AIB Data Centers Inc. (AIB) Earnings Call Transcript & Summary

Good day, and welcome to the Iaxis Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is AIB Data Centers, Inc. [Operator Instructions] Today's presentation will begin with a short video. Following the video, Jerry Tang will begin the company presentation. Let's begin. [Presentation]

Welcome, everyone. Today, I'm going to give you a presentation on AIB data centers, a powerful compute infrastructure company that's focused on delivering data center to the AI economy. This is a typical forward looking statements. So please note the disclaimers. So why AIB, why now? AIB is present in markets with the fastest growth market in the country for data center. We have a large pipeline of parent sites that are under development that are under diligence that can satisfy the very high demand from AI companies and AI cloud companies. And we have a team that have executed over 3 gigawatts of data center construction in the past career. And also, we have done over $40 billion deals in arranging for construction deals. This is a great opportunity right now because our stock is trading at just below $2 million per megawatt comparing to some of the peers that are averaging over $20 million per megawatt. The gap is there because we have not executed a tenant contract yet. We are in the [indiscernible] market for barely 6 months but we are going to execute our business plan. So in the past 6 months, since we have become public, we have contracted 65 megawatts with 15 years of term in one of our Southeast side. And we have -- according to our power acquisition team, we have looked at over 50 sites in the U.S. and issued NOIs to over 10 sites and we are looking to acquire 4 to 5 sites in the next 3 to 6 months, totaling just over 300 megawatts. Our goal is to contract over 300 megawatts by year-end or Q1 2027. So unlike most of the other data center companies, we're going to be focused on mid-market. What does it mean to be mid-market? It means we are targeting AI companies or cloud companies between the market cap or valuation between $10 billion and $100 billion. They are not a smaller companies, but they are smaller than [indiscernible] companies. As a result, they are not as -- that demand has been very underserved to focus -- by focusing on smaller data centers, we can lease the data centers much faster because these guys, they generally move faster. Because these -- the data centers are of smaller footprint, we can deliver them much faster as well, creating higher demand. As you know everybody wants the data center tomorrow. And we have a simpler supply chain because we have fewer equivalents that we need per kilo. And by definition, when you have a smaller footprint, you have a small impact to the surrounding community and you have less [ push back ] a higher certainty of getting permits. Now let's turn to the next slide, and I'm going to hand over to Gary, our VP of Sales.

Thank you so much, Jerry. If you can actually go back to the last slide, [indiscernible] One thing that I want to preference, I've been in this industry for over 10, 15 years and had the opportunity to sell to all the major hyperscalers in [ Neo ] clouds. And one of the reasons why I came to AIB is Jerry's strategy, and he's very cerebral in his approach in being focused on these institutional mid-market assets anywhere from 50 to 100 megawatts. And to his point, because of the quick sales cycles in the fast delivery times from a construction standpoint and being able to navigate the critical pathways to execution when it comes to supply chain. This is all lands on one key goal, which is speed to market. And our portfolio aligns perfectly with our target market, which is, as Jerry mentioned, the Tier 1 and Tier 2 Neo clouds also some of the smaller enterprise clients. And most of these AI companies are looking for power between now and anywhere first half 2028 and so having this type of approach with our portfolio gets us to that speed to market and be able to hit the capacity goals that our target audience and our target market is striving to achieve. There is a gap of power that is needed to supply the demand. And it's very significant. If you just take the top tier neo clouds into hyperscale entities right now, you're looking at their capacity planning, they're behind at least 25 to 30 gigawatts currently. As you can see from this slide here, there's about 66 gigawatts under construction right now, and 95% of that is pre-committed. But I can also preference that there's over 200 gigawatts of capacity that is needed between now and the end of 2029. And that is -- that's incredibly significant. Right now, the North American vacancy for the third, fourth consecutive year is less than 1%. And for the assets that we are bringing to the marketplace, as you can see here from this slide, we're looking at typically one anchor tenant per asset per site. The average term is about 10 to 15 years. And so when you look at what that comes out to per megawatt per year, it's anywhere between $1.5 million to $2.8 million, which is significant. And at the end of the day, we are a power first strategy. We're not going to offer any land that doesn't already have the power secured. We're not marketing theoretical power. We're developing sites that already have, as you can see, our first gate, the power agreement [ implant ], either executed ESA and a power purchasing agreement in place. Because at the end of the day, the bottleneck isn't the land. The bottleneck is the power. It's the utility agreements. It's the transmissions. It's the delivery schedules for power. And so we want to make sure we have the power under control then we had the land under control. And lastly, we have the interconnection under control. And we have those 3 facets, that's the way to look at the asset and that's when we move forward to acquiring the land. Because, again, it's all about speed to market and we want to ensure that we have firm power readily available as we are a powerful strategy when it comes to building out our portfolio for our customer base.

Awesome. Thanks, Gary. I'll jump in. So I'm Jolienne Halisky. I'm the CFO with AIB. The first thing I want to talk about is what a megawatt is actually worth. So on the left-hand side of the slide, we speak to some of the benchmarks per megawatt. And then on the other side, we are going to talk a little bit about what these contracts look at full lease -- look like at full lease-up. So if we pull this apart, basically 65 megawatts of utility contract demand or utility load at our 1.3 design PUE converts to about 50 megawatts of critical IT load, the power. This is the power that actually reaches the racks and generates revenues. A benchmark of $1.8 million to $2 million per megawatt per year that is roughly about $93 million of annual revenue at stabilization with expected net operating income margins running in between that 85% to 90% range. And because the tenant pays for the power directly under the triple net structure, that utility cost is a pure pass-through. And it's not a margin line that shows up on our P&L. So the net operating income range is roughly $79 million to $84 million against a total project cost that is projected to be around $850 million. Over a 12-year 10 to 12-year based term, illustratively speaking here, we're looking at a 12-year base term. That math produces approximately $1.32 billion of total contract value when you factor in the annual escalators. So this catalyst, this is -- the lease is the catalyst that turns our math [ reillustration ] our projections from illustrative into contracted revenue once we have that signed lease, and that's where we're going to go next. So for us, one signature changes everything, and we're going to look at these 3 pieces that are impacted significantly with that signature separately. So first of all is the contracted revenue. So illustratively, the 50 megawatts of critical IT load leased at the current market rate of 1.8 to 2.2 per megawatt, 2.2 million per megawatt per year creates approximately like we mentioned, that $1.32 billion of total contract value over the 12 year lease term. That's basically from 0 to $1.32 billion with just one signature. Secondly, we have the contracted cost coverage against total project cost of roughly $850 million that has a ratio of approximately 1.55x. The initial lease term alone repays the entire build and returns approximately $465 million above that before any renewals or before any potential expansion phases. Third is payback timing. So if we assume the 3% annual escalators, cumulative contracted rent crosses 100% of the project cost around year 9 of that initial 12-year term. So years 10, 11, 12 are effectively margin -- all margin. And because this is structured as a build-to-suit lease, rent commences at the full contracted rate from day 1. There's no lease ramp-up period that we need to fill with tenants. So the reason we change -- we treat this signature as a catalyst rather than any milestone along our strategy is that it accomplishes 3 things at once, and that being committed revenue, enhanced financeability and closes our valuation gap. With that, I'm going to hand back to our CEO, Jerry Tang.

Thank you, Jolienne. Can you turn back to that slide? I just have a comment there. While the contracted value is $1.32 billion. The capital markets will price at $85 million each NOI probably at 20x, 25x. If you do the math, that creates potentially over $1 billion in value creation just by signing a lease and deliver the capacity to the tenant. So to execute our business plan, we have assembled a [ 82 ]. I, myself, have done over $40 billion deals in commercial real estate and infrastructure. And a big part that tenants, the clients look at is the ability of the management team to execute a financing capital raising, and that's my stronger fit. And we have assembled a team. For example, Gary has done many, many hyperscale or enterprise data center leases on the sales. Alex used to work on visual reality one of the largest data center REIT in the world. Chris is our Head of Construction Execution, and he has working AWS with over 3 gigawatts of data center construction on this belt. We believe this is a team to win. So there are some talks in the chatroom that the management has significant shares in the company and there's a lockup period that's going to expire in mid-September. What I can tell you is there's no intention, no intention to sell any shares that's held by VCV Digital and [ TageCloud ]. Both of those entities are in control. The goal is to continue to own the shares because they are extremely, extremely undervalued, in my opinion. So to summarize to succeed in this business, you need a very talented team with experiences in construction, financing, and power procurements in order to execute at scale. And obviously, you need the power without a power, there's nothing to start to work with. As you know, power is new currency and is the biggest constraint for the AI growth. So if you control power, which we do you should command a very valuable position. In addition to that, we have experienced a leasing team that has tons of experience in selling to AI companies enterprise. This is a very sophisticated selling process. and we have that experience. And I can tell you that demand is very, very high, far off-street supply, as Gary has iterated in prior slide is 2x, 3x of the construction pipeline for the next 3 to 4 years. For the last quarter, we have done a few things that are quite significant. For example, we have contracted 65 megawatts on the 15-year ESA fully committed power supply agreement. And we have hired and rounded out of the team further by getting talents in construction, talents in sales, talents in procurement and also finance. We are in active search for a COO, that's of [ verifi ] caliber in the data center industry right now. Also, we raised over $60 million from institutional investors. Some of the names are public, for example, [indiscernible] 72 Davidson Kepler and Blackstone, some of the top investors in the world. We were also including [ Rosso ] 3000 index and covered by 2 analysts from different investment banks. We have identified, as I pointed out, we have been actively looking for new [indiscernible] sites to grow our portfolio to diversify our sites and we have a few hundred megawatts in our pipeline that will continue to fuel our growth. As Jolienne pointed out, the next catalyst will be one of the new site acquisition or [indiscernible] a client contract both well over $1 billion.

Awesome. Thanks, Jerry. We're going to jump into some Q&A right now that we've received that have come in. First question is what are the biggest milestones investors should watch as AIB transitions from Bitcoin hosting to AI data centers? And I'm going to pass that one to Jerry to answer.

I mean the next biggest, again Catalyst will be signing a lease with a global AI firm, that will showcase to investors that we have been diligent by very large firms enterprise that they trust our ability in delivering the capacity, trust in our ability to execute the plan to deliver that data center capacity.

Awesome. Gary, I'm going to give you this question. What differentiates AIB's power first strategy from other AI data center developers?