Q4 2025 Earnings Call — March 30, 2026
Analyst Paul Golding (Macquarie): Thanks so much. Hey, how are you? I wanted to ask two near-term questions, one being what the key discussion points are with prospective tenants that are being negotiated as you try to work to a definitive agreement. And secondly, more specifically on the near-term energization milestones, as you look to the SGT 800 frames that you've received in Houston, now that you have the equipment on hand, how is the timeline coming together for deployment of those assets and how that might relate to your negotiations with prospects?
Executive Miles (Title): The number one issue, the number two issue, and the number three issue with our tenants is they want all of our power and they want it all forever. But for our model to work, we need to have multiple tenants so that, you know, you deal with the differences in loads. So that really is the issue. And so from when they get out there to the site, they're blown away by the sight, and they realize this is a place you can generate a significant amount of power, and they want it all.
In terms of the SGT-800s, we've had quite a bit of luck. The units came, as you're aware of, to Houston. We kept them in a free trade zone in hoping maybe we could get a break while we were waiting for our environmental permit. And literally the second the Supreme Court had a ruling on the tariffs, we checked them into the country. We saved ourselves probably $27 to $30 million. And I'll have them put the pictures. You can see the SGT 800 foundations are ready to pour. But on the tenant side, because I know that's what everybody is focused on, what we can share is that we're in the contracting phase with multiple new potential tenants. But everyone needs to understand these transactions are complex, they're multi-party, and they involve billions of dollars.
So, hey, Paul, it's Miles here. I would just add that, and we've said this all along, the other thing is not a tension point, but it's one of our things we're holding firm on, is we want investment-grade wraps. That's why Toby earlier referred to the fact that this is really companies saying, are they going to put their balance sheet up? And when we say companies, we're talking about investment-grade companies that wrap these things. So then the second thing I would add is that it's not just what we do and what we control, but the ultimate off-takers also, or development partners, need to look at this and say, can they get their side of the equation up? In other words, all their MEP and their RACs, et cetera. And so we're doing more, I'll say, reverse due diligence than I expected we were going to have to do to make sure that they can have their stuff up in time to take our power, because our power is ahead of most people's ability to get the other stuff in place. That has been one of the bigger surprises. If you say Jeremy in the fall was worried whether convincing people that we had the power, we now want to be convinced they have the MEP because we do have the power and we need to put it to work.
Analyst Paul Golding (Macquarie): Thanks for that color, Toby and Miles. If I could just sneak one more in then on the back of the discussion seeming to be pretty robust around demand. Is pricing, are you able to give any color on pricing directionally relative to where you expect it to be when you first started considering sort of the financial approach to the first gigawatt of power?
Executive Miles (Title): We're at the same. And we'll talk to Bert for more, but we're definitely ready to say we're at the same.
Analyst Vikram Mulhatra (Mizuho): Morning. Thanks for taking the questions. Congrats on your full fiscal year. I guess I just want to dig deeper, if you can, on kind of the tenant discussions. And I'm wondering if there are different sticking points for sort of Fermi as a landlord versus your potential tenants, and kind of how those sticking points may, you know, result in, I guess, delays in signing. I think you cited 12 months in your share. Over the next 12 months, and I just want to get a better understanding on the sticking points from either side, and from a timeline perspective, should we think over 12 months, or could it be sooner?
Executive Miles (Title): Again, I know it comes across as braggadocious. Once they get to the site, it really is they want the power, and they're trying to lock in all of our power at a price today, because I think our tenants really appreciate the scarcity of the gen sets, and that the price of energy for them will be increasing, so they are rightfully focused on locking in as much power at today's prices as possible. That really is it, and like I said, we're in the contracting phase of this process.
In terms of providing guidance on the time, the board, the coaching, I've got a really great – Jeremy has a really great board. Y'all can take a look at it. Their point is when we provide guidance on timing or expectations, that changes the dynamics of the negotiations – to Fairme's disadvantage. And so the board was pretty firm with me on Saturday that we're not going to discuss the timing because what we're doing is it changes the dynamics of, you know, these aren't $1 billion transactions. These are multi-billion dollar transactions, and they just want to keep the dynamics as flat as possible.
Analyst Vikram Mulhatra (Mizuho): Okay. And then just two things to clarify. One, the I guess the shareholder letter mentioned sort of term sheets and various agreements. I just want to clarify, one, is there an actual LOI in place with any of these, you know, five, six, seven tenants that you're negotiating, or is that sort of the next step? And number two, if you could just clarify any of the near-term financings, like, you know, from MUFG, is there a stipulation in any of these financings that you must have a lease signed by, you know, XYZ period?
Executive Miles (Title): I think our comment that we're comfortable with is signing new LOIs, it will be a normal course of our business, and we won't be commenting on them post that. I think it's kind of one of the lessons that we've learned so far is we do not want to change the negotiating dynamics. Each one of these financing is separate, and I'm sure we've disclosed it. Miles, I just don't want to comment on the... We don't have any tenants signing covenants, if you will, Vikram, on our financing arrangements. And the other thing to remember that these financings are non-recourse to the parent, which I think is really important when you think of the overall public company.
And then, you know, the thing that hasn't changed is that we do have an agreement with Texas Tech that we'll have a tenant by the end of 2026. That remains the same, and we're working collaboratively with them to advance that. So that's probably what's most important right now is to understand that we're still full on and we feel really good about where we're at. It's only a 200 megawatt tenant. I don't want to call that, I don't want to demean it, but that should be cutting. That's not close to the expectation. We don't have a tenant that wants 200 megawatt. That's not our problem. They want more. Be clear. Yeah. If we had to have a college, you only could have a 200 megawatt tenant, that would be a problem for us. The problem is they want, you know, gigawatts.
Analyst Ryan Gravis (UBS): Hey, guys. Miles, you touched on this earlier, but what additional development at the site are you planning at this point before a first tenant lease is signed and you secure project financing? Is there anything you can share in terms of more precise CapEx spending or cash burn that you're expecting this year?
Executive Miles (Title): Yeah, so we are going to be very diligent about matching our development with the signing of a project financing as well and our tenant leases. But as far as we'll go, and look, these things change. This is a long-term project, not a 30-day project. But what we'll do is have the site ready to receive our power generation equipment. It's largely there today. There's a little incremental work that needs to be done so that we can place those generation assets into service as soon as we see that we've got tenant agreements to line up with the timing of that installation.
Yeah, I think what we were talking about, there we've become not skeptical, but we definitely want to see that the timing of our development matches the MEP that our tenants can acquire. And if you say, is there a change in how we as a company have viewed it, is we've become – where I would say last year we were focused on people being able to do great due diligence on us. We have pivoted and actually made hires. We picked up a really great person from Meta that helps us do diligence on the pace of execution of our potential tenants.
Analyst Stephen Jangaro (Stiefel): Thanks. Good morning, everybody. When we think about, like, your tenants' need for power and sort of the various tenants and the timing of kind of when their data centers are up and running and when they need power. When you're talking to the customers, how far out are they thinking about securing power relative to when the data center becomes fully operational?
Executive Miles (Title): First of all, that differs between each tenant, and it's the number one – not the number one, but it's in the top three – diligence items we have or how we prioritize in it is obviously, you know, are you financeable? I argue investment grade is number one. But the number two thing is we actually, unlike most companies in the world, are sitting on a whole heck of a lot of power generation that we are very anxious to put to work. And so it is each... That is... There's no one answer to it, but when you think about how we're running the business and prioritizing people that we would contract, that's probably our number two thing. How fast? We can have the power because of all the work we did at the site to date. We can have the power, what we now realize, probably faster than some of them can have the MEP. So that becomes how we prioritize who we attract with us.
Analyst Stephen Jangaro (Stiefel): And the follow-up is just kind of going back to the first potential tenant in the negotiations that were terminated or at least maybe terminated but delayed at least. When did they actually need power? Because I'm just sort of thinking if there's a lack of power, what are they doing for power if they're not doing it with you?
Executive Miles (Title): What I look back, and again, I don't believe that – I hope – that the first tenant is a tenant. So I just want to convey that. When we look at when they leave power, you know, it definitely brought, you know, our attention is we have to really make sure that these tenants have the NDP. I think it's a bigger bottleneck than we originally anticipated.
Executive Miles (Title): Yeah, look, I So they originally were looking at they would have power that they could deploy and make revenue themselves off of in 2027, okay? But I think there's two parts to your overall question, which is when do off-takers need power? And if you look at their planned portfolios, most of them are into 27, 28, where they need to consume the power. However, and this is an important point, you can read it in the newspapers. There's other sites that are not capable of delivering on the power that they've committed to these. So we do expect and we've seen some potential reallocations of where they're going to get their power that they thought they already had and they actually don't have. We're in a really special spot. We are in a special spot because we have a lot of power, and the world recognizes it.
Analyst Nick Amakuchi (Evercore ISI): Hey, good morning, guys. Just wanted to touch upon something. So I guess, you know, just given kind of multiple new LOIs in process, you know, in addition to the original one, I just wanted to kind of get some sense. Has there been any kind of potential – has the potential scope of those tenants increased, meaning like different, you know, different types of tenants, or is it still more or less – Obviously, investment grade, but just kind of trying to see if those horizons broadened a little bit.
Executive Miles (Title): I think the only thing that I would say is significant engagement by chip makers, not some directly, not directly. I think they are getting really concerned that those chips are only worth the power behind them. So, in terms of scope, that would be the only change I would suggest.
Executive Miles (Title): That's how I would describe it as well. The chip makers are more directly engaged in where's the power going to come from. And frankly, where's the whole consumption of their chips going to come from is really what they're focused on. I think y'all are off the markets aware that the leading chip makers are now realizing they're getting behind a number of companies. And so that changes the dynamics so it does broaden it. For us, the key thing is, and you know this as well as anybody, we do need a diversity of load to maximize the efficiency of our gen sets. So I think what you're seeing us do is a little more math, not a little more, a lot more math, on we are better off with a more diversified load-based system maximize the efficiency of this private grid that we're building.
The other thing I would just add in terms of market dynamics, what's happening is increasingly on the MEP side, the emergence, if you will, of modular MEP, which if you think of it as a chip maker, what you're really concerned about is speed to token. And so you look through the whole value chain and you say, where do I have places to speed up? There's opportunities to speed up the timing of MEP, and so you see more modular players coming in that help make that happen, which is a huge positive for us because we've got the power.
Executive Miles (Title): Yeah, that is another thing that we've become hyper-focused on, and one of the great things that we've had exposure to from the oil and gas business is modularization. And, again, it does then, in terms of hiring people, we are bringing people in that can help us diligence and engage on our client supply chain for MEP. That has been a real focus for us the last month.
Analyst Nick Amakuchi (Evercore ISI): Great. And then, Miles, you had mentioned obviously today kind of the IPO lockup expires. and, you know, the intention is still to, you know, follow as a REAP for 2025. Just wanted to see, are there any specific management sales that either need to occur or that we should be on the lookout for to satisfy that status?
Executive Miles (Title): Yes, so there's not a management sale necessarily required for the, at the time of this expiration of the lockup. However, to meet the REAP 550 rules, there will be, what I would say, an orderly sell-down that we're working to make that happen. And then that – we have a few months to make that happen. And we're in – you know, we got an advisor we've retained to help with that. And so I fully expect that that will be done in an orderly fashion, Nick. But that's been there from day one.
And now is the time that we're focusing on getting that executed. Obviously, my family is the problem. Today, we own about 38% of the company. What I would hope to achieve, can't promise, that if our family has to sell down, it needs to be to an accretive buyer. And what I mean by that is, I want one plus one on this sell down to equal three or four. And that's why we've hired an advisor to help us find which acquirer of a block. And frankly, I don't want to sell down hardly anything at all, especially at these levels. But if we're going to do it, I want it to be something that adds something to the brand of Fairme. So that is our goal there.
Analyst Sky Landon (Rothschild & Company): Hi, coming back to the tenant questions, clearly a few months ago we were talking about kind of one client taking the full first gigawatt. It now seems like you're potentially balancing trying to keep multiple parties happy. So just wondering if that first gigawatt maybe splits into multiple tenants taking smaller kind of megawatt numbers or not, or kind of what you see the base case from here.
And then secondly, you mentioned that pricing was remaining in the same ballpark as previously, but just wondering if the structure of rental revenues kind of ahead of operational shells is still going to be the same structure as previously or if there is different conversations with new potential tenants is potentially changing this.
Executive Miles (Title): My strong, first of all, there's no one that wants less than 200 megawatts. I mean, we're trying to talk them down. We'd rather do five 200-megawatt deals, if you ask us. When we run our calculations, that is the right – and the opportunity we've got is we've got 2.3 gigawatts with the F-class units on their way. Our team was in Germany the other day, and they were – two of them were in the loading dock. So, hey, our goal is I don't think we get away with three tenants for the first two would be victory, and I think we only get away with two.
Executive Miles (Title): Yeah, I would say, this guy smiles here, I would put it this way. We will likely only do deals 500 plus, and we can do that so it's allocation. If we can allocate the initial commitments right over that two-point plus, the real question for me in these discussions is they all want ropers on future quantum of energy, and you've got to not just look at the initial allocation, but also how are you allocating the ropers so that you comply with any ropers that we will commit to.
In terms of the pricing, it's the same as we said. I think we're getting more involved in the MEP I'm not saying we're getting into MVP business, but we are wanting to make sure we're solving all of our clients' problems. So not a change in strategy, but enhancing the services that we provide to our customers.
Analyst Eric Whitfield (Texas Capital): Good morning, all. Thanks for your time, and congrats on your progress today. With respect to your prospective tenant list, could you perhaps add color on how this list has evolved since your air permit was finalized?
Executive Miles (Title): The tenant list didn't change. The engagement changed dramatically. And basically, the best way I can describe it is shoppers became buyers. I mean, it is one of the largest air permits ever. I think the largest gas project ever It's in Florida. It's only three and a half gigs. We're at six. I think, as you all know, we filed for an additional five. I mean, we're looking at being the place where you can have the largest dash generation set on the planet. And I think the C-suites across all of our customers immediately got concerned and, hey, we better get why the getting's good, to use a West Texas phrase.
Analyst Eric Whitfield (Texas Capital): And then for my follow-up, with regard to the emergence of modular MEP development, what is the base unit in general on this modular operations, and to what degree can they accelerate time to power?
Executive Miles (Title): I went to the Schlumberger factory in Shreveport. Gosh, bear me. Six weeks doesn't sound like that long to go, but to Barely six weeks is six years at most companies. But I think it's game-changing, and I think it's going to dramatically – I don't believe we're going to be talking stick-building MEP in a year. I really, really don't. It's just such a transformational way and a much more cost-effective way to build MEPs. We're going to plug and play MEP into PowerShell. That's what the business is going to go to. Perfect. I encourage you all. I'm sure some of you will let you go see their factory, and I know there's a couple of other companies. But, I mean, it took us one minute to realize, wow, we're going to get Schlumberger to build a factory next to us.
Analyst Joe Brent (Liberum): Good morning, gentlemen. Two questions, if I may. Firstly, you talked earlier about cash burn, and I understand there are different scenarios, but can you just give us the parameters of what the cash burn might be in FY26? And secondly, related to that, I think you've got $885 million of equipment financing facility, which I understand it's currently non-recourse. Could you indicate at what point, if ever, that comes onto the balance sheet? And then related to both those, remind us of the funding structure.
Executive Miles (Title): Well, first of all, on the cash burn, I like to tell people that I'm an aggressive personality, but a financial sissy. And we do have a standing call every day at 4 o'clock Eastern, 3 o'clock Central, where we review the cash position on a daily basis on the recourse. And I focus on it pre-tenant, meaning, again, aggressive personality, financial city. Miles, I don't – I'm not aware that any of it comes on to the balance sheet. It doesn't come on to the whole co-balance sheet.
And then on the cash firm, we're running – what does it look like, cash flowing from a pre-tenant signing perspective? And we've got plenty of cash from that perspective. And then once we have the tenant, we'll do the project finance. And obviously, at that point, there's plenty of cash to finance the first tenant contract and finish out the deployment and commissioning of the gensets.
Analyst Rich Anderson (Cantor Fitzgerald): Thanks. Good morning, everyone. So, Myles, early on in the call, you addressed potential for asset relinquishment to preserve cash flow. Can you provide a little bit more color on how that might play out, you know, assets that are sort of on that list? You know, anything more you can add to that topic?
Executive Miles (Title): Yeah, let's be clear, Rich. That is not our intention whatsoever, and we don't see that happening. But when you think through all potential scenarios, right, you say, well, what are the levers I had to pull? That would be one lever if we had to. But right now, we don't have any plans to do it. But if you had to do it, you would do it with a GEN set or two because there's plenty of demand. I mean, we get lots of inbound calls as to whether or not we would move our equipment to somebody else. We have no interest in doing that.
I only mentioned it because... Well, and it's only prudent to say, what are the levers? If you've got to pull different levers, what do I have? So I would not want anyone to think that that's on our list of things to do at this juncture, given what we see on the tenant front, the timing of everything. I don't even like talking about it. These ginsets are incredibly valuable. And I would auction off my two boys first before I would let one of these gen sets go. And probably the dumbest thing I've ever done is even before we got the tech lease, my family basically committed to buy those SGT 800s. So I did basically auction off my children's future for that. So it's the worst thing you've... Like I said, my boys will be auctioned off first, and then we'll look at the gen sets.
Analyst Rich Anderson (Cantor Fitzgerald): Okay. Second question is on the land lease or ground lease. You know, what must be in place by this date or that date from a power resource perspective or tenant or whatever it is that, you know, satisfies any sort of requirements around maintaining your position as a landowner?
Executive Miles (Title): It is a notice to proceed to begin construction. So we don't have to have anything built, which means we're further ahead. But, yes, we don't have to have an actual data center. We have to have a tenant and an agreement with that tenant, and it has to be 200 megawatts. And I'm not going to diminish – that it would be hard to get 200 megawatt deal because no one wants that little power. To be clear, that's by 1231.26.
Analyst Andrew Fisher (Barenburg): Okay, thank you. Good morning, everyone. Thanks very much for taking my question. A few have already been answered, but I just had one follow-up just on the sort of pre-tenant cash or investment requirements. Could you maybe just give a little bit more color of, say, the turbines that you already have in your possession, you know, where you've already got the foundations being installed? Could you give us a rough idea about, you know, what remaining capex is needed just to get those installed to sort of get you there ready for the first tenant? Or if you can't give an absolute number, maybe an idea of the sort of percentage of the overall capital cost of those projects. I assume most of the heavy lifting has already been done, but it would just be good to get an idea, please.
Executive Miles (Title): Okay. We're working on the actual calculations on the foundations for the F-class units. Again, two of them is a wonderful picture. In fact, let's put it on the website so people can see the – the F-class units. I want to get those foundations installed. The site's clear. The geotech's done. They're only 1,300 square feet per generator. I don't have the numbers for those. We have those out for bid literally right now.
And if you're over here after this call, we're going to be debating how much money those SGT... The foundation we need to complete is the SGT 800s. And, you know, let me be clear. I don't think it should cost more than $10 million. But I would put that one in a source of consternation and debate at Fermi America. Okay. I'd like to get those SGT 800s instead of having them sitting in Houston. They need to come home to Amarillo, and it makes no sense to have those half-class units sitting in an expensive storage facility. I'm really zoned in on the foundations. We've got an additional extension on our deal with Excel that I think is kind of $8 or $10 million-ish. I think it should cost $4. I think he's going to get a theme that the CEO thinks everything should cost half of what he's currently being quoted.
Executive Miles (Title): Thank you very much.
Management: Ladies and gentlemen, this does conclude today's Q&A session and will also conclude today's call. You may disconnect your lines
at this time and we thank you for your participation.