Ben Sommers

Ben Summers inquired about the longer-term potential for the Noble BlackRhino, including spot work in the U.S. Gulf or relocation, and expressed concern about projects continuing to shift to the right, particularly in West Africa, impacting the 2027 demand pickup.

Answer

Robert Eifler (CEO) stated that for the Noble BlackRhino, there are multiple opportunities, with some spot work hoped for in 2026, but more exciting programs are anticipated in 2027 both in and outside the U.S. He acknowledged that projects getting pushed to the right is always a risk, especially with Brent in the $60s. However, he noted that the substantial backlog announced by Noble and competitors means fewer pieces need to fall into place for a tight 2027 market, giving fair optimism.

Ben Sommers from BTIG inquired about the progress and timeline for A16 mass production, as well as the margin profile differences between the Home Series and A15 models and their potential to sustain future margins.

Answer

Chairman and CEO Nangeng Zhang confirmed that A16 machines are in customer testing, with mass production preparations underway post-Lunar New Year and volume ramp-up expected by the end of Q1 2026. CFO James Jin Cheng explained that while industrial machine profitability faces pressure, the Home Series maintains good profitability due to less competition and will play a more significant role in future profit generation.

Ben Summers asked about the progress of A16 mass production, its timeline, and the margin profile differences between the Home series and A15 models.

Answer

Nangeng Zhang, Chairman and CEO, stated that A16 machines are in the testing phase with customers, and mass production preparations are underway, expecting volume ramp-up by the end of Q1 2026. He also mentioned developing liquid-cooled and immersion-cooled A16 models. James Jin Cheng, CFO, explained that industrial machine profitability is under pressure due to Bitcoin price volatility, while the Home series maintains good profitability. Q4 prioritized industrial orders from strategic North American customers, impacting overall margins.

Ben Sommers inquired about the customer mix for older versus newer generation GPUs and IREN's outlook on the longevity and continued revenue generation from older generation chips.

Answer

Kent Draper, Chief Commercial Officer, explained that newer chips are typically used for training (speed to market), while older chips increasingly shift to inference, a growing segment. He noted strong demand for older generations due to overall undersupply, citing A100s/H100s (5+ and 3+ years old) as still 100% utilized and earning good returns, suggesting a long economically useful lifetime beyond typical contract lengths.

Ben Sommers from BTIG asked about the customer mix for older versus newer generation GPUs and the expected economic longevity and tail for generating revenue from older generation chips.

Answer

Kent Draper, CCO, explained that newer chips are typically used for training due to speed requirements, while older chips increasingly shift to inference, which is a growing portion of demand. He noted strong demand for older generations due to overall undersupply, with chips like A100s and H100s (5+ and 3+ years old, respectively) still 100% utilized and earning good returns, suggesting a long economically useful lifetime beyond typical contract lengths.

Ben Sommers from BTIG inquired about the broader market outlook for state-level incentives across the U.S. for the W56 step van, specifically asking about opportunities beyond California's HVIP vouchers. He also asked about the expected cost trends for the W56 vehicle as Workhorse ramps up production towards its 2026 launch.

Answer

CEO Rick Dauch highlighted the success of HVIP vouchers in California, leading to immediate order pickups and repeat business from FedEx Ground operators, with W56 vans achieving 97-98% uptime. He also noted growing interest and voucher movement in Washington and New York. CFO Bob Ginnan explained that cost reductions for the W56 in 2026 would come from decreasing bill of material costs through engineering and supply chain efforts, alongside improved labor costs as production volume increases. Rick Dauch added that de-escalators are built into purchase contracts for higher volumes and emphasized the 55-65% total cost of operation reduction for W56 in the field.

Ben Sommers from BTIG inquired about the broader market outlook for state-level incentives for the W56 step van across the U.S., specifically opportunities beyond California. He also asked about the expected cost trends for the W56 vehicle as production ramps up in 2026.

Answer

Workhorse Group CEO Rick Dauch highlighted the success of HVIP vouchers in California, leading to immediate order increases from FedEx Ground, and noted growing interest in Washington and New York. He emphasized the W56's proven reliability (97-98% uptime) driving repeat orders and a significant 55-65% total cost of operation reduction for fleets. CFO Bob Ginnan explained that cost reductions for the W56 in 2026 would come from lower bill of material costs through engineering and supply chain efficiencies, and improved labor costs with increased production volume. Rick Dauch added that de-escalators in purchase contracts and higher battery volumes are key to achieving cost parity with internal combustion engine vehicles over time.

Ben Sommers inquired about the demand profile for Hut 8's Illinois site, given its smaller size compared to other pipeline sites, and potential expansion in that region.

Answer

CEO Asher Genoot described the Illinois site as a 'tuck-in add-on' for tier-one markets, attracting demand for nearby operations, burst capacity for AI labs/enterprise, and opportunities for Hirise (GPUs). He noted that while larger campuses are currently prioritized, the Illinois site is valuable for strategic placement rather than just economics.

Ben Sommers asked about the demand profile for the smaller Illinois site in Hut 8's pipeline and the potential for expansion in that region.

Answer

CEO Asher Genoot explained that the Illinois site was developed as a tuck-in add-on for tier-one markets, seeing demand for tuck-in sites, burst capacity for AI labs, and enterprise use. It also presents an opportunity for HiRise and GPUs. Genoot stated that Hut 8 is currently prioritizing larger campuses due to demand but views the Illinois site as strategically valuable for specific placements rather than just economics, despite its smaller scale.