable growth. Adjusted EBITDA grew even faster than revenue, rising by 70% year-over-year, driven by increased operating leverage. Dennis will discuss this in more detail later. Third, disciplined execution. Equipment revenue grew 86%, reflecting strong backlog conversion. Let me emphasize. Our projects are progressing as planned with no delays or cancellations. And fourth, excellent revenue visibility. Equipment order backlog reached $8 billion up 142% year-over-year.

With $2.2 billion in Q3 equipment orders, our last-12-month book-to-bill ratio stands at 3.3x. Building on this performance, we are raising our full year adjusted EBITDA guidance by $60 million at the midpoint to between $780 million and $800 million Dennis will walk you through our outlook in more detail later. On the next slide, I will highlight 3 major order milestones that reinforce this momentum. Starting on the left, a 620 megawatt follow on order from a leading data center developer. We also entered into a long term service agreement covering the first 500 megawatts of previously ordered capacity.

In the center, we secured a 450 megawatt order from Liberty Energy to provide behind the meter power for large scale data projects in North America. Delivery is scheduled for 2028. And on the right, we extended our strategic partnership with Agreco through 2031. The agreement includes a minimum of 450 megawatts of Jenbacher engine capacity to be ordered and delivered by the end of 2027. It also includes access to agreed capacity levels for the remainder of the agreement and a multiyear service agreement for the existing fleet. Together, these commitments show that customers are building their long term strategies around INEO and support sustained profitable growth.

On the next slide, let's take a closer look at the INEO business. As a reminder, this slide, which we shared last quarter, shows our 2 business segments, equipment and services. On the bottom left, you can see equipment represented 58% of revenue over the last 12 months, up 6 percentage points from full year 2025. With 67% of equipment order intake, data centers offer a significant growth opportunity for INEO. At the same time, our long standing core markets remain strong. Services, on the bottom right, contributed 42% of revenue. Over the next decades, our growing installed base is expected to generate attractive recurring high margin revenue.

The equipment backlog and the higher service intensity of data center applications provide further support for long term profitable services growth. With that, let me explain how these 2 segments reinforce each other. Here you can see 1 of the key strengths of the INEO business model. Our service flywheel. We shared this slide also last quarter, let's keep this short. On the left, equipment order intake increased from $3.9 billion in 2025 to $6.8 billion over the last 12 months. This drove our backlog to a record $8 billion. Providing excellent revenue visibility. On the right, our expanding installed base delivered $1.5 billion in services revenue over the last 12 months.

And over its lifetime, each engine generates around 2.5x its original equipment EBITDA in services EBITDA. And as our installed base grows, so does our long term services opportunity. Let's now look at the next slide to see why AI data center customers choose Ineo. Ineo's technology delivers a compelling value proposition for AI power. Let me remind you why customer demand for our solutions is so strong. There are 6 key reasons. First, our solutions allow for modular deployment, which shortens the time to power. Second, we have a proven technology, with a large and global installed base of 44 gigawatts installed over decades. Third, our solutions have the ability to follow rapid AI load swings.

Fourth, we have competitive life cycle costs. Fifth, our solutions have operational flexibility across use cases. And sixth, we deliver strong environmental performance, including near zero water consumption. This is part of a comprehensive sustainability strategy. For the fifth consecutive year, Eco Vadis awarded us its platinum rating, placing INEO among the top 1% of all companies assessed. Let's now look at where our solutions fit into the broader power value chain and the opportunities this creates for INEO. This slide illustrates the full energy value chain and highlights strong demand on both sides of the meter.

On the left, in front of the meter, rising electricity demand and grid constraints drive the need for flexible power solutions that support grid stability. We expect our addressable power solutions market to grow by 30% annually through 2030. Increased gas production is also expected to drive 14% annual growth in our addressable compression market through 2030. On the right, behind the meter, rapid data center expansion fuels demand for fast, reliable on-site power independent of the grid. Here, we expect our addressable market to grow by 65% annually through 2028. For INEO, this creates a significant and sustained growth opportunity. Our success in data centers builds on decades of experience powering industrials, utilities, and gas infrastructure.

This diversified foundation gives us proven technology and an established network to support customers for the long term. We will now take a closer look at 1 of the most important drivers of behind the meter demand, the rapid build out of AI data centers. Let's move to the next page. The rapid growth in power demand is creating a major challenge for The US electricity grid. Expanding the grid will take time, and capacity constraints are likely to persist. Let me highlight a few numbers that illustrate the scale of the problem. First, on the left, average grid connection waiting times have increased from less than 2 years between 2000 and 2007 to more than 6 years today.

And on the right, The US could face a shortfall of up to 80 gigawatts of firm power capacity by 2030, increasing the risk of reliability problems. This creates a long term opportunity for INEO. Our on-site power solutions allow customers to secure electricity without having to wait for the grid. And on the next slide, I will explain why gas engines are particularly well positioned to meet this demand. This slide summarizes why customers choose our gas engines. It compares gas engines with simple cycle gas turbines, combined cycle gas turbines, and fuel cells. Across 5 key criteria. Fast start and load following, part load efficiency, low redundancy requirements, fast and flexible deployment, and CapEx.

Gas engines offer a strong combination. They respond quickly to changing power demand, maintain high efficiency at part load, and allow customers to add capacity in modular steps. They also require less CapEx than fuel cells. For AI data centers, this combination is particularly valuable. Customers need reliable power that can follow load changes and scale with their growth while limiting upfront investments. On the next slide, let me double click on 1 of the criteria that is becoming increasingly important. Water usage. Water use is attracting growing attention. And our engines need almost none. On the left, US media coverage highlights growing concerns about the water demands of data centers and their power supply.

Water availability is an increasingly important issue across political parties in our largest market. The United States. On the right, the comparison shows our advantage. INEOS type 6 engines use less than 0.1 liter water per megawatt hour compared with approximately 200 liters for the turbines shown. This near zero water consumption is a clear advantage for customers, particularly where water availability is constrained. Turning to the next slide, we will bring these advantages together with the economics and long term customer commitments. This slide shows how leading economics and proven performance translate into long term customer commitments. Customer commitments provide the strongest that INEO is being selected for lasting value. Beyond near term equipment availability.

Starting on the left, economics. Bloomberg New Energy Finance puts the levelized cost of electricity of gas engines at $103 per megawatt hour. This is the lowest cost among behind the meter technologies and 26% below fuel cells in the middle, performance. Customer and industry statements highlight our fast response to changing power demand and the reduced need for battery support. And on the right, customer commitments. Customers are reserving capacity well into the future with noncancelable, nontradable slots. They are also signing multiyear supply agreements. That anchor long term relationships. These commitments reflect INEO's operational flexibility and extensive service network. Our service agreements cover major overhauls, extending engine lifetimes, and supporting continued operation.

And these advantages remain relevant even after customers connect to the grid. Let me explain why on the next slide. Even if grid access becomes available, there are compelling reasons for customers to choose behind the meter power solutions. Starting on the left, behind the meter solutions provide backup during grid disruptions and have the ability to adapt to rapidly changing AI loads. They also reduce exposure to grid charges and rising electricity costs. On the right, based on the assumptions shown, Bloomberg NEF puts the marginal generation cost of a gas engine at $43 per megawatt-hour. That is 51% lower than the $89 for grid power.

Together, these economic and operational advantages support continued engine operation long after a grid connection. And this value proposition resonates across a broad and growing customer base. Let's move to Page 16. What matters here is simple. Our customer base is broadening and our routes to market are becoming more diversified. On the left, you see 2 different routes to market. When we sell equipment directly to a customer, demand can naturally be more concentrated. But when we sell to energy as a service companies, rental companies, and channel partners, the customer base becomes more diversified. Behind those partners is a broad range of end customers. Leading hyperscalers, oil and gas companies, and critical infrastructure providers.

Broader routes to market mean more end customers across more markets. Many of these engines are installed on-site to power data centers. The underlying need for power extends beyond any individual intermediary and our engines are designed to serve these sites for decades. The strength of our technology puts us in a privileged position allowing us to be highly selective when choosing customers. We prioritize customers that have either secured long term take agreements with hyperscalers or Frontier AI Labs, or have a clear line of sight to securing such agreements. We can also confirm that we have not allocated any meaningful volumes to NeoCloud operators.

Let's move on to the right hand side where we show how our equipment order intake is evolving. Our largest customer accounted for approximately 20% of order intake in 2024, and 41% in 2025. In our preliminary near term outlook, the largest customer share is approximately 21%. Inyo's growth is built on a broad base of strong customers and partners backed by firm orders and long term commitments. Commitments. With that, let me hand over to Dennis for the financial discussion.

Dennis Schulze: Thank you, Olaf, and hello, everybody, from my side as well. I will walk you through 4 main topics today. First, the financial highlights of the quarter, second, the performance of our equipment business and the visible operating leverage that is coming through. Third, our services business and how we are laying the foundation for future growth. And lastly, our financial policy and our increased full-year 2026 guidance. Let's start with Page 18. INEOS relentless operational execution is translating into improving metrics across the board as it is shown on this page. Based on very strong order intake, equipment order backlog reached $8 billion in Q3. This reflects 2.4x last year's level, with a last-12-month book-to-bill ratio of 3.3x.

Moving to the third line, total revenue. We delivered a strong backlog increase and book to bill performance, while our equipment sales reached a new record. Total revenue was $1.2 billion for the quarter, up 57% year-over-year. Year-to-date, revenue reached $2.8 billion up 46%. This top line development is driven by our strong backlog conversion as well as continuously added production capacity supporting higher deliveries. Adjusted EBITDA was $245 million for the quarter, up 70% year-over-year with the margin expanding 1 percentage point to 21%. EBITDA grew faster than revenue on the back of realized operating leverage, I will talk more about that in a few minutes.

Year-to-date, adjusted EBITDA reached $540 million up 34%, at a 19.5% margin, which includes the growth investments made in the first half of the year. We are well on track to over deliver on our margin targets for the full year and mid term. Let's now turn to Page 19. As you can see, both segments are contributing to our strong growth. Equipment revenue increased 86% year-over-year to $778 million for the quarter, while services revenue increased 20% year-over-year to $390 million. Together, they combine a rapidly expanding equipment business with recurring earnings from the installed fleet.

Total adjusted segment EBITDA reached $257 million for the quarter, up 65% year-over-year with a margin of 22% compared with 21% a year ago and 20% last quarter. Year-to-date, adjusted segment EBITDA was $578 million up 36% at a 21% margin. There are 2 key points to understand about the margin development. First, third quarter profit growth exceeded revenue growth. Better pricing in the backlog is reaching earnings and higher volumes are improving the absorption of our operating costs, and Services is benefiting from a favorable mix and scale. Second, the year to date margin has stepped up quarter over quarter in line with our plan. We invested in capacity, people and our U. S.

Footprint ahead of revenue to prepare for our growth journey, and equipment now represents a larger share of sales. As volumes rise, we are absorbing those growth investments more efficiently. The third quarter results show that improvement, while the group margin will continue to reflect the balance between equipment and higher-margin service. Let me now double click on our equipment segment. Year-to-date, equipment revenue was $1.7 billion up 70% year-over-year. As you can see, data center deliveries are the main driver of that growth, now representing 60% of equipment revenues during Q3. We are seeing very strong demand across data centers, power solutions and compression, with customer requests exceeding the capacity we can supply in each business line.

Quarterly revenue mix and growth reflect how we allocate available capacity and do not indicate underlying demand. We prioritize projects based on customer commitments, delivery readiness and attractive returns. Let me now move to Page 21. Equipment order intake was $2.2 billion for the quarter. Year-to-date, we generated $6.1 billion of equipment order intake up 91% year-over-year. Within this, data center orders grew 29%, to $1.8 billion and compression orders almost doubled to $116 million Power Solutions orders were $265 million in the quarter, and $1.3 billion year to date, up 23%. As you can see, the order book is broad based and demand is growing strongly across every business line.

We also had record equipment order backlog of $8 billion at the end of the quarter, up 142% from $3.3 billion a year ago and up $1.4 billion in this quarter alone. Our equipment orders continue to exceed rising deliveries. There are a few points that indicate the quality of our backlog. First, pricing in the backlog continues to improve. As orders convert, this is expected to have a sustained positive impact on our bottom line. Second, most equipment orders are take or pay. With associated down payments and cancellation fees. These terms demonstrate customer commitment and provide certainty as we allocate capacity. Now turning to our services segment on Page 22.

Our services segment provides recurring high margin earnings from the installed fleet. In addition, there is a clear path to further outsized growth as we convert our backlog. Services revenue grew 20% to $390 million. Year-to-date, it grew 21% to $1.1 billion Adjusted segment EBITDA grew 37% to $124 million at a margin of 32% up from 28%. Year to date, the services margin stands at 31%. The quarter benefited from a higher share of parts relative to labor, and from better absorption of our investments in service personnel and parts capacity. That mix can vary by quarter.

Looking further ahead, the data center engines we are installing today add decade long maintenance demand as they operate, with first larger service events expected around 2030. Our services revenue is nondiscretionary and recurring. We deliver spare parts, perform maintenance, overhauls, and upgrades on an installed base of around 44 gigawatts as of year-end 2025. Let me spend 2 pages on why this matters so much. Customers can buy services transactionally, by part or service event or through a multi year agreement with an agreed scope. Both models create opportunities for repeat business. Customers depend on uptime. Proprietary engine parts, performance upgrades, and trusted local service.

The cost of any disruption at a customer site makes reliable support critical throughout the engine's life. Particularly for our larger engines and in data center applications, we expect to capture the vast majority of the full service parts scope, whether customers choose transactional service or a multiyear agreement. Customers rely on our proprietary parts and specialist expertise throughout the engine life cycle. So the key message here is that regardless of the model through which we serve our customers, whether through transactional service or multi year agreements, our services business is sticky and long term. Let me now quantify the service opportunity ahead of us.

Our installed base of around 44 gigawatts generates around $30 thousand in service revenue per megawatt per year. Last quarter, we provided some color about the makeup of our backlog and slot reservations. Today, that combined number stands at about 19 GW, compared with the over 15 GW figure of last quarter. As a reminder, this is a combined figure across our equipment order backlog and slot reservations. These slot reservations are distinguished from our equipment order backlog but are still noncancelable and nontradable. As these engines enter operation, they expand the installed base. The engines we have in backlog and across reserved slots are expected to create a larger service opportunity per megawatt.

Most of these engines are prime power. So they run around the clock and sit at the higher end of our product range. That means more operating hours than the average engine in our current installed base of about 44 gigawatts. We also expect the service scope on these installations to reach beyond the engine into adjacent parts of the installation, which increases the value we capture throughout the engine life cycle. On average, we expect annual service revenue of more than $50 thousand/MW for our added installed base around 70% higher than the approximately $30 thousand generated by our existing fleet. On the right hand side, we show how service revenue builds over an engine's operating life.

Illustratively, cumulative service revenue exceeds $500 million/GW over the first 10 years. With further substantial revenue beyond that. Our recently signed long term service contract covering 500 megawatts with a major data center operator confirms these assumptions. It includes a major overhaul and extends into a second life cycle. Evidencing the customer's long term commitment to our solution. Based on our current capacity expansion and these dynamics, we strive to quadruple our adjusted service EBITDA till the mid-2030s. Let me now come back to our profitability and discuss the mechanics behind the margin expansion. Let me take you through how this builds up, starting with revenue.

Power delivered rose from 0.7 gigawatts in Q1 to 1.2 GW in Q3, so volume is the first driver of our revenue growth. On top of volume, scope and pricing add to revenue per gigawatt. Second, our overhead is not growing in line with revenue. On the right, adjusted SG&A as share of total revenues fell from 19% in the first quarter to 16% in the second and 11% in Q3. The cost base for the ramp is largely in place. The people, the sites, the supply chain organization. Revenue is now growing into it. That is operating leverage. We expect this ratio to improve further as we move into 2027, based on continued expected growth.

Third, this shows up in our margins. On the left, you can see that equipment adjusted segment EBITDA margin increased from 7.1% in Q1 to 17.1% in Q3. Fueled by the explained operating leverage and pricing. This more than offsets a negative mix effect driven by scope. We also expect our higher margin backlog to increasingly contribute to an even better overall margin profile. Put together, this is what supports adjusted equipment EBITDA per gigawatt delivered, which more than tripled from $33 million in Q1 to $106 million in Q3. We are delivering more power and generating significantly more earnings per gigawatt underpinned by price, scope and operating leverage.

Capacity execution is what allows us to keep delivering this operating leverage. Our expansion projects in Jenbach and Waukesha remain well on track as we scale from 3.5 GW of annual capacity in 2025 toward our expectation of more than 10 GW by 2030. As Olaf mentioned, we recently built the first Jenbacher generator unit at the Waukesha site. An important milestone toward realizing our planned capacity growth. We will release additional slots in measured, conservative stages, tied to the ramp meeting timing and specification requirements. This links customer commitments to capacity we can deliver with our quality promise central to the plan. Before I come to the full year guidance, a short word on our financial policy.

Our net leverage stands at 2.1x as of this quarter, down from 3.6x at the end of 25. Our strong operating cash flow is funding the capacity expansion as well as our deleveraging profile. Against that backdrop, our capital allocation framework has 3 priorities. First, invest in profitable organic growth to meet customer demand. We also continue to review M&A opportunities with value creation central to the assessment. Second, reduce leverage. We target net leverage below 2.0x over the medium term with continued annual deleveraging. At 2.1x, we are approaching that target. We retain flexibility for selective, value accretive M&A that may temporarily increase pro form a net leverage to 2.5x. Third, assess returns of capital alongside our investment opportunity.

We do not intend to pay cash dividends in the near term as we reinvest in the business. We will continue to assess capital returns to shareholders subject to market and other conditions. This brings me to our full year outlook. We are raising it today on both revenue and adjusted EBITDA. On revenue, we now expect between $3.9 billion and $4 billion for the full year. Up from the $3.8 billion to $3.9 billion we guided to in July. That is growth of around 50% at the midpoint versus 2025, with equipment at around 63% of the mix.

On volumes, we are targeting deliveries of approximately 4.5 GW for full-year 2026, which corresponds to approximately 1.5 GW in the fourth quarter. On profitability, we now expect adjusted EBITDA to come in between $780 million and $800 million plus $60 million versus our guide last quarter. At the midpoint, that is growth of 44% versus the $549 million in 2025, and a group margin of approximately 20%. Up from the approximately 19% we guided to in July. Our raised full year outlook implies that we sustain the substantial step up in earnings achieved in Q3 through year end. At the midpoint, fourth quarter adjusted EBITDA would be broadly consistent with Q3 and more than 60% above the prior year.

Reflecting continued conversion of our backlog into profitable growth. Our confidence rests on the orders already secured, the pricing in our backlog and the production ramp demonstrated this quarter. We expect pricing, scope and better cost absorption to support fourth quarter delivery. This concludes our prepared remarks.

Timothy Joseph J. Furcillo: Back to you, Timothy. Before we open the line, I ask everyone to ask just 1 question so we can get to as many people as possible. Operator? Please open the line for questions.

Operator: Thank you. To ask a question, you will need to press *11 on your telephone. Or if you have joined via device audio, click the raise hand button and wait your name to be announced. To withdraw your question, please press *11 again or click the lower hand button. We are now going to take our first question. And this question comes from David from Morgan Stanley. Please go ahead.

David: Oh, hi. Good morning. Good afternoon. Thanks so much for taking my question. Let me see. How do you expect orders to trend after 3 quarters now, of very strong order patterns here. Great to see. How do you expect orders to trend the rest of the year? And then when you consider the slot reservations that you have, how far out are you reserved at this point? Where are customers incrementally putting in reservations now on the margin?

Olaf Berlien: Thanks, David, for the question. Yeah, let me start, and then we will be at Martin and Dennis if I forget something, I think we have still a very strong pipeline. So, I do not see any slowdown for the next years. I am talking about with customer about projects in 2029, and already with 2031. So in this case, it is a strong pipeline for the next years, and it is a combination about firm orders and slot reservations. And this brings us really to strong years ahead.

Dennis Schulze: Yeah. Maybe to add, Olaf. On the slot reservations, as Olaf said, we have a line of sight up to 2029, 2030, 2031. Slot reservations are already signed for that period of time. We still have capacity available for 29 and 30 as capacity will be released. And with that, our slot preservation, let's say, will turn into order between 6 months from now and 18 months from now, depending on how far out they are for the reserve timing. Okay.

David: Great. I hope that answers the question. Helpful. Very helpful. Thanks. Thanks, David.

Operator: Thank you. We are now going to take our next question. And this 1 comes from Joe Ritchie from Goldman Sachs. Please go ahead.

Joe Ritchie: Hey. Good afternoon, everybody. Good afternoon. Hi, Joe. Are they there? So hey, so my so my first question. Or I guess my only question is, you take a look at your dollar per kilowatt that came through equipment revenue this quarter. It was roughly around $650 per kilowatt. that is a really big ramp from the second quarter. Recognize that part of that is going to be pricing and some of it is probably going to be mixing up into the. Your containerized solution. Can you just maybe unpack that number for us to some degree? Like, how much of it was just mix versus pricing?

And then is that a good jumping off point? as we progress beyond Q3.

Dennis Schulze: Hey, Joe. Dennis speaking. Let me take that 1. We obviously do not deconstruct that number, since we are not giving separate revenue numbers for the container and for the equipment. I think it is a fair assumption to say that the majority of the increase is really scope driven. As we are, increasing our deliveries into the data center market, which comes at higher containerization levels, so there is a lot of scope into that increase. At the same point in time, margin is increasing. To reconfirm the joint understanding here, We are increasing the margin for the container itself. We are for the equipment piece, so for the engine in itself.

And overall, you will see the mix effect that is resulting through the numbers that we are looking at. In terms of your question of if this is the right starting point, I would say, overall, containerization ratio has been pretty strong in Q3. But overall, for the next couple of quarters, on average, this is a good starting point to take it up with. There might be some swings up and down, based on the concrete cutoffs and the deals delivered in each respective quarter but you should definitely look forward to see numbers north of 600 going forward. Hope it answered the question, Joe.

Joe Ritchie: Yep. Yeah. it is perfect. Thank you. Thanks.

Operator: Thank you. Our next question comes from the line of Kristen Drinos from RBC Capital Markets. Please go ahead.

Kristen Drinos: Yeah. Good afternoon, and congratulations on a strong quarter. I wanted to dial in a bit more to the structure of the relationships with your data center customers than your energy-as-a-service kind of customers that are servicing those data centers. And, I guess, specifically, can you speak to the average attach rate of the long term service agreements And do these agreements kind of extend beyond that first major or first equipment-- major equipment overhaul. You know, could it be, like, a multi-lifespan agreement? Thanks.

Olaf Berlien: Thanks, Christopher. So I would say Martin will start. And maybe, Carl, you can add something from the service we should add.

Martin: Good morning. Yeah. So our contracts and our full service contracts, were able to sign and negotiate with our customers. From the data centers, from the colocators, and from the energy-as-a-service providers are including the major overhaul not all of them, but the majority is including the major overhaul and reached 10 years and even up to 15 years. So but as you asked, Christopher, so there is no real difference between the data center direct customer, energy-as-a-service customer, or the rental fleet customer. So they all. You. We all have the same long term service contracts with these customers.

And maybe to add which I forgot before, the reason for that is that when we sign the new unit contracts with them, there is a back-to-back normally. When they sign then with us the service agreement, they have a back-to-back. The majority is at the moment 15 years with their end customers. So that allows them, of course, to sign with us a long term service agreement going further out of the major overhaul.

Kristen Drinos: I hope that answered the question, Christopher. Yes. Yep. Thank you very much. Thanks. Thanks.

Operator: Thank you. We are now going to take our next question. And this 1 is from Mark Strauss from JPMorgan. Please go ahead.

Mark Strauss: Yes. Good afternoon. Thank you for taking our questions. So I appreciate the new slide on Page 24. Curious if you can also kind of talk about the service margins, at least directionally speaking. I mean, it sounds like with at least with the ASPs going higher that we should expect margins to go higher as well. I am just curious though kind of directionally whether that slightly higher, materially higher over time? And if you can kind of provide some color around that, maybe around kind of customers. You know, we are hearing some feedback that customers might be looking to self perform some more of this. It.

What you are seeing there is some of that self performance maybe in some of the lower margin parts of service, you know, like the EPC work? Just kind of anything directionally speaking on margins would be great. Thank you.

Olaf Berlien: Okay. So, Carl, maybe you start and. But the margin, first of all, Mark, yeah, thank you for the question. I think you mean Page 22. You see the margin expansion in service from 29% last year now to 31.1% this quarter in 2026. And I think it is this Yeah. But, Carl, maybe I think it is a combination for you.

Dennis Schulze: So overall, we see for the near term moderate positive margin developments because, of course, we continue to invest into ramping up our service infrastructure. as well. Then as we look further out, and that is probably what you are referring to on Page 24, as the minor overhauls then take a stronger share in the service business. This will then be the time where we see stronger increases of margins. So it is in and that is probably also answering in the second part of your question, which was around, okay, what-- where do we expect part of the services to potentially be covered by our customers?

The scope that would potentially be covered outside is the label scope and it is typically lower margin than the part scope. So that is why as Dennis also pointed out on the page earlier, service business is very sticky and the most important portion of it, which is the parts business. Hope that Very helpful.

Mark Strauss: Thank you. Does that answer the question, Mark? Yes. It did. Thank you, Olaf. Thank you, team. Thanks, Mark.

Operator: Thank you. We are now going to take our next question. And this 1 is from David Riley Lane from Bank of America. Please go ahead.

David Ridley Lane: Yes. Thank you. This is David Ridley-Lane on for Andrew Obin. Very much appreciate the additional disclosure that you have not allocated meaningful capacity to NeoClouds Could you also just describe your credit underwriting in taking slot reservation agreements? Any additional disclosure You can understand obviously, the last couple of weeks in credit markets have focused, you know, extensively on credit risk around new data center developers, Any additional disclosure you can give for investors that have more comfort in the quality of your backlog of 19 GW. Thank you.

Olaf Berlien: Yeah. Maybe I give the answer together with Martin. As I said in my remarks, we do not have orders with NeoCloud. So we are not involved in their financial issues or risk from this point of view because we are dealing with the big hyperscalers and with the collocation. And they have already their financing. So in this case, there is from our point of view, not these credit risks because as I said, we do not have business with a NeoCloud provider. But, Martin, maybe you have 1-- good morning, David. good morning, David.

Martin: As Olaf said, we are not working with NeoCloud providers. We are working with hyperscalers collocators, energy-as-a-service companies. You saw Aggreko as a rental company. And as well IPBs. We usually do not work with land developers as I already specified, or mentioned here last time, the last earnings call, And the NeoClouds very often work with LAN developers and reason we are not working with them is because they are very far away from the end customer And when they order the equipment, there is normally no back-to-back.

And we are very carefully, which we mentioned throughout all the time here, we are very carefully with giving the orders and as well as slot reservations to customers where we see that there is already a back to back or there is a very strong sight of having a back-to-back contract with, at the end, the hyperscaler. And due to that, so far, we never worked with them. So both on slot reservations and of definitely not on firm backlog for us.

Olaf Berlien: David, Andrew, does this answer your question?

David Ridley Lane: Or should we add something? No, thank you very much. Really, really appreciate it. Thank you. Thanks, David. Thanks, David. Thanks, Andrew.

Operator: Thank you. We are now taking 1 more question. And this 1 comes from Ben Kallo from Baird. Please go ahead.

Ben Kallo: Hey. Good day, guys. Congrats on the results. Could you. Maybe just taking a step back, could you talk to some of the new state rules around data centers? And then how your Jenbacher solution, plays into that, if you are seeing you know, more orders because, you know, you outlined your water usage, a take-away from turbines or others if you are displacing anyone out in the field and then just. Maybe if you could just highlight different states where, you are seeing strength, in the marketplace. And thank you guys very much.

Olaf Berlien: Yeah. Thank you very much. As I said at the beginning of my speech that we do not have any cancellation or delay in any project. So we are not affected from any issues that you explained. Most of our customer base is in Texas, and all the projects are up to running and have approval. And in this case, I do not have any customer. I am looking now to Martin in his eyes. Did you have any discussion with 1 of the customer which are affected from the issue. I think before you answer, the second part was really that-- I put this chart in, to make it really clear.

We are clearly need more or less no water, or I have to say very limited minimum 0.1 liter, because it is circulate system like in a car. So that means we have no water usage. And I think that is 1 of the biggest advantage in comparison to a turbine, which needs up to 200 liters. And in this case, we are a preferred solution for that. But back to Martin, any discuss-- any customers you have seen or discussing with problems with permission?

Martin: No. Of course, we all have seen or you all have seen the announcement regarding Texas permitting, etcetera, So far, our projects are not canceled at all, not postponed at all. There was a 1-week postponement of 1 project, and now it gets resolved again. So every building continues. Everything is fine there, and the other data centers and the other engines are commissioned. Our main projects, Ben, as you said, are still in Texas, in Virginia, in Ohio, in New York. New Jersey. So I would say many, many states in The United States. The concern about water usage, to be honest, I like because it favors our technology.

I would say we have more requests for our or more asks for our technology than even before. And so with that, we are not affected so far at all by these new regulations.

Ben Kallo: Thank you, guys. Did this answer the question? Yeah. It did. It did. Thank you very much. Very good. Thank you.

Operator: We are now taking the next question. This 1 is from Andy Kaplowitz from Citigroup. Please go ahead.

Andy Kaplowitz: Good morning, everyone. Good morning. So Services revenue has very consistently grown at over 20% this year, and that is really without help from your recent data center equipment order. So how should we think about service going into next year? Can service sustain this type of growth just given the high utilization of your installed base? And the continued high volume of transaction work.

Dennis Schulze: I am sorry? Thanks, Andy. Dennis speaking. As mentioned beforehand, the service business is a very steady, stable and steadily evolving business. We are adding to the installed base on a consistent basis, but we are adding a lot of young fleet So the development that we are seeing for the next couple of years actually is unchanged. It should be, on average, be high single digit growth. This year has been a particularly good year, exaggerating our expectations and going the next couple of years, I see high single digit growth before it really kicks up in the early 2030s. This view is unchanged. Appreciate that, Dennis.

Andy Kaplowitz: Thanks, Andy.

Operator: Thank you. As a reminder, to ask a question, you will need to press *11 on your telephone. Or click the raise hand button on your device screen. We will now take 1 more question. And this question is from Moses Sutton at BNP Paribas. Please go ahead.

Moses Sutton: Thanks for taking my question. Congrats on this quarter. Service intensity, if I could return to that, in Slide 24, it is helpful that you show over $50 thousand/MW-year as estimated for the 19 GW of the backlog and slots, is this equivalent to year 1 service pricing and essentially that type of number we look at it through a given project, it is subject to its annual inflation as the service contract progresses. And I know that there are minor and major overhauls in there as well. So do we think about that over 50 thousand if it is an average over the lifetime, pre inflation adjustment, any. Anything that helps, frame that? Thank you.

Dennis Schulze: that is it. Yeah. Thanks, Moses. Yeah. I think maybe Dennis and Carl could answer I will give it a kick, and then, Carl, you jump in. If there is something missing. So first of all, yes, service intensity is going to increase. And what you saw is completely correct. it is north of $50 thousand per megawatt per year for what we are seeing in the 19 GW backlog and reserves. Going forward, it is going to increase. it is again a blend. As you remember, I mentioned numbers of north of $70 thousand to certain data center projects and other projects might be smaller, but overall the data center intensity is obviously driving this number up.

This is an average over the signed contract life cycle of the. Or the expected contract life cycle of the engines delivered. So this is the average for the 10 or 15 years ahead. And this is growing into it as the right side of the page is showing. So out of the box, the first year is then going to be slower. Before it is really kicking in, and on average we are getting to this number. So the good years that are following with year 5 and then year 10 and in between are adding more than the 50, whilst at the beginning, as always, it is starting slower. Karl?

Carl: Yeah. I think that is exactly it. And then you asked, I think, about pricing as well and indexation. And this-- the pricing shown here or the value of $50 thousand on average per year that is today's value. So that is not inflated. Yep. So you should see, if there is inflation out there, we are indexing our contract and we are going to see indexed up pricing going forward.

Operator: Moses, does this answer your question?

Moses Sutton: Yes. Very helpful. Thank you. Very good. Thank you. See you later. Thank you.

Operator: We have 1 more question. What I will hand back to Olaf for closing remarks.

Olaf Berlien: Yeah. Thanks, thanks for dialing in, and I am looking forward to see and to meet you. If you have any additional questions, please get in contact with Timothy or with Dennis and me, of course. And, yeah, hope to see you soon. Thank you.

Operator: Thank you. Thank you. This concludes today's conference call. Thank for participating. You may now disconnect.

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