Fermi Inc. (FRMI) Q3 2026 Earnings Call Transcript

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DATE

Nov. 12, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Rodrigo Acuna
• Chief Executive Officer - Lee Alan McIntire
• Chief Financial Officer - Robert L. Masson
• Chief Commercial Officer - Anna Bofa
• Chairman of the Board - Marius Haas
• Chief Operating Officer - Jacobo Ortiz

TAKEAWAYS

• Net Loss -- The company reported a net loss of $141.6 million, or $0.22 per share, for the three months ended Sept. 30, 2026.
• Hyperscaler Prepayment -- Management reported an agreement for a $200 million prepayment from an investment-grade hyperscaler to fund 600 megawatts of power development at Project Matador.
• Unrestricted Cash -- Unrestricted cash and cash equivalents totaled $286.3 million at the end of the third quarter.
• Property, Plant, and Equipment -- Total property, plant, and equipment grew to $1.67 billion, reflecting $133.4 million of capital investment during the third quarter.
• Total Debt -- Outstanding debt, net of discounts and issuance costs, reached $958.4 million following a convertible senior notes offering in July.
• Lease Termination -- Fermi terminated its data center lease and services agreement with TensorWave along with the associated AMD credit support agreement.
• Permitting Status -- The company reported having air permits for 6 gigawatts of capacity in-hand to mitigate regional development delays.
• Power Delivery Timeline -- Management targeted initial power availability for the 600 megawatt development in late second quarter or early third quarter of 2027.
• Water Efficiency -- The campus design is expected to utilize 80% less water than traditional methods by using dry and hybrid closed-loop cooling systems.
• Gas Pipeline Capacity -- Energy Transfer committed up to 220,000 BTU of natural gas through an on-site pipeline with a capacity of 450 million cubic feet per day.
• Equipment Valuation -- CEO McIntire estimated the replacement value for on-site turbines and ancillary equipment at approximately $4 billion.
• Customer Pipeline -- The company reported a 2.2 gigawatt pipeline of current capacity with demand identified for several additional gigawatts beyond that level.
• Powered Land Plus Costs -- Management cited market benchmarks for the Powered Land Plus model ranging from $3.9 million to $5.1 million per megawatt in construction costs.
• Powered Land Plus Revenue -- Market data for the Powered Land Plus model indicates fixed charges ranging from $55 to $69 per kilowatt-month in base rent and capacity charges.
• Amendment Fees -- The company paid $25 million in fees to amend its turbine warehouse facility to remove a lease deadline and maintain a 5% minimum principal payment.
• Stock-Based Compensation -- General and administrative expenses included $65.8 million of non-cash stock compensation for the third quarter.
• Equipment Funding -- Management identified $112 million of equipment commitments to be funded using existing facilities through the remainder of 2027 and into 2028.
• Early Construction Funding -- The company signed a $15 million agreement for early construction and site development to maintain customer delivery schedules.
• Steel Purchase Agreement -- Fermi and a hyperscaler are finalizing a $90 million agreement for structural steel and building materials secured by the company in advance.
• Operational Cash Outflow -- Cash used in operating activities was $54.5 million during the third quarter.

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RISKS

• McIntire stated, "Texas for example, paused new air permits before the election," noting that state-level regulatory shifts have added uncertainty to the permitting landscape.
• McIntire noted that "Community angst about the spread of data centers" regarding water, noise, and light has taken several potential development sites off the market.

SUMMARY

Fermi Inc. (NASDAQ:FRMI) reported a strategic shift toward direct agreements with investment-grade hyperscalers and terminated its previous turnkey arrangement with TensorWave. Management stated that the company is prioritizing its Powered Land Plus model to reduce capital requirements and accelerate the delivery of its 2.2 gigawatt power pipeline. The company reported the receipt of significant upfront customer capital to fund vertical construction of energy infrastructure while maintaining critical site permits and equipment on-site. The company is currently transitioning its funding strategy from corporate cash reserves to project-level debt and customer prepayments to align with its long-term construction milestones.

• Chairman Haas noted that the company prefers direct hyperscaler deals over complex multi-party arrangements to reduce project execution complexity.
• Anna Bofa indicated that the 600 megawatt agreement allows the customer to manage its own data center construction while leveraging Fermi's power and campus infrastructure.
• Management noted that the availability of turbines and structural steel already on-site allows customers to accelerate their development schedules in a market constrained by equipment lead times.
• Anna Bofa reported that customers are prioritizing sites with established power infrastructure due to the global scarcity of energy for artificial intelligence expansion.
• The company is working toward anchoring the campus with 4 to 5 investment-grade hyperscalers who can establish an initial presence and expand over time.
• Robert L. Masson stated that the Powered Land Plus model requires the least capital from Fermi while focusing investment where the company has the greatest advantage in power and permits.

INDUSTRY GLOSSARY

• Behind the meter: A renewable or energy production system that provides power directly to an on-site facility without first passing through a utility's transmission and distribution grid.
• ERCOT: The Electric Reliability Council of Texas, which operates the electrical grid and manages the deregulated market for most of the state of Texas.
• Hyperscaler: Large-scale technology companies, such as Amazon, Google, or Microsoft, that require massive data center infrastructure for cloud and AI services.
• Powered Land Plus: A commercial model where Fermi provides land and power infrastructure, but the customer builds and operates its own data center facilities.
• Project Matador: The name of Fermi's integrated energy and data center campus located in the Texas Panhandle.
• Triple-net lease: A lease agreement where the tenant is responsible for paying all expenses of the property, including real estate taxes, insurance, and maintenance.

Full Conference Call Transcript

Operator: Good morning. Welcome to Fermi America's Third Quarter 26 Earnings Call. At this time, all participants are in a listen-only mode. We will open up the floor for your questions after the presentation. If you wish to join the queue to ask a question at any time, you can press 1 or press 2. It is now my pleasure to turn the floor over to your host, Rodrigo Acuna, Director of Investor Relations. The floor is yours.

Rodrigo Acuna: Good morning, and welcome to Fermi America's third quarter 26 earnings call. I am Rodrigo Acuna, Director of Investor Relations, With me today are Lee Alan McIntire, our chief executive officer Robert L. Masson, our chief financial officer and Anna Bofa, our chief commercial officer. Later in the call, we will be joined by Marius Haas, our chairman of the board and Jacobo Ortiz, our chief operating officer. Today's remarks include forward-looking statements. They are subject to risks and uncertainties that could cause actual results to differ materially. Please see the risk factors in our Form 10-K, Form 10-Q, and other SEC filings. We will also discuss non GAAP measures. Definitions and related disclosures are in our investor presentation.

After our prepared remarks, we will take your questions. Now I will turn the call over to Lee.

Lee Alan McIntire: Thanks, Rodrigo. Good morning, everyone. This is my first earnings call as CEO. I want to use it to tell you where we are taking Fermi and how we will get there. Let me start with the environment we are operating in for context. In the past couple months, there is been significant change in the market. Power got more scarce. State by state moratoriums tightened up access to. And in Texas, ERCOT, for example, froze new large load connections, which are powering AI data centers. Land got harder to find. Community angst about the spread of data centers. Concerns about water, noise, light, and the natural environment, have taken many sites off the table.

Permits are harder to come by. Texas for example, paused new air permits before the election. And then the elections last week added more uncertainty. As a result, the gates to first power got harder to clear. that is driving demand higher for safe harbor sites where the region benefits from jobs, economic development, and long term investment, that is bringing investment grade hyperscalers to our door. We have also seen shifts in how AI infrastructure gets financed. The high yield bond market has tightened. We feel more hyperscalers are moving away from yield clouds toward direct relationships. As this shift is occurring, we are focusing our commercial work on deals with investment grade hyperscalers.

Against that backdrop, we made 2 announcements this morning. The TensorWave lease will not move forward. That deal was a complex turnkey lease with a neo-cloud involving multiple parties and requiring the support of third party credit. Most importantly, today, we have reached an exciting agreement with an investment grade hyperscaler for 600 megawatts of our 27 power capacity. it is a simpler deal providing power to a single customer with less to finance. it is a stronger deal on every measure that matters to us. it is nearly 3x the capacity. it is with an investment grade hyperscaler directly. So it does not depend on anyone else's credit.

The customer is building its own data centers under a project manager so Fermi does not carry that construction capital requirement. And importantly, it is putting capital upfront to accelerate construction. These consist of a $200 million prepayment agreement. It provides substantial upfront funding for the 600 megawatt development. And an early construction and site development agreement that sets a framework to start site preparation. We are excited about the structure of this deal. And it comes with little or no dilution. This is our strategy and practice. We invested early to getting the site ready. That lets customers build faster, brings their capital in earlier, and turns their power and advantages into long term revenue opportunities.

We continue to work towards a definitive long-term lease and the customer's identity remains confidential. Our advantage is not just that we have power. it is that we have done the work to help customers turn access to power into operating data centers faster. That work extends to the ground we are building on. Our campus is on land leased from Texas Tech University system, In this market, that partnership is even more valuable. Earlier this week, Texas Tech chancellor Brandon Creighton reaffirmed that the university, quote, remains firmly committed to the success of Project Matador. Unquote.

When community concerns are taking sites off the table, that kind of institutional backing is part of what we believe makes our site a safe harbor. We have the power, the land, and the permits in hand as many of our competitors face strong headwinds. We have invested more than $1.6 billion in the site. We have done the long-lead work ahead of lease construction. Engineering design, site preparation, and moving equipment to site, which reduces execution risk for our customers and our lenders. On permits, we have air permits for 6 gigawatts in-hand. We have a comprehensive water strategy built around conservation. We have designed the project to minimize water use by maximizing dry and hybrid closed loop system.

When we are running at capacity, we expect to use about 80% less water than traditional methods. For fuel, Energy Transfer has committed up to 220,000 BTU natural gas per 4.6-miles of on-site pipeline. Rated at 450 million cubic feet per day that is plenty for 2 gigawatts. On power, we are bringing our own. Behind the meter on our own grid, we have more than 2 gigawatts of generation equipment secured. Many in the Panhandle community are supportive of this project. Lastly, where our competitors are struggling to source equipment we already have turbines on-site. Those advantages are hard for others to replicate. We have a robust pipeline of customers who see this.

Our disciplined capital management puts us in strong position to evolve Fermi from pre-revenue, pre-lease, to our next phase. Now I will turn the call over to Anna who will walk you through how we are building our customer portfolio.

Anna Bofa: Thanks, Lee. I am really excited about the commercial progress we are making at Fermi. I want to spend a few minutes talking about why this hyperscaler relationship is so significant. And what we are seeing across our broader customer pipeline. Power has become 1 of the defining constraints on AI growth, and it is no longer just about how much power you can deliver. it is about how quickly, how reliably, and whether you have the infrastructure in place to support development at scale. 1 thing has become increasingly clear in our conversations with the world's largest technology companies, Customers are no longer waiting for power to come to them. They are building around where power is available.

The 600 megawatt commitment Lee just described is a great example of this shift. We have spent months working closely with this customer's commercial and technical teams listening to their requirements, understanding their development timelines, and aligning our plans around what it will take to bring capacity online as quickly as possible. And what is particularly exciting is how we have been able to align around what each side does best. These are sophisticated customers They have their own engineering standards, building designs, construction teams, and capital. They do not necessarily need us to build their data centers for them.

What they need is reliable power, development ready land, and a partner who can help them move faster. that is precisely what our Powered Land Plus offering is designed to provide. Fermi brings the power, the land, the supporting campus infrastructure. Our customers can bring their own designs and construction capabilities, allowing us to move forward together faster without Fermi having to finance and deliver the entire data center. In this case, we have gone a step further. We have already advanced engineering and design work with our partners, and we secured critical long-lead materials ahead of the customer's final lease. Structural steel is a great example.

Rather than having to start a new procurement cycle, this customer can leverage the deal we have already secured to accelerate its construction schedule. that is the value of the infrastructure work we have done in advance. And why being ready matters so much in this market. The customer is now moving forward with substantial financial commitment and construction preparations ahead of finalizing the long term lease. To me, that speaks to both the urgency of demand and the strength of the partnership we have built. We are targeting initial power availability in late Q2 or early Q3 of 27, and the customer is aligning its development plans with that schedule.

For Fermi, this creates the opportunity to bring our power capacity into revenue sooner while deploying less capital into customer owned data center construction. And importantly, we believe this approach can be replicated. Our pipeline is strong with active discussions across multiple investment grade hyperscalers. If the opportunities we are pursuing today convert into definitive agreements, they could absorb our planned 2.2 gigawatts of capacity. And our broader pipeline extends several gigawatts beyond that. We are also seeing customers think well beyond their initial deployment. They are asking about future expansion rights, and how they can grow with us as additional power becomes available. that is central to how we envision Project Matador developing.

Our strategy is to anchor the campus with 4 to 5 investment grade hyperscalers each able to establish an initial presence and expand over time. That creates the potential for a diversified long-term customer portfolio greater visibility into demand and a more disciplined approach to planning and financing future infrastructure. Our focus now is execution: converting our pipeline into financial commitments and long term agreements, aligning customer construction schedules with our 2027 and 2028 power ramp, and bringing capacity into revenue as quickly and responsibly as possible. Ultimately, we are not simply selling megawatts. We are building the infrastructure and partnerships that enable some of the world's largest technology companies to accelerate their ambition. We have established the foundation.

Now we are seeing customers begin to build on it. With that, I will turn it over to Robert to explain how our 3 commercial offerings and broader capital strategy support that growth.

Robert L. Masson: Thank you, Anna, and good morning. Today, I will cover our third quarter results, our liquidity, our capital strategy, and our covenants. Before I do that, I want to build on Anna's comments and talk about the multiple options Fermi has to create differentiating value. This quarter, we shared our business strategy that aligns our pricing cost and capital requirements for the long term. You can see this strategy in action with the recent news, which is tightly aligned with today's market the capital raising environment, and what our customers need. And it is the right approach for this early stage of our business. Fermi creates value 2 ways, under 1 triple-net lease.

We sell private behind the meter power, and we lease data center real estate on our campus. Each has a fixed charge, and a variable charge. The fixed charges, capacity charge for power, and base rent for real estate, recover our capital and costs, and earn our return. Both escalate in our take or pay over 15 to 20 year terms. The variable charges, for energy, and common area maintenance past fuel, operating costs, insurance, and taxes through to customers. The power is the same in every deal. What changes is how much of the real estate we build. Fermi offers customers 3 options. Our focus is Powered Land Plus.

Because it is what the hyperscalers we are talking to are asking for. Under the Powered Land Plus model, the customer gets a development ready parcel with power, water, fiber, security, and shared campus infrastructure in place. The customer builds and operates the data center. Hyperscalers have their own design and build partners. Powered Land Plus is the fastest to deliver, This model plays to who we are, a private power company. Dedicated power on our campus sets us apart from others in a crowded data center space. Powered Land Plus needs the least capital from Fermi, It puts capital where our advantage is. Power, fuel, and permits. And it leaves the construction risk with the customer.

Greatly reducing our capital requirements. To help you frame each model, our investor presentation shows economics from recent market deals on Page 11. These are market benchmarks not Fermi deal terms. They are based on market rates for 45 deals over a 2 year period. They are not necessarily indicative of where the market is today. And only a small portion are behind the meter deals. what is important is the relative value even at these historical rates. The data shows Powered Land Plus has cost roughly $3.9 to $5.1 million per megawatt of total power capacity to build, At equivalent market rates, it earned about $55 to $69 per kilowatt-month in fixed charges including base rent and capacity charge.

The second model is powered shell. It includes everything in Powered Land Plus, We also deliver the building and its core infrastructure. The customer fits it out, and capital and revenue sit in the middle. In recent deals, powered shell has cost about $5.1 to $6.1 million per megawatt of total power capacity to build, At historic market rates, it earned about $64 to $80 per kilowatt-month in fixed charges, including base rent and capacity charge. Powered Shell brings in more revenue per megawatt than the Powered Land Plus but it needs more Fermi capital. And we take on the added construction and delivery risk of the building. The third model is turnkey.

In the turnkey model, we develop, build, and deliver the complete facility. It earns the most contracted revenue per megawatt but in recent market deals, Turnkey has taken about 3x the capital of Powered Land Plus for about 2.4x the revenue. Each deal is negotiated around what the customer needs. So terms will differ from deal to deal. For our 2027 and 2028 capacity, Fermi and our potential customers are focused on moving quickly committing capital early, and building their own facilities. that is Powered Land Plus, and it keeps our capital needs down. That enables us to sell our power as it comes online, without carrying all the construction capital ourselves.

Our customers get the power they want in the time frame they desire and Fermi is able to generate revenue matched with the power delivery. Now a quick review of our third quarter results. I will focus on cash and liquidity this morning as the details of quarter are available in the release. We ended the quarter with about $316 million of cash, cash equivalents and restricted cash. Including $286 million of unrestricted cash. Property, plant, and equipment grew by about $120 million in the quarter, to about $1.67 billion At quarter end and following our $430 million convertible senior notes offering in July, we had $958 million of debt net of discounts and issuance costs.

On liquidity, we are being disciplined in our capital deployment more closely matching outflows to inflows. Our operating cash outflow was $54.5 million in Q3, and our CapEx was $133 million down from $185 million in Q2 and partially supported by our equipment facilities. Going forward, we have $126 million of equipment commitments. $112 million of which will be funded using our facilities over the remainder of 27, and into 2028. As we transition to vertical construction, for lease requirements, so too our funding is transitioning from Fermi corporate cash to customer prepayments. and project-level debt and equity. So our budgets and spending are aligned with the project easing the burden on corporate cash burn. Now our capital strategy.

Across the campus, our capital strategy aims to reduce the Fermi equity each megawatt needs and reduce corporate capital exposure as we add capacity. We will do that 3 ways. Use project level debt and equity while limiting recourse to our corporate balance sheet, prioritize Powered Land Plus deals for our 2027 capacity and planned 2028 development. Bring customer capital in earlier through development contributions reservation fees, prepayments, and mobilization payments. Like the ones we highlighted earlier. We will report on financing and capital commitments as we hit each milestone. Briefly on covenants. We have made good progress over the past couple months, First, the turbine warehouse facility MUFG.

In October, we supported the transfer of the facility to a new syndicate of lenders. The amendment has 4 significant benefits for Fermi. It removed the November 10 lease deadline. It removed the risk of our lenders marketing the turbines for sale after November 10. It kept our minimum principal payment at 5% of the loan balance rather than stepping up to 10%. Based on our estimates, that eliminates potential required principal payments of more than $55 million over the next 3 quarters. Cash we keep in the business. Lastly, it lets us move the equipment to the site reducing extra storage, transport, and insurance costs of holding it elsewhere.

With the move mostly complete, we are now able to immediately start vertical construction on the turbines. In return, we paid the lenders about $25 million in amendment fees. With that, I will turn it back to Lee.

Lee Alan McIntire: What we have built puts us in an advantaged position Permits, power equipment on-site, fuel, water, and the site work along with an impressive list of proven contractors. Demand for what we offer is strong. We have 5 priorities in the near future. Finalize a definitive lease agreement with our hyperscaler that we had talked about this morning. Convert our other customers in our pipeline into tenants, protect liquidity and match spending to commitments, advance financing partnerships and bring in customer capital. Keep the site ready and work safely to deliver first power next year. Want to thank our employees and contractors. They are the ones actually putting turbines on -site. Piping the ground, and getting our permits in hand.

I want to thank Texas Tech University and the Amarillo community. I want to thank our investors We are 100% committed to converting our advantages into cash flow and returns for you. Robert, Anna and I are now joined by our Chairman, Marius Haas and our Chief Operating Officer, Jacobo Ortiz, and we will take any of your questions.

Operator: Thank you. The floor is now open for questions. If you wish to join the queue to ask a question. Please lift your handset while asking your questions to provide optimal sound quality. Once again, please press 1 on your phone as time to join the queue to ask a question. First question from Paul Golding with Macquarie.

Paul Golding: Congrats on the new hyperscale relationship. I wanted to ask around sort of pending items for executing the definitive leads here. What are the key negotiating points and how you are thinking about incorporating maybe other aspects of your forward purchasing of long lead time items into building out that relationship further beyond this initial 600-megawatt? Thank you.

Anna Bofa: Hi. This is Anna. I am happy to take that question. So in terms of where we are at with the lease negotiations, we are very, very far along. As is indicated by the announcements we had this morning, we are actively pursuing the schedule. And what that means is we have to start mobilizing on our site. In order for us to hit the timeline for power for the customers to hit their goals around getting their data centers stood up. So what that tells you is that we are getting very far along and both committed to working through the final items for the lease.

As soon as we get that done, we will, of course, announce that We are also actively working on not just the 600-megawatt opportunity, but additional opportunities for capacity in 2028. And so the goal is to not just do the initial phase, but to have a second phase following that. And, again, we will announce those definitive agreements as soon as they are signed, and we are able to give you more details.

Paul Golding: Thanks for that, Anna. And maybe as a quick as a quick follow-up, I was just looking to get some additional color on any permitting that the hyperscaler may need for the structures that they would be looking to build? Understood that you have the TCEC air quality permit for up to 6 gigawatts? But wondering if there is any incremental permitting that would be pending in this arrangement. Thank you.

Anna Bofa: Yeah. We have been working very closely with them on all permitting requirements, 1 of our advantages is that we have done the heavy lifting on the permitting side. And so we are able to take advantage of that and lean on the work that we have done in fact, even 1 of the things that has really accelerated the conversation, is because we have that permitting in the same way that we already have the steel. It really just allows us to quickly unlock stuff with the customer.

Operator: Great. Thanks. Thank you. Next question comes from Nicholas Amicucci with Evercore ISI. Please go ahead.

Nicholas Amicucci: Hey. Good morning. I just wanted to touch upon, too, with the $200 million prepayment, and I think, Robert, you had you had alluded to, and Anna just alluded to it as well, just getting vertical with construction on the site. I mean, is this. Is it safe to say that the tech. That the Texas Tech 99 year lease is locked in then? Because we were under the subsidy NTP with the firm lease agreement. So that is

Anna Bofa: This is Anna again. So 1 of the things that we highlighted earlier was just the strength of our relationship with Texas Tech. They have been actively working with us to ensure that we will hit all covenants associated with that lease. And they have been incredible partners to us in that regard. The hyperscale customer has also been an incredible partner in terms of working with us and partnering with TTU as well. So it has been a 3-way partnership to work together to ensure that all the requirements for TTU and that company are hit, and we fully anticipate being able to do that.

Nicholas Amicucci: No. That makes sense. And then, I guess, just going back to kind of, I guess, the $200 million in prepayment, Just. I guess, what does that really allow you to expedite when and where and just how quickly I how quickly does that really expedite the process?

Anna Bofa: Yeah. So it helps us expedite things tremendously. And what we have been doing with the customer is really working through when can they deliver their data centers and when can we have our power available to match to that. So what we determined together was what would be the amount of capital we would need ahead of getting that definitive lease done and the project financing done to ensure we could hit that schedule together. So that is where that $200 million came from with us working together to determine that amount. What that allows us to do is. Our goal is to start mobilizing on-site by December 1.

So with this team in hand, we will be able to go ahead and start doing that.

Nicholas Amicucci: Perfect. Thanks. Yep.

Operator: Next question from John Hodulik with UBS. Please go ahead.

John Hodulik: Great. Thank you. Just a couple of follow-ups, maybe for Anna. Just to clarify, Anna. So given the situation in Texas and permits required, the potential tenant can begin construction immediately, or is there anything else we are sort of waiting for from a permitting standpoint for that. For them to begin construction? And then I guess based on your guys' outlook, when do you expect that the tenant would begin sort of off taking power and, sort of any other color you can provide in terms of you know, you had the 200 megawatts of grid power.

You just sort of could you talk a little bit about your plans for standing up to the assets that you have on-site? You laid a lot of it out on your slides, but just sort of any color on sort of what you would expect to deliver at those dates to the tenant?

Anna Bofa: Absolutely. So I will take your this is Anna again. I will take the first part of your question again on permitting. So just to be clear, again, what we have on our site is all of the permitting so far that is required for customers to be able to start construction and take power. And so we have been able again to work with the customers to ensure that all of the requirements they have from environment to air permitting to local permitting, that all of that is done. And we have we have done that together.

In terms of the second question, in terms of offtake and the and the timeline, as I mentioned, right now, the way that we have it all outlined is our target is to hit the end of Q2, early Q3. For their first building to be available, and then we will continue to deliver buildings, up to 8 buildings As they become available, our power ramp will be ready for them. And the goal is this would be for 2027.

John Hodulik: Got it.

Operator: Thank you. Thank you. Next question comes from Skye Landon with Rothschild. Please go ahead.

Skye Landon: Hi. Thanks for thanks for taking my questions. Firstly, on the new deal, I am just wondering what you can say in regard to potential lease durations and renewable renewals and how long this kind of lease would be? And then secondly, just maybe stepping back a little from this deal and thinking about the value of the underlying assets that you already have, namely the gas turbines We have seen a bunch of headlines on the value of turbines and engines such the anthropic news recently. And I am just wondering if you would be able or willing to comment and if you would had any approaches for your generation assets.

And what you potentially think that the firm you own fleet could fetch on the secondary market at the moment? Thanks.

Lee Alan McIntire: This is Lee McIntire. Yes, you talked about our stock. Our market cap, it is pretty low. If you look at what we have, just for just for the turbines and the ancillary, it equipment, just to support turbines. You know, it is probably worth up to close to $4 billion That does not even take into account the value of the permits, 6 gigawatts of permits we have at site, which is I think, very valuable. Maybe invaluable. The infrastructure we put in, we put in $1.6 billion worth of infrastructure, does not even include that. Value of that infrastructure. So you just take the equipment itself it is worth about $4 billion.

So replacement value alone is certainly worth looking at.

Anna Bofa: Yes. I can take the first part of your question. You asked about lease duration. So what we target in all of our deals is we require 15 to 20 years. This is a long term commitment. it is part of why we have to work so closely and why we take the time to ensure that we get these deals right. And the other thing that we require is triple net. So we target triple net deals, 35 years of duration. That ensures that we have what we need in terms of being able to finance and have a long a long term commitment from the customer.

Skye Landon: Great. Thanks, guys.

Operator: Thank you. Next question comes from Stephen Gengaro with Stifel. Please go ahead.

Stephen Gengaro: Good morning. Thanks for taking the questions. I think 2 for me. Can you talk a bit about for the contracts you announced today, the CapEx requirements on Fermi versus well, basically, on you versus what the what clients will ultimately pay. that is probably less significant. But what CapEx outlays you need to execute this from where you stand?

Robert L. Masson: Yes, happy to take that, Steven. it is Robert L. Masson. So I think in our deck and our strategy, we gave ranges and numbers. If you think about Powered Land Plus, which is where this is, the market range is anywhere from $3.9 to $5.1 million Per megawatt, and we will be within that range. And if you think about the overall deal, that is total cost. You have to realize that we are not starting from 0. We have invested $1.67 billion inside of the project already. And then what we have also talked about is the prepayment now and contemplated further payment. So what we are doing is being very disciplined with our capital.

As we mentioned early on a number of quarters ago, now we are matching our outflows to inflows, and that is the transition we are in here with these projects. So this is a our firm commitments are modest outside everything's going on the project side.

Stephen Gengaro: So Okay. Okay. Thanks. And would you and we have some of the goalposts have moved a bit but we are trying to kind of 0 in on what kind of cash payback or unlevered returns do you think are sufficient that you would. that you kind of require to push forward with contracts?

Robert L. Masson: I think we have we have indicative rates. What I would say is if you look at Slide 11, in our deck, these were 45 market deals. Again, they are not representative of Fermi. But they are 45 market deals and what happened. Those are from 2024 to 2025. So if you think about that as a baseline and then with what makes Fermi unique, have a very large campus. Very few of these were behind the meter deals. We are a behind the meter at scale opportunity. So we really see that we are able to have a premium in the market and you have seen prices move since these deals were announced.

So if you think about some of the metrics we put down here that are our general benchmarks, you can kind of start to see the math and think about what would be more appropriate for us on a higher end.

Stephen Gengaro: Great. No. I appreciate the color. Thank you.

Operator: Thank you. Next question from Noston Ocean with OceanWall. Please go ahead.

Analyst: Thanks very much. I had 2, please. Can I ask you to clarify the precise timing of the $200 million prepayment? Is that a bullet payment or a phased profile? And then secondly, you made reference to the pipeline beyond the 600 megawatts out to 2.2 gigawatts Is there anything more you can say about the makeup of that pipeline and the timeframes that you are expecting to work on to those deals? Thanks.

Anna Bofa: Yes. This is Anna. So in terms of the pre-payment, what I can share is that the agreement dictates that we need to receive the wire in for the $200 million by November 13. And, again, our goal is to mobilize by December 1 and the customer is aligned with that. In terms of your second question on pipeline, so as Robert and I and Lee outlined today, our pipeline is really focused on our strategy. And our strategy is working with direct hyperscalers who can self perform, meaning they can build their own data centers and that they can do that at the speed in which we can stand up power.

And so the reason we are focused on that is that allows us to get the. What we think are the best sort of return profiles as Robert described. It also ensures that we are getting customers who fit our model and who are able to, what we call, land and expand. So we are, again, focused on who are the sort of handful 4 to 5 hyperscalers that can come to our site, get in and start working with us, but over time, expand their footprint on our site. So that is sort of how we think about our pipeline and how we have modeled it out.

Again, if we convert our existing pipeline we will have, you know, leases that total that 2.2 gigawatts of capacity We have clear line of sight into that. The demand is extraordinary for us, and this is why we had the opportunity to really sort of handpick who are the ones that really fit our timeline and our model and that is our focus right now.

Analyst: Thanks.

Operator: Thank you. Next question from Vikram Malhotra with Mizuho. Please go ahead.

Vikram Malhotra: Good morning. Thanks so much. Just a couple of clarifications. On your comments. I guess just first of all, I know you said the TensorWave deal is not moving forward. Did you terminate that? Did they terminate it? Like, what drove because that. You put out a whole framework, and you had agreed on a bunch of things. So I am just wondering, what led to this termination.

Marius Haas: Yes, Vikram. Thank you very much. This is Marius Haas. Love to answer your question. Great question. As you can imagine, we will not be providing any specific details as to specific negotiations between parties. But rest assured, as you know, every single entity in this macro market environment is reassessing every single 1 of their projects based on their priorities, and based on their concept and understanding of when what can get delivered with what level of complexity. And if I had to make a choice today do I like to have a complex 4 party deal or a direct large hyperscaler deal, I would make that choice all day long every day of the week.

We are ecstatic with the relationship with this party, They have spent an enormous amount of time with us. On our site. We understand them. very well. They understand us. What we have not mentioned yet, but it was mentioned in the release, is that there is an incremental $90 million coming on top of the $200 million for the steel. That is negotiations to be finalized here in the coming days. And to Anna's point, the speed at which they have demonstrated they can operate is nothing but impressive. And we are looking to deliver significant volume of power capacity in Q2.

With a fast ramp to 600 megawatts in next year, which is faster ramp faster access to capital than we had in the previous deal.

Vikram Malhotra: Okay. Thanks for that and then just. You mentioned the I wanted to clarify. I think you said November 13 is when you expect to receive the wire for that $200 million. Is that an expectation? And you know, more so more broadly, do you mind giving us a rough, like, time line? When do you anticipate signing a definitive lease with this hyperscaler?

Anna Bofa: Yes. So that is. This is Anna. That is correct. We said the terms dictate that wire due November 13. We have no question in our mind that will be will be met. In terms of the timeline for the lease, what we can share is that we are very far along Everything that we have talked about today should really dictate and show that this deal is moving forward.

In the-- To use the customer's words, they are willing to you know, take the risk to come on our site, start mobilizing, get their timeline ahead of that definitive agreement because of all the agreements that we have in place and all the work that we have done together to partner. So our goal is to really serve this customer hit their timeline, and ensure that they have the capacity that they need to achieve their ambitions into next year.

Vikram Malhotra: Okay. Great. And then just lastly, would we be in the ballpark, if we were to use sort of a high single digit, low double digit yield on cost if that is the way this is negotiated, to just gauge sort of revenue in our models. And then I think you mentioned we should not use the. And you have given some CapEx numbers, but you have also said you have spent a fair amount of money you mind just giving us, like, for this 600-megawatt, if this goes through, like, roughly what is the incremental spend from Fermi's perspective? Thank you.

Robert L. Masson: Hi, Vikram. it is Robert L. Masson again. So, yeah, let me let me point you to a couple slides in the deck. So on slide 13, you can see the PowerLAN plus and the benefit. Now we do not give specific numbers, but it is trying to get at your yield on cost question. And so if you look at that, you can see that the Powered Land Plus is the highest return, and that is really because of the power provided and the incremental capital needed to do that On the other models, it is a little less. But if you look at that side, that is sort of the modeling.

As I said before, referencing slide 11, those are market comps, but not very good market comps from 2024, 2025. There are no behind the meter deals. So you can think of us as a higher ability to get to get rent payments and so forth because of the value of our property Anna talked about the ability to land and expand for the tenant over time is really significant. It aligns well with us and aligns well with them. If I go to your other part of the question, which is the capital employed, I think once the once the deal is finalized, we will come out with the specific deal amounts.

But if you think about, you know, we have invested across the campus to develop certainly a lot of, funding inside our turbine assets. We will be standing up to support 600 megawatts So I think you will be able to kind of triangulate into that. And as I said, once we have the deal finalized and have the terms we will come out with more specifics on the deal itself and what it means.

Vikram Malhotra: Thank you.

Operator: Thank you, ladies and gentlemen. That concludes our question and answer session and our conference call for today. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

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