NET Power Inc. (NPWR) Earnings Call Transcript & Summary

Thank you, and good morning to all of you for joining NET Power's conference call covering our third quarter 2026 earnings; joining me today are Danny Rice, our Chief Executive Officer, Marc Horstman, our President and Chief Operating Officer, and Lee Shuman, our Chief Financial Officer. We released our earnings results yesterday for the third quarter that closed on September 30th, 2026, together with the presentation that goes along with today's remarks. You can find both on our investor relations website, ir.netpower.com. On today's call, we'll be making forward-looking statements, which include statements regarding 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. Because of risks and uncertainties tied to our business, actual results could differ materially from those stated or implied by forward-looking statements. We undertake no obligation to update any forward-looking statements. You can find more information on factors that could cause actual results to differ materially in the cautionary statement included in yesterday's earnings release, as well as 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, both of which were filed with the SEC and are available on our website. With that, I'll hand the call over to Danny Rice, NET Power's Chief Executive Officer.

Bryce, thank you, and good morning to all of you. We released an investor presentation yesterday, and I would suggest having it in front of you as we walk through our prepared remarks. I will take a few minutes to discuss the macro backdrop, because it influences how we are thinking about NET Power's business. Slide three provides the context. Power demand from data centers continues to rise. Even once a site has been hooked up to the grid, large loads may be disconnected when the grid is strained. Consequently, an increasing portion of that demand gets served on-site, and as a result, on-site natural gas has genuinely turned into a market of its own. Slide 4 illustrates the market's reaction, and Texas is truly leading the way, with some of the biggest on-site power campuses nationwide under development there. Yet the key point is the distance between ambition and execution. A substantial amount of gas power is being developed, while just a small portion is actually under construction. That's the space NET Power occupies, and it's what we're striving hard to tackle. We're aiming at a sizable market—one that keeps expanding and requires co-located generation solutions that are flexible and quick—and we're pursuing the schedules customers require. Turning to regulation, in Texas and elsewhere, the question of who pays for added data center demand is top of mind for policymakers. Power that runs off-grid avoids both the grid and the interconnection queue, and in the end the customer receiving that power covers its cost. When handled properly, such projects can create jobs and grow the local tax base. We'll continue working constructively with every stakeholder, and our view remains that self-supplied generation will form part of the solution Texas and other states seek. The timing of regulatory proceedings is beyond our control, and customers require power as quickly as possible. Speed to power is our priority. So that involves looking at each powered land opportunity we have, in Texas and elsewhere, and putting our capital to work where we can bring power online in the shortest time; with that, I'll hand things over to Marc.

Appreciate that, Danny. Morning, everybody. Slide five illustrates NET Power's function as a powered land developer. The work we do covers cultivating financeable customer opportunities, locking in dependable fuel supply, overseeing project contracts, investing capital prudently, preparing assets for dependable operation, and executing projects in a predictable manner. In short, we aim to carry a site through everything from the initial customer discussion to an asset that is up and running, and our attention is on what customers are purchasing right now: speed to power, reliability, and scale. To make that happen, we're building islanded power solutions that bring together recip engines, gas turbines, and battery storage—engineered to meet the needs of a data center located on the same site and to grow alongside the customer, building by building. Each solution is sized with redundancy built in, so it satisfies data center reliability standards, and we approach our islanded design as a product, not a one-off project. Because it will be standardized, we anticipate replicating it more quickly, with less effort, and with more confidence, and adapting it across a variety of generation technologies and sizes. To back that up, we've assembled a toolkit that lets us weigh alternatives, pin down the correct configuration, and then confirm a conceptual design basis satisfying each customer's financial and operational requirements. We're working up our first project for a prospective client—a top developer of frontier AI models—at a Texas location we haven't yet locked down, and which is distinct from Project Permian. Should other events arise, the customer has to reimburse our non-refundable cost of approved expense items, capped at roughly $180 million and contingent on conditions, unless we choose to retain the associated equipment. We're in negotiations aimed at a definitive energy services agreement, though neither side is bound to sign one. Our plan is to keep advancing Project Permian as a parallel second project. Lee will take that over from me.

Thank you, Marc, and good morning. Turning now to slide six. We closed the third quarter with roughly $183 million in cash equivalents and investments, and we carry no debt. Property, plant, and equipment rose to about $141 million, compared with approximately $33 million at year-end. That is the line on this slide I want to highlight. Almost all of that amount is construction-in-progress: about $118 million tied to 10 Wärtsilä reciprocating engines and the associated EPC contract, along with roughly $23 million in deposits on two gas turbine generator packages. As our 10-Q describes, whether those costs are recovered hinges on the initial project going forward, on recovery under the cost reimbursement agreement, and on reselling or redeploying the equipment. We will keep managing costs with discipline. Our G&A run rate comes to about $30 million-$35 million annually. Our liquidity forecast assumes we will not issue full notice to proceed under our EPC agreement, and will not make additional significant equipment or construction commitments, absent committed financing or other capital; on that basis, we believe our existing cash and available-for-sale securities will be enough to meet our obligations for at least the next 12 months. Our projects will need 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 projects financeable will stay our top priority. With that, I will hand it back to Danny.

Thanks, Lee. Demand for reliable on-site power generation is genuine and expanding, while the constraints come down to permits and getting things built. Our people are in place, the hardware is in place, and a potential client is in place. On location, we'll remain adaptable, which lets us hold firm on speed of delivery. We're eager to bring you news as we move toward finalizing the definitive energy services agreements. We appreciate you joining us this morning.

Thanks. That brings today's conference to a close, everyone, and at this point you're free to drop off the lines. We appreciate you joining us.