ERock, Inc. 2026 Q2 Earnings Call

Thank you, operator. Hello, and thanks for joining ERock's second quarter 2026 earnings call. I am joined by John Carrington, CEO, Ian Blakely, CFO, and Corey Amthor, President. In a minute, I will turn the call over to John and Ian for their opening comments, after which we will have a question and answer session. Please note that we have also published a supplemental earnings presentation on our investor relations website. Later today, a replay of this call will be available on our investor relations site. As a reminder, we will provide forward-looking statements during this conference call. These statements are not guarantees of future performance and involve a number of risks and assumptions. Please review our SEC filings for a list of actual risk factors that may cause our results to differ materially from those presented during this conference call. We will also discuss non-GAAP measures during this conference call.

Reconciliations of adjusted EBITDA and certain other non-GAAP measures to their closest GAAP counterparts can be found in our earnings release and presentation available on our website. With that, let me turn the call over to John.

Thank you, Ted, and thank you all for joining us on our inaugural earnings call covering our second quarter 2026 results and 2026 guidance. We executed well during the quarter with our backlog up 10x year-over-year to a record $1.7 billion. We contracted with Anthropic for 470 megawatts of generation capacity for a new data center. We commenced construction on the 366-megawatt El Paso Electric project, supporting Meta's data center campus in El Paso. We began operations at our Hyperion facility here in Houston, which will expand our assembly capacity to 1.2 gigawatts by year-end. Finally, we priced our IPO, raising approximately $400 million for the company. Having just gone public in June, I would like to spend a few minutes reviewing our history, the robust market backdrop, and the compelling solutions we have purpose-built for this environment.

I will then discuss our commercial and operational progress during the quarter. Ian Blakely will follow with additional detail on our financial results for the quarter and our outlook for the balance of the year. ERock provides vertically integrated power systems to our customers. We design, install, and operate distributed power systems for commercial and industrial data center and utility customers across the country. We have a 15-year operating history of delivering five nines of reliability across over 400 operational sites, which represents more than 1 gigawatt of installed capacity. This long-term track record of high reliability sets ERock apart from most of its competitors. As many of you know, the market backdrop for our solutions is strong and growing. AI-driven demand has pushed load growth to the highest levels in over 50 years, which, combined with an aging grid, is creating tremendous need for additional generation capacity.

Supply chain constraints have extended gas turbine lead times to over four years. Additionally, interconnection queues can extend to over seven years. Together, these trends have accelerated speed to power needs for hyperscalers, utilities, and C&I customers. Our contracted power system sales backlog reflects that, having grown to approximately $1.7 billion, which is up roughly 10 times year-over-year or an increase of $400 million quarter-over-quarter. ERock was built for this environment. We provide solutions that help customers meet growing power demand safely, reliably, and cost effectively. For many customers, addressing these needs independently can be challenging, as they may not have the dedicated in-house energy expertise or the resources to manage permitting, gas supply, construction, commissioning, utility interconnection, and ongoing optimization across multiple stakeholders.

As we are seeing the regulatory environment evolve to address the intersecting needs of power, grid infrastructure improvements, and community impact, ERock is ideally positioned to meet the emerging bring your own power model. In order to allow our customers to bring their own power quickly and efficiently, we provide a turnkey solution. Our vertical integration means that we design, assemble, install, operate, and monitor our distributed power systems. Through our proprietary Granite software, we optimize the value of our customer's assets. Once our equipment is operating, we provide long-term services over the life of the system, typically contracted for five to 15 years and generating high margin recurring and predictable revenue. A key metric we track is repeat business and renewal rate. Our services renewal rate is running at 100%, clearly demonstrating that value our customers see in our O&M services.

There is also a positive feedback loop as the more systems we deploy in the field, the faster we learn, the more real-world operating data we collect, which feeds back into our design and installation process. I'd like to share some comments on our differentiated technology platform. At the core of the platform is RockBlock, our proprietary natural gas generator. Traditionally, high-emission diesel generators have been the only option available to meet fast-start and transient response needs required for large systems. With our proprietary design, our RockBlocks have been engineered to outperform other reciprocating natural gas engines, meeting fast-start and transient response attributes, but with reduced emissions for far quieter operations and no water requirements.

Regarding fast start, our generator can take full electrical load in as little as 10 seconds, compared with competitive natural gas solutions that may take up to 45 seconds or longer to fully ramp. Given the differential and start times, our competitors' units cannot be used in place of traditional diesel backup. The multiple use cases of our RockBlock lowers the total cost of ownership while supporting customer reliability requirements. RockBlock's proprietary technology is also designed for strong transient response, enabling rapid ramping to match the variable load profiles of AI data centers, both across training and inference workloads. Our ability to maintain stable voltage and frequency through significant load swings is a key point of differentiation versus competing generation options, including turbines, fuel cells, renewables, and other gas-based solutions.

Competing technologies must often use batteries for smoothing, while our system need fewer or no batteries because of our superior transient response profile. From an environmental and deployment perspective, RockBlock is the first natural gas engine on the market that meets the California CARB DG standard, one of the most stringent distributed generation emission standards in the country, and is up to 99% cleaner than diesel, with no water required for operation. Its lower noise profile also supports deployment closer to load centers and communities. RockBlock is modular, with building blocks as small as 500 kilowatts, and its patented design reduces footprints by approximately 50% compared with similar natural gas units. That modularity allows us to tailor systems to a customer's specific load profile, build in redundancy, and deploy more quickly and repeatably than larger single-block alternatives.

RockBlocks have lower emissions, are quieter, require smaller footprints, and use no water. All strong competitive differentiations that matter to our customers. What further differentiates ERock is the integration of hardware, proprietary software, and long-term services under one accountable operating model. Each RockBlock is delivered with our embedded Granite software platform, enabling sub-second data capture from the engine and controls. That data supports predictive diagnostics, site-specific performance optimization, and maintenance planning based on actual operating conditions rather than fixed service intervals. Granite enables us to monitor and control thousands of systems remotely 24/7 from our network operations center. Customers that procure a conventional gas generator often manage separate supplier relationships across installation, maintenance, and service response. With ERock, those responsibilities remain integrated within one platform and one accountable partner, eliminating the handoffs that can create complexity and execution risk.

We assemble RockBlock systems in-house, which protects our intellectual property, gives us greater control over supply chain execution, and supports a capital-light operating model. Because our systems are pre-kitted and modular out of the assembly facility, installation requires less specialized labor and heavy equipment than many competing technologies, improving deployment speed and repeatability for our customers. This unique technology platform results in a single installed asset that is capable of serving multiple use cases. First, it can serve as a bridge power solution for customers waiting to connect to the grid. Our systems run 24/7 and five nines reliability as prime power until grid interconnection is established. Second, when permanent utility service is available, the same asset can be used for backup power, protecting operations from outages.

Enabled by our proprietary Granite software, it can also serve as a source of dispatchable capacity, supporting the grid during periods of peak demand or system constraint. The unique ability to provide dispatchable capacity helps create a more resilient grid, benefiting the utility and the broader community. With our multi-use solution, ERock benefits customers, utilities, and the community. A good example of multiple use cases in practice is our partnership with El Paso Electric and Meta in El Paso, Texas. El Paso Electric was facing an estimated five-year timeline to deliver grid interconnection for a 366-megawatt Meta data center complex, and ERock was selected to close that gap. EPE purchased our systems, and we are on track to commission the site in approximately 15 months, or about four years faster than waiting on the grid. As I mentioned earlier, we have already begun mobilizing on-site in El Paso.

During the initial bridge period, El Paso Electric will collect payments from Meta via PPA. Once grid interconnection is complete, the highly depreciated asset can move into their own rate base offering ratepayers a significantly lower cost of peak capacity. This outcome is a clear win-win for both our customers and the El Paso Electric ratepayers more broadly. Meta gains access to an operational data center years earlier than may otherwise be possible, while El Paso Electric gains a flexible, low cost, low emissions grid asset that can support long-term system reliability. At a time when AI growth is placing greater pressure on utility systems and rates, ERock offers a differentiated asset that increases reliability and lowers costs. This is not a new model for ERock. For more than 15 years, we've partnered with utilities, grid operators, and the communities they serve to deliver reliable power when it's needed most.