INNIO N.V. Ordinary Shares 2026 Q3 Earnings Call

Please go ahead. Hello, everyone, and welcome to INNIO's third quarter 2026 earnings call.

My name is Tim Furcillo, Vice President of Investor Relations at INNIO. 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 INNIO, Andreas Eberharter, responsible for product management and marketing, and Carl Richers, head of 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 27th, 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 30th, 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. For additional information on risks and uncertainties, please refer to our SEC filings. Unless otherwise specified, all comparisons refer to Q3 2026 versus Q3 2025. The remarks are presented using AI-generated voice replicas.

The Q&A session will be conducted live with the CEO and CFO. With that, I will hand the call over to Olaf.

Thank you, Tim. Hello, everyone, and welcome to INNIO's third quarter earnings call. INNIO delivered a record quarter, exceeding $1 billion in quarterly 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. INNIO 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. 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 3.3 times. 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'll highlight three 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 center projects in North America. Delivery is scheduled for 2028. On the right, we extended our strategic partnership with Aggreko 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 multi-year service agreement for the existing fleet. Together, these commitments show that customers are building their long-term strategies around INNIO and support sustained profitable growth. On the next slide, let's take a closer look at INNIO's business.

As a reminder, this slide, which we shared last quarter, shows our two business segments, equipment and services. On the bottom left, you can see equipment represented 58% of revenue over the last 12 months, up six percentage points from full year 2025. With 67% of equipment order intake, data centers offer a significant growth opportunity for INNIO. At the same time, our longstanding 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 two segments reinforce each other. Here you can see one of the key strengths of the INNIO business model, our service flywheel.

We shared this slide also last quarter, so 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. Over its lifetime, each engine generates around 2.5 times its original equipment EBITDA in services EBITDA. 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 INNIO. INNIO'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 six 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 multiple use cases. Sixth, we deliver strong environmental performance, including near zero water consumption. This is part of a comprehensive sustainability strategy. For the fifth consecutive year, EcoVadis awarded us its platinum rating, placing INNIO 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 INNIO. 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 INNIO, 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 one 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 U.S. 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 two years between 2000 and 2007 to more than six years today. On the right, the U.S. 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 INNIO. Our on-site power solutions allow customers to secure electricity without having to wait for the grid.

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 our gas engines with simple cycle gas turbines, combined cycle gas turbines, and fuel cells across five 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 rapid load changes and scale with their growth while limiting upfront investments. On the next slide, let me double-click on one of the criteria that is becoming increasingly important, water usage.