SOLV Energy, Inc.

Greetings. Welcome to Solve Energy's fourth quarter and full year 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Anthony Rasmus with Investor Relations. Thank you. You may begin.

Good morning, everyone, and thanks for joining us for Solve Energy's fourth quarter and full year 2025 earnings conference call. Before we begin, we would like to remind you that this conference call may include forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements, which are subject to various risks, uncertainties, and assumptions, could cause our actual results to differ materially from these statements. These risks, uncertainties, and assumptions are detailed in this morning's press release, as well as our filings with the SEC, which can be found on our website at investors.solvenergy.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we'll also reference certain non-GAAP financial information. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in this morning's press release and in our SEC filings. Joining me on the call today is Solve Energy CEO, George Hirschman, and CFO, Chad Plotkin. Following our prepared remarks, we'll open the line for your questions. As a reminder, there will be a replay of this call posted on our IR website. With that, I'll turn the call over to George. Thank you, Anthony.

Good morning, everyone. We're thrilled to be here today to give an update on our fourth quarter and full year 2025 performance. This also marks our first earnings call since becoming a public company, and we want to extend our sincere gratitude to everyone who supported us through this process. To our Solve Energy team, thank you for the amazing work that you do and your tireless efforts that got us to this point. Let me start today by grounding us in something that defines who we are as a company, safety. Safety isn't just a metric to us. It's a fundamental part of how we operate. The most important job we do at Solve is to get our people home safely every day. A TRIR of 0.48 is 70% below the industry average, and an LTIR of 0.19 is also well below benchmarks. These results reflect disciplined process, strong leadership in the field, and the investment we've made in dedicated site and corporate safety personnel. It's why customers trust us, and our employees feel valued. A safe job is a profitable job, and our track record directly contributes to loyalty and repeat business. With safety as the foundation of everything we do, let's shift to the market environment we're operating in today. Moving to the next slide. Across the U.S., we are experiencing an unprecedented surge in electricity demand driven by data center growth and reshoring of manufacturing. Digital infrastructure and manufacturing investment are running at roughly three times historical average. Solar and storage build rates have nearly tripled, and expected load growth has increased almost fivefold. Traditional generation gas and coal cannot meet this level of demand, and customers increasingly expect carbon-free solutions. Solar remains the lowest cost source of new generation, with or without tax incentives. And paired with battery storage, it is uniquely positioned to meet near-term reliability needs, not to mention the speed in which it is deployed. Let me walk you through how Solve is positioned to capitalize on the rising demand on slide six. Solve Energy is a leading provider of lifecycle infrastructure services to the U.S. power sector and is a recognized market leader in utility-scale solar, battery storage, operations and maintenance, and high-voltage substations. Our lifecycle service approach focuses on the full 35-year life of a power plant. Through delivery of services during the build, operate, maintain, and future augmentation and repowering of plants, our business model is differentiated in the industry. Our backlog as of December 31, 2025, was over $8 billion. a strong signal of the demand environment. In 2025, we delivered nearly $2.5 billion in revenue and $342 million of adjusted EBITDA, all records for the business. These results reflect a healthy demand environment and deep trust our customers place in SOLVE as a long-term partner to deliver critical solutions. We operate across all 48 continental U.S. states, supported by more than 2,600 employees, including 1,950 in the field. We also manage over 2,000 local hired or union dispatch workers on a temporary basis each day. We've completed more than 500 projects and constructed over 21 gigawatts of capacity. Today, we are under contract to manage more than 20 gigawatts of generation across 150 power plants. This scale gives us deep visibility into the market and into long-term customer needs.

Moving to slide seven.

Our competitive advantage lies in the breadth and integration of our capabilities through the lifecycle of a power plant. Upfront, we deliver engineering, modeling, design optimization, forecasting, and environmental compliance. Through procurement, our scale across all major plant components and transmission structures help reduce costs and schedule risk for customers. On the construction side, we deliver full-scope civil, structural, mechanical, electrical, and commissioning execution, largely self-performed across most regions. And once assets are online, SOL truly differentiates itself from other EPC peers. Our O&M business provides 24-7 monitoring, preventative maintenance, emergency response, and performance analytics. End-to-end from design to build to long-term operations, we offer a full lifecycle suite of services that drives best-in-class execution and supports long-term customer partnerships. Turning to the next slide, eight, EPC is the largest category of spend on a solar plus storage project. and it's increasingly difficult for new entrants to compete at the scale of the market today. Experience, financial stability, and execution discipline create meaningful barriers to entry. At the same time, EPC converts more EBITDA into free cash flow than any other part of the value chain. When paired with our long-duration O&M relationships, we effectively build 35-year annuities, predictable, reoccurring revenue streams supported by five-year contracts with automatic annual renewals. As demonstrated in the graph on the page, and using illustrative unit economics from third-party sources, Our business focuses on converting the average $0.82 per watt billed in EPC into a lifecycle revenue opportunity of $1.19, an over 40% higher revenue opportunity. This model provides meaningful upside as installed capacity grows and customers look to partner with providers who can support the full lifecycle. discuss embedded revenue on slide nine. Within our installed base, the long-term revenue opportunity is significant. We now are under contract to manage more than 20 gigawatts of operating assets. Over an expected 35-year project life, we estimate customers will spend roughly $7.4 billion on preventative maintenance, corrective maintenance, and inverter replacements. And that doesn't include additional opportunities like repowering, phase expansions, battery storage additions, and transmission and distribution upgrades. Importantly, only a very small portion of this, about $540 million, is currently reflected in our backlog. That highlights just how much future revenue remains available to be captured. Importantly, this is our portfolio today. On the next slide, we highlight the growth opportunity in the O&M business. As you can see in slide 10, since 2020, the amount of solar and storage capacity we manage has grown 2.2 times, and looking forward, Industry forecasts show a 3.8 times increase in operating utility scale solar and storage capacity by 2034. Every new gigawatt built today will require long-term operations and maintenance services. Given our scale and position, we are incredibly well aligned with the rapid expansion, both in terms of construction demand and long-term O&M growth. Let's move to slide 11, our growth strategy. Given the market demand backdrop, we have a clear and disciplined growth strategy. First, we continue to focus on the fastest growing segment of the market, especially projects above 200 megawatts, where our scale matters most. Second, we are expanding our O&M business to deepen our recurring revenue base. Third, we are leveraging our capabilities to move into adjacent markets where we can add immediate value. Fourth, we are investing in innovation in digital tools, construction methods, and predictive maintenance to accelerate growth and expand margins. And finally, we continue to pursue strategic acquisitions that strengthen our capabilities and extend our reach. Together, our safety culture, scale, lifecycle capabilities, and discipline strategy positions us exceptionally well to power the next generation of U.S. industry and infrastructure. Thank you, and now I'll turn the to call over to Chad to provide a summary of our fourth quarter and full year 2025 results.

Chad? Thank you, George. It is great to be here this morning, and thank you to everyone for taking the time. Starting on slide 13 to discuss our Q4 and full year 2025 financial results. 2025 was a record year for Solve. fourth quarter revenue was up 80% year-over-year to $794 million, and we delivered approximately $2.49 billion in full-year revenue, or an increase of 35% year-over-year. This performance was driven by the ongoing growth in our core EPC business, as well as our existing infrastructure or O&M services business, which contributed $113 million for the full year, an increase of nearly 55% year-over-year. Our services business continues to grow as we are also now contracted for over 20 gigawatts of services, which will continue to support our business through predictable cash flow. Along with our revenue growth, we also recognize record profitability across the business. Fourth quarter and full year 25 gross margin was over 18% with realized gross profit of $144 million and $464 million, respectively. This performance was primarily driven by the strong productivity and cost containment across the core EPC business and ongoing contribution from our service business. As a result of this performance, adjusted EBITDA for the fourth quarter was $100 million. And full year adjusted EBITDA was $342 million, or a more than doubling from 2024. Before I turn to the next slide, I just want to say thank you to the entire SOL team. 2025 has been a transformative year for us, and none of this success can happen without your dedication and commitment to the company.

Turning to slide 14.

Backlog at the end of 2025 stood at $8 billion. an increase of 87% since year-end 2024, providing us meaningful visibility into future performance. As a reminder, based on conversations with our customers, 100% of our backlog is with SafeHarvard projects. On backlog, all signed backlog relates to fully enforceable LNTP and FNTP agreements. Awarded backlog reflects the remaining value of estimated contracts under LNTP. and our services business reflects the remaining duration of original agreements plus an estimate for corrective maintenance. Please note that this estimate reflects historical trends for non-covered services, which as of the end of 2025 stood at approximately 75 cents on the dollar of covered services. Now let's turn to our 26th outlook on slide 15. With the strength of our backlog, today we are initiating full-year financial guidance with revenue in the range of $3.72 and $3.82 billion, representing a 51% increase at the midpoint compared to 2025. We're also targeting gross margin in the range of 15.6 and 16.2%, which will drive our adjusted EBITDA expectations between $400 to $420 million, which would be further records for the company. With the IPO now behind us, Solve is in an incredibly strong position. Net IPO proceeds of approximately $553 million allowed us to fully de-lever the balance sheet with additional cash on hand. When coupled with our newly expanded credit facility to $200 million, we are now placed with significant flexibility to drive further growth into the business. As we consider this dynamic, our financial goals for the year are quite simple. We expect to meet our financial expectations. We plan to utilize our new balance sheet capacity to drive accretive growth via an expansion of our service offerings. And we will be steadfast in our focus to drive the ongoing professionalization as a new public company, including meeting all of our compliance requirements, such as Sarbanes-Oxley readiness. And with that, I'll turn it back to George for closing remarks.

Thank you, Chad. And thank you all for joining us For our first earnings call, what an exciting step for Solve Energy. We're proud of the foundation we've built and energized by the opportunities ahead. Our team remains focused on disciplined execution, long-term growth, and delivering value for all of our stakeholders. With that, I'd like to open the line for your questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. To ensure we have enough time to get to everybody in the queue, we ask that you please limit yourself to one question and one follow-up question. Our first question is from Julian DeMolin-Smith with Jefferies. Please proceed.

Hey, good morning, team. Thank you guys very much, and congratulations, I must say. inaugural call. What a great step. Great. Thank you, Julian. Absolutely. Nice to chat with you guys. Look, let me start it off with an observation just real quickly. As I look at the gross margin guidance for 26 and look at what you guys were able to put up last year, I mean, just A phenomenal improvement from 24 to 25. Obviously, a little bit of a dip here in 4Q25. How would you set expectations on the seasonality of gross margin? And then overall, how do you think about the gross margin expectations that you're setting here for 26 vis-a-vis what you just did last year? How would you define the construction environment last year vis-a-vis maybe normalization in the current year? How would you benchmark that? Because certainly it stands out in terms of the guidance you put out here. And thank you again for the inaugural question.

Great. Well, thanks, Julian. Yes, you know, obviously our business has seasonality, and 2025 we saw just really strong performance across every region of the country. And that reflected in a strong gross margin. We also had some large service projects, large repair projects that contributed to margin as well. And so those are harder to predict, the large repair projects that are contributors. And so those aren't forecasted typically into our projects, right, or into our long-term forecasts. So those have meaningful effect if a large repair comes in that is, you know, unforecasted. And so I think that's kind of how we look at our forecast for 25 and maybe some of the adjustment to gross margin.

And, Julian, I'll just add – You know, bear in mind, for this year, we have a lot of new starts of projects, given the scale of backlog and what we're looking at on revenue. And, you know, obviously, as projects start, we've got a, you know, a view of how we think about underwriting. And, you know, I think as we spend a lot of time, you know, on the road, Prior to the, you know, speaking with everybody, and I think as we see performance and productivity enhancement over time, we certainly know that there is the ability to see higher margins. But, you know, with all these new starts and everything that comes with that, you know, we feel like we're in a range of what we view as a reasonable assumption, certainly at the start.

Excellent. And then maybe just a quick follow-up, if I can. How do you think about use of cash on the balance sheet, right? I mean, obviously... You all are on the front foot here, and certainly so post the raise here. How would you characterize or set expectations on that front as you look at 26?

Well, I think, you know, we are looking at, you know, a lot of different options to, you know, to continue to grow our services, and we recognize that we're in a really strong position coming out of the the IPO and the strength of the balance sheet. We are going to stick to our growth strategy and recognize that we want to find areas we can strengthen our core services, add additional core services inorganically. We're clearly looking for for options there, and I think we are sitting in a wonderful position to do it coming out of the IPO.

Awesome. Excellent, guys. All the best. Talk soon. Thank you.

Our next question is from Mark Strauss with JP Morgan. Please proceed.

Yeah, good morning, guys. Thanks for taking our questions, and welcome to the public markets. I wanted to start with kind of how you're thinking about gas prices. Obviously, prices have been going up recently. Is there a rule of thumb of how we should think about that as a percentage of your project costs and kind of how you're baking that into your 2026 guide?

Thank you. Yes.

I mean, Mark, well, thank you, first of all, for the question and joining the call and all the help. We are obviously watching this in real time. The reality is that fuel costs have probably less than 1% impact on direct fuel costs on the cost of a project. Obviously, there are shipping cost impacts and other things that are also impacted. And I think that... we see it as something that we need to monitor but should not have a huge impact on or significant impact on the cost of our projects today based on where fuel costs are. Obviously, disruptions in the supply chain can have impact, and we are watching that, but we don't see any issues currently with disruptions in in shipping routes and supply chain. We also have force majeure in our contracts to address these type of issues.

Okay, that's great, George.

And then a quick follow-up, maybe just kind of provide your latest thoughts on the competitive environment. I mean, clearly your backlog is surging, your visibility is extending, projects are getting bigger and more complex. Just kind of curious how you're thinking about kind of some of competitive gains and how that proceeds over the foreseeable future.

Thank you.

Well, there continues to be just massive amounts of demand. So I think from a competitive standpoint, we're seeing that plenty of opportunities for us. And so that's driving backlog. As As we've said, this is projects that are, because of the size of projects, we're just seeing the competitive landscape getting smaller and smaller as there are less EPC and O&M providers that can provide this service at the scale in which it's now being asked. So I think that is limiting the competitiveness of the environment.

Our next question is from Philip Chen with Roth Capital Partners. Please proceed.

Hey, guys. Congrats on a successful IPO, and I'll say as well, welcome to the public markets. I wanted to talk about the bookings outlook for the coming quarters. Insofar as you can quantify or qualify, what can you share in terms of the momentum there? You've had really strong momentum through And how much should we expect that to continue from a booking standpoint through 26? Thanks.

So, well, thanks, Phil.

You know, we're seeing continued, you know, opportunities in our pipeline that are converting into backlog. And I think quarter over quarter, we're continuing to see, you know, our backlog grow. as we continue to obviously put work in place. But I don't see that the market is slowing down, I guess, from a book-to-build standpoint.

Yeah, and so I think I'll just add, I mean, we appreciate the question. You've got $8 billion as of the end of the year, which gives us visibility. Obviously, we've talked about how that is, you know, call it sort of like a 12- to 30-month window into revenue realization. We're seeing a lot of demand. There is some, you know, these are not immediate sales. Like, when you think about a sales cycle, it's not like you're signing contracts daily. These are large projects with significant capital commitments. So, you know, but we're continuing to see great demand for our services, and Outlook continues to be really robust.

Great. Hey, thanks. Sorry, George. Go ahead.

I said our convergence from LNTPs to FNTPs are on schedule. We're seeing those dates hit, which is consistent with our forecast.

Great. Okay. Thanks, guys. Hey, I was wondering if you might be able to provide a little bit of color on how much you guys think might be safe harbored out there and to what degree that can support the outlook for your business as well. You have the backlog. That's great. And then there's a substantial amount of safe harbor, I think, that is out there. But I was wondering if you might be able to share any color on that topic as well. Thanks.

You know, we're hearing, I'm sure, what you're hearing as well and what has been reported is something over 200 gigawatts of product safe harbored. Obviously, that is being done at our customer level, so we don't have direct visibility into all of it, but I think those are probably realistic numbers.

Great. Thanks, George. I'll pass it on.

Our next question is from Mark Bianchi with TD Cowan. Please proceed.

Hey, thanks so much. I guess maybe following on to that last point there about the safe harboring, do you have a sense of how much of that 200 has been awarded? So, you know, all of your backlog is safe harbored. So is that some portion of the 200? And if we were to try to think about, you know, how many gigawatts have yet to be awarded to you and your competitors, what that number might look like?

Well, all of our backlog is safe harbor. My assumption is that most projects that are awarded today are safe harbor because of, you know, the provisions for 24 and 25. And even into, you know, through the first half of 26. So, you know, all projects I think today are being awarded are safe harbor.

And I think, Mark, I'll just add, and it's coming back to the comment George made in his prepared remarks. Obviously, safe harboring is important and it's, you know, part of a, you know, a health driver of long-term capital formation for our customers. But, you know, we're in a rising power price environment with a lot of, you know, with scarcity and, you know, with all this demand. I mean, candidly, even independent of the safe harboring, you know, our core service is still just fine and, highly competitive to other forms of generation.

Yep, indeed it is. The other one I had was also related to something that was discussed before in this sort of gross margin outlook. I guess, can you, so the guidance has some lower gross margins, which is understandable. You've got a lot of new work, big backlog growth over the course of last year. But from a on the ground, boots on the ground. Can you talk to us about what you've done to prepare for this uptick in work? What can you say to give investors confidence that you'll be able to execute on all this new business?

Well, the interesting part about the backlog growth is it's not in significantly more projects. The projects are just larger. So we get a lot of leverage out of project teams because of scale of projects. So we've been able to continue to grow revenue and execution through just the size of projects versus the number of projects, right? If you think about a... You know, the difference between, you know, a project team from a 200 megawatt project to an 800 megawatt project isn't four times more people. It's really, you know, the same project team with some additions. Obviously, there's labor force and other things that we have to manage, but there is scalability in this business, and we've been able to do it, you know, over the last, you know, almost two decades that we've been building this business. So we've been managing for this, preparing for this, and building, you know, one expertise and process to be able to scale the business in this way.

Great. Thanks, George. I'll turn it back.

As a reminder, there's star one on your telephone keypad if you would like to ask a question. Our next question is from Sanjita Jain with KeyBank Capital Markets. Please proceed.

Good morning. Thanks for taking my question. I just have one. So just following up on the fuel cost comment, I just want to ask if there are any supply chain disruptions from the Middle East that you're factoring into the sequencing of your backlog. I know there's $8 billion of backlog that you're going to burn over the next two years. Just trying to see how much clarity you have into equipment availability over that period.

We are not seeing any supply chain disruptions today. Obviously, we're continuing to watch and monitor the situation And again, we have contractual remedy for these type of issues if we see something in the future. But today, where we sit today, we're not seeing any supply chain disruption.

Understood. That's it for me. Thank you.

Our next question is from Ben Callow with Baird. Please proceed.

Hey, good morning. Congratulations, guys. Just two quick ones. First, on the FEOC, if you're seeing anything in either panels or trackers or anything else in the supply chain, it's a bottleneck. And then my second question is just more on bookings, but longer term. Are you having any kind of conversations for post-ITC

projects uh now or is that too early and thank you guys very much um thanks ben um we are not seeing um you know direct ceoc impact today i think the industry has done a lot to uh prepare for this and so a lot of domestic content a lot of um you know manufacturing that has that has um you know, moved internationally. And I think there's just a lot of robust supply chain addressing this. So we're not seeing, you know, we're not seeing direct impacts because I think of, I think about the work that we've done as an industry to prepare for this.

And then your second question, I'm sorry.

Yeah. Post ITC.

Yeah. Project demand post ITC. Yes. We are starting to see portfolios from customers that have placed in service dates that are post-ITC, and they're seeing continued demand from their customers. And so to Chad's point and to my point earlier, demand is driving this market. And so I think... The industry is set up for post-ITC. Demand is there, recognizing that, you know, we'll be building, you know, there's projects now that are at least being planned post-ITC. You know, based on the speed in which we deploy, we won't see those projects come into our backlog now because our backlog is really a 24 to 30-month period. window because of the speed in which we can deploy projects. So, I wouldn't expect that we would see projects that would have, you know, COD and placed in service dates, you know, post-ITC as of yet in our backlog.

Great. Thank you, guys.

Our next question is from Dylan Nassano with Wolf Research. Please proceed.

Hey, good morning. Thanks for taking my question. Just wanted to kind of check on the storage angle here. Could you give us a little bit of a sense of within the $8 billion, just what the mix is of solar only versus paired with storage, and then just any kind of color on how that momentum has kind of gone year to date so far?

Yeah, I mean, I think, you know, when we think about our Storage, there is a lot of momentum, a lot of discussion, both for standalone and sort of what I think what we're really excited to see is just more and more projects where you've got hybrid solutions, right? And, yeah. Yeah, and on the backlog, you know, I think it's roughly of our eight, kind of roughly after the end of the year, $2 billion of that is related to either standalone or projects that are otherwise hybrid projects. for both solar and batteries. So, no, I think it's a really exciting part of the business and definitely an area of focus.

Great. Thank you. Thanks, Dylan.

And our last question is from Mark Jarvie with CIBC Capital Markets. Please proceed.

Thanks. Congrats on the progress over the last couple of months here. Just on the last question following up, just how do you think the opportunity is to gain market share in the battery side of things versus standalone solar? Is there a concentrated focus to lean a bit more on the battery just given there's longer duration on the tax credit side of things?

Yeah, that is a growing portion of our business, you know, and a focus. So, yes, we are, you know, we're in customer discussions with, with all of our customers, honestly, are looking at battery storage as a growing part of their portfolio, which ultimately drives our business as well. And so it is a, it's a direct focus on both our EPC business and our O&M business, because there's a lot of opportunity in the, you know, OEM services side of battery storage. And so it is a, It is a significant focus in our business.

And just in terms of market share gains, you feel like there's an opportunity to do greater on the battery side of things?

Yeah. No, I think that this market is growing dramatically.

So I think that if we continue to hold or grow our market share, we'll continue to be a market leader.

Just going back to the question about potential M&A, are you guys able to comment a little bit in terms of the opportunities that you see there today, final deal activity? Is there a likelihood that you guys feel there's opportunity to transact in 2026?

Yes, we will transact in 2026. I can't really comment on what opportunities we're looking at, but they're all in line with our strategies that we've outlined for M&A. for growth.

And those would not yet be in the guidance, or is there any small tuck-ins already factored into guidance at this point?

Yeah, I mean, I think our expectations are based on where we are today. Obviously, how we allocate capital in the future is going to be done with the right level of discipline that we need to ensure that we're putting our dollars to work prudently and accretively.

Sounds good. Thanks for your time.

Thank you. We have reached the end of our question and answer session. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.