Thomas Sellers Meric

Thomas Meric asked about Solaris's long-term strategy regarding partnerships, including potential collaborations with technology developers, fuel suppliers, service providers, or capital partners.

Answer

Chairman & CEO William Zartler confirmed they view partnerships as key to bringing in complementary skills. He mentioned active discussions with gas producers, midstream companies, and customers interested in co-investing capital. He also highlighted the importance of partnerships for electrical contracting and operations to effectively manage complex hybrid power plants.

Thomas Meric of Janney Montgomery Scott asked for a walkthrough of the next phases of the domestic uranium enrichment pilot program and BWXT's view on the associated LEU market. He also inquired about the expected free cash flow seasonality for the year.

Answer

CEO Rex Geveden detailed the enrichment program's next phase is a sole-source award for a pilot plant, with the long-term strategy dependent on how LEU and HALEU supply emerges. EVP and CFO Robb LeMasters confirmed that free cash flow seasonality is expected to follow a typical pattern, with a stronger second half and Q4 being the most significant contributor.

Thomas Sellers Meric of Janney Montgomery Scott asked about BWXT's potential expansion into hexafluoride conversion and how the pending Kinectrics acquisition might enhance commercial win rates and project scope.

Answer

President & CEO Rex Geveden explained that any move into hexafluoride conversion would be an organic expansion of internal capabilities, not an acquisition. He clarified that the Kinectrics deal provides a vertically integrated service offering, enabling BWXT to pursue larger and more complex projects rather than simply increasing win rates on existing bids.

Thomas Meric from Janney Montgomery Scott asked about equipment cost inflation and tariff impacts on CapEx, the expected timeline for the EPA's resolution of the partial waiver, and opportunities to recontract power purchase agreements (PPAs).

Answer

Co-CEO Jonathan Maurer responded that CapEx is largely insulated from inflation and tariffs as they commit to equipment costs upfront and source domestically. Co-CEO Adam Comora projected a potential EPA resolution on the waiver in the April-May timeframe. Regarding power projects, Maurer noted strong merchant pricing for a portion of the portfolio, with proactive re-contracting for others. Comora added that the renewable power segment represents significant future optionality for growth, especially given rising U.S. electricity demand.

Thomas Sellers Meric of Stephens Inc. asked for a breakdown of the CapEx increase for SN1, commentary on the outlook for thermal power CapEx deflation, and how data center operators view rising costs as a potential funding opportunity.

Answer

COO Brian Allen explained that a specific cost breakdown is unavailable but cited market imbalances, industry-wide cost escalation, and first-of-a-kind project scope as primary drivers. CEO Daniel Rice added that they do not foresee CapEx deflation and are focused on cost reduction via multi-unit deployments and modularization. CFO Akash Patel outlined four potential avenues to close the funding gap: project-level capital, corporate-level capital, government support, and commercial partnerships.

Thomas Sellers Meric of Stephens Inc. inquired about the cost-saving opportunities and integration challenges of operating multiple NET Power plants on a single site, and also asked about the specific drivers of capital equipment inflation.

Answer

CEO Danny Rice explained that the largest cost savings come from deploying multiple plants in a fleet configuration, which aligns with market demand for gigawatt-scale power at single locations. COO Brian Allen added that savings stem from duplicating powertrains and sharing infrastructure like control rooms. Regarding inflation, CEO Danny Rice confirmed it is affecting large engineered equipment like turbomachinery and heat exchangers, with a fuller picture on bulk materials expected after the Zachry FEED estimate is complete.

Thomas Meric sought clarity on the Norway project's potential $20 million revenue, asking if it's a one-time Q4 figure and its expected free cash flow conversion. He also asked about the cash flow profile of future similar projects and the key learnings from this initial transfer process.

Answer

CFO Geoff Trukenbrod clarified that the potential $20 million revenue for the Norway project in Q4 is largely a catch-up for previously incurred development costs, which also initiates a long-tail revenue stream from ongoing services. CEO Jennifer Holmgren added that a key learning is to create a replicable 'lift and shift' project design to lower future costs and timelines. The goal is to partner with capital providers at the earliest stages to ensure alignment throughout the pre-FID process.

Thomas Sellers Meric from Janney Montgomery Scott LLC asked for details on the Norway project's financial impact, specifically whether the projected $20 million revenue is a one-time Q4 event, its associated free cash flow conversion, and key lessons learned.

Answer

CFO Geoff Trukenbrod clarified the $20 million revenue for the Norway project is largely a 'catch-up' recognition of previously incurred development costs, making it primarily a Q4 event, but it also initiates a long-tail revenue stream. CEO Jennifer Holmgren added that a key learning is to create a replicable 'lift and shift' strategy with EPC partners to reduce future project development time and cost.

Thomas Sellers Meric from Janney Montgomery Scott asked if the second-generation bioreactor was critical for the Jakson Green project's viability, questioned the potential causes for project delays in the second half of the year, and requested an update on the Brookfield partnership and the first project transfer.

Answer

CEO Jennifer Holmgren explained that while the project was viable with the first-generation reactor, the second-generation version improves efficiency and reduces costs, making it the natural choice. CFO Geoffrey Trukenbrod addressed project timing, noting that while Q4 is heavily weighted with several large projects, any potential slippage would be a matter of timing (e.g., from December to January) rather than a risk to the projects themselves. Jennifer Holmgren added that the first Brookfield project transfer is progressing well, with a focus on establishing a smooth process before scaling the pipeline.

Thomas Sellers Meric from Janney Montgomery Scott asked about the significance of the second-generation bioreactor for the Jakson Green project, the nature of potential project delays impacting back-half guidance, and for an update on the Brookfield Renewable Partners partnership.

Answer

CEO Jennifer Holmgren stated that the second-generation bioreactor enhances project efficiency and profitability but was not a prerequisite for the project's viability. CFO Geoffrey Trukenbrod clarified that the Q4-weighted guidance reflects the timing of several large projects reaching key milestones like FID, rather than fundamental project risk. Holmgren added that the company is working closely with Brookfield on a single initial project to perfect the transfer process before scaling up with the broader pipeline.

Thomas Meric asked about the supply, demand, and cost dynamics for Sustainable Aviation Fuel (SAF) feedstocks, the impact of the GREET model, and the potential for more Brookfield project FIDs.

Answer

CEO Jennifer Holmgren highlighted growing global demand for waste-based feedstocks, supported by mandates like the UK's. She viewed the GREET model as a positive for US corn ethanol producers. Regarding Brookfield, she noted a robust pipeline exists but the immediate focus is on finalizing the first project transfer to establish a clear process for future projects.