NET Power (NPWR) Q3 2026 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Friday, Nov. 13, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Bryce Mendes
• Chief Executive Officer - Danny Rice
• President and Chief Operating Officer - Marc Horstman
• Chief Financial Officer - Lee Shuman

TAKEAWAYS

• Cash and Investments -- $183 million as of Sept. 30, including cash equivalents and available-for-sale securities intended to support operations for at least 12 months.
• Debt -- $0, reflecting the company's reliance on existing liquidity and future project-level capital rather than corporate debt.
• Property, Plant, and Equipment -- $141 million, representing an increase from approximately $33 million at the end of 2025.
• Construction-in-Progress -- $118 million, primarily consisting of 10 Wärtsilä reciprocating engines and the associated engineering, procurement, and construction contract.
• Equipment Deposits -- $23 million, paid for two gas turbine generator packages to secure necessary long-lead generation equipment.
• Cost Reimbursement Agreement -- $180 million maximum, allowing for the recovery of approved nonrefundable expense items from a prospective customer under specific conditions.
• Annual G&A Expense -- $30 million to $35 million, representing the current annual run rate for general and administrative costs.
• Customer Pipeline -- Management is negotiating a definitive energy services agreement with a developer of frontier artificial intelligence models for an initial project in Texas.
• Texas Site Status -- The specific land for the initial project in Texas has not yet been secured, though the company is evaluating multiple opportunities.
• Project Permian Status -- The company is continuing the development of this utility-scale project in parallel with its other customer-specific initiatives.
• Financing Requirements -- The company requires project-level financing, partner capital, or additional equity, as none of these sources were committed as of the call date.
• Capital Allocation Policy -- Management stated it will not issue a full notice to proceed under its EPC agreement without first securing committed financing.
• Islanded Power Strategy -- The company is developing standardized solutions combining reciprocating engines, gas turbines, and battery storage to serve co-located data center demand.
• Development Efficiency -- The company is treating its islanded power design as a standardized product to enable faster replication across different generation technologies and scales.
• Market Opportunity -- Management identified a significant gap between the high volume of gas power in development and the small fraction currently under construction in the Texas market.

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

RISKS

• CFO Shuman stated, "None of that financing or capital has been committed, and securing the commercial arrangements that make project financeable will remain our top priority," highlighting the dependency of project execution on future capital markets.
• CFO Shuman noted that "recovering those costs depend on whether the initial project proceeds, recovery under the cost reimbursement agreement, and resale or redeployment of the equipment," referring to the $141 million currently held in property, plant, and equipment.

SUMMARY

NET Power Inc. (NYSE:NPWR) is shifting its business model toward becoming a powered land developer to address rising on-site power demand from data center campuses. Management reported that the company is prioritizing speed to power by utilizing islanded generation solutions that avoid traditional grid interconnection queues and regulatory delays. The company has concentrated its capital on securing standardized equipment, including reciprocating engines and gas turbines, to provide scalable energy solutions for artificial intelligence developers. Management stated that project advancement is contingent upon securing definitive energy services agreements and project-level financing while continuing the parallel development of Project Permian.

• CEO Rice stated, "The market for firm on-site power is real and growing, and the bottlenecks are permitting and execution."
• CEO Rice noted that the company is evaluating "every powered land opportunity in front of us, both in Texas and in other markets, and deploying our capital where we can get power online fastest."
• CFO Shuman stated that the company's current liquidity forecast assumes "we will not issue full notice to proceed under our EPC agreement or make additional significant equipment or construction commitments without committed financing or other capital."
• Marc Horstman indicated that the company aims to "take a site from the first customer conversation to an operating asset" by managing project contracts, fuel supply, and capital deployment.
• Marc Horstman noted that the islanded design will be "replicated faster, more easily, and with greater confidence" by utilizing a standardized conceptual design basis.

INDUSTRY GLOSSARY

• EPC: Engineering, Procurement, and Construction; a common form of contracting arrangement in the energy industry.
• Frontier AI Models: Highly advanced artificial intelligence models that require significant computational power and reliable energy infrastructure.
• Islanded Power: A power generation system designed to operate independently of the main utility grid, often co-located with the load it serves.
• Project Permian: The company's initial utility-scale project utilizing its proprietary oxy-combustion technology.
• Reciprocating Engine: Also known as a piston engine, it is a heat engine that uses one or more reciprocating pistons to convert pressure into a rotating motion for power generation.
• Wärtsilä: A Finnish global leader in innovative technologies and lifecycle solutions for the marine and energy markets.

Full Conference Call Transcript

Operator: Greetings, and welcome to the NET Power Inc. Third Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bryce Mendes, Director of Investor Relations. Thank you. You may begin.

Bryce Mendes: Thank you. Good morning, everyone, and welcome to NET Power's third quarter 2026 earnings conference call. With me on the call today, we have our Chief Executive Officer, Danny Rice, our President and Chief Operating Officer, Marc Horstman, and our Chief Financial Officer, Lee Shuman. Yesterday, we issued our earnings release for the third quarter ended September 30th, 2026, along with the presentation that accompanies today's remarks. Both are available on our investor relations website at ir.netpower.com. During today's call, our remarks will include forward-looking statements, including statements about the development, permitting, financing, and timing of our projects, our prospective customer and a definitive energy services agreement, our cost reimbursement agreement, and our liquidity.

Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. We assume no obligation to update any forward-looking statements. Additional information about factors that could cause actual results to differ materially is contained in the cautionary statement in yesterday's earnings release and in the risk factors in the company's annual report on Form 10-K for the year ended December 31st, 2025, and the quarterly report on Form 10-Q for the quarter ended September 30th, 2026, each filed with the SEC and available on our website. With that, I'll turn the call over to Danny Rice, NET Power's Chief Executive Officer.

Danny Rice: Thanks, Bryce, and good morning, everyone. We released an investor presentation yesterday that I encourage you to have open during our prepared remarks. I'm going to give a few minutes on the macro backdrop because it shapes how we are approaching the business of NET Power. Slide three sets the stage. Data center demand for power keeps climbing. Even once grid-connected, large loads can be cut off when the grid is under stress. So more and more of this demand is being served on-site, and as a result, on-site natural gas has really become a market of its own.

Slide four shows the market response, and Texas is really setting the model, with some of the largest on-site power campuses being developed in the country. But the more important takeaway is the gap between ambition and execution. A great deal of gas power is in development, and only a small fraction of it is under construction. That is where NET Power fits in and what we are working so hard to address. We are targeting a large market, one that is still growing and that needs co-located power generation solutions that are flexible and fast, and we are working towards the timelines that customers need.

On the regulatory front, in Texas and more broadly, policymakers are focused on who bears the cost of new data center load. Islanded power doesn't draw on the grid, doesn't sit in an interconnection queue, and it ultimately is paid for by the customer it serves. Done right, these projects can bring jobs and expand the tax base to their communities. We will continue to engage with all stakeholders constructively, and we still believe self-supplied generation will be part of the answer Texas and other states are looking for. What we cannot control is the timing of regulatory processes, and customers need power as soon as possible. We are prioritizing speed to power.

That means evaluating every powered land opportunity in front of us, both in Texas and in other markets, and deploying our capital where we can get power online fastest. With that, I will turn it over to Marc.

Marc Horstman: Thanks, Danny. Good morning, everyone. Slide five lays out what NET Power does as a powered land developer. We develop financeable customer opportunities, secure reliable fuel supply, manage project contracts, deploy capital with discipline, prepare assets for reliable operation, and deliver projects predictably. In short, our aim is to take a site from the first customer conversation to an operating asset. We are focused on what customers are buying today: speed to power, reliability, and scale. To deliver that, we are developing islanded power solutions, combining recip engines, gas turbines, and battery storage that are designed to serve a co-located data center demand and scale with the customer, one building at a time.

Each solution is sized with redundancy to meet data center reliability requirements. We treat our islanded design as a product, not as a one-off project. Because it will be standardized, we expect it to replicate it faster, more easily, and with greater confidence, and adapt it across a range of generation technologies and sizes. To support that, we have built a tool set that helps us evaluate options, identify the right configuration, and then verify a conceptual design basis that meets each customer's financial and operational needs.

We are developing our initial project for a prospective customer who is a leading developer of frontier artificial intelligence models at a site in Texas that we have not yet secured, and that is separate from Project Permian. Other events occur, the customer must reimburse our non-refundable cost of approved expense items, up to approximately $180 million and subject to conditions, unless we elect to keep the related equipment. We are negotiating towards a definitive energy services agreement, but neither party is obligated to enter into one. We intend to continue development of Project Permian as a second project in parallel. I will hand it over to Lee.

Lee Shuman: Thank you, Marc. Good morning. Now focusing on slide six. We ended the third quarter with approximately $183 million of cash equivalents, and investments, and no debt. Property, plant, and equipment grew to about $141 million, up from roughly $33 million at year-end. That is the line I would like to call out on this slide. Nearly all of it is construction-in-progress, about $118 million for 10 Wärtsilä reciprocating engines and the related EPC contract, plus about $23 million of deposits on two gas turbine generator packages. As our 10-Q explains, recovering those costs depend on whether the initial project proceeds, recovery under the cost reimbursement agreement, and resale or redeployment of the equipment.

We will continue to manage our costs with discipline. Our G&A run rate is approximately $30 million-$35 million a year. Our liquidity forecast assumes that we will not issue full notice to proceed under our EPC agreement or make additional significant equipment or construction commitments without committed financing or other capital. On that basis, we believe our existing cash and available-for-sale securities will be sufficient to meet our obligations for at least the next 12 months. Our projects will require project-level financing, partner capital, additional equity, or some combination of those sources. None of that financing or capital has been committed, and securing the commercial arrangements that make project financeable will remain our top priority.

With that, I will pass it back to Danny.

Danny Rice: Thanks, Lee. The market for firm on-site power is real and growing, and the bottlenecks are permitting and execution. We have the team, we have the equipment, and we have a prospective customer. We will stay flexible on where we build so we can stay uncompromising on how fast it can happen. We look forward to updating you as we work towards the definitive energy services agreements. Thank you for your time this morning.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

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

The Motley Fool has positions in and recommends Net Power. The Motley Fool has a disclosure policy.