NextNRG, Inc.

Good morning, and welcome to the next NRG Inc. fourth quarter and full year 2025 earnings call. All participants are in a listen-only mode. Following management's prepared remarks, we will move to a pre-submitted Q&A. This call is being recorded. Before we begin, I'll turn it over to Sharon Cohen for the required forward-looking statements disclosure. Sharon, please go ahead.

Thank you. I'd like to begin by reminding everyone that today's discussion will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks and uncertainties that could cause actual results to differ materially. Please refer to our most recent SEC filings for a full discussion of relevant risk factors. Today's call will also reference adjusted EBITDA, a non-GAAP financial measure. A full reconciliation of this measure to net loss the most comparable GAAP measure, is available in our earnings release, located in the investor tab of our website. Non-GAAP financial measures should not be considered a substitute for GAAP results. On the call today is Michael DeFarkas, founder and chief executive officer, as well as Joel Kleiner, chief financial officer. Michael, the floor is yours.

Thank you, Sharon, and good morning, everyone. I want to begin with some numbers that will frame everything you're about to hear. In 2024, Next Energy generated $27.8 million in revenue, while in 2025, we generated $81.8 million. I want to repeat that, $27.8 million to $81.8 million. That is about 195% growth in one single year. Our on-site mobile fueling business was the driver of this growth. Following the completed merger of Next Energy and Easy Fill, we integrated two acquisitions, Shell Tap-Up Assets and Yoshi Mobility. These acquisitions allowed us to enter into four new major markets, Phoenix, Austin, San Antonio, and Houston, ending the year operating coast to coast. And the results reflected that. We posted seven consecutive months of record revenue. And by May, our year-to-date revenue had already surpassed all of 2024. Most critically, our margins improved as we scaled. Our full year gross margin in fueling was 8.4%. By Q4, it had climbed to 10.4%. That is the direction we're moving towards as we continue to optimize our operations, implement smarter customer acquisition, greater route density, increase of fuel mix deliveries, and less wasted time. In that curve, we are still early. I want to call out our fourth quarter specifically because it tells you where this business is headed. Q4 revenue was approximately $23 million. October, $7.4 million. November, $7.5. December, $8 million. December loan represented 253% year-over-year growth in revenue and 308% growth in fuel volumes. And that is the momentum we're carrying into 2026. I also want to take a moment to highlight something specific because I believe it speaks to the quality of what we are building. Right now, our largest commercial fleet customer, the largest global online retailer, is actively cutting other fuel vendors in certain markets and replacing them with us, Next Energy. That does not happen by accident. That happens when service is cleaner, more reliable, and more integrated than the alternatives. This is precisely what we designed our products and services to do. And it means that the opportunity with just one customer alone has not even reached its full potential. I want to talk about our energy infrastructure segment, because this is where the next chapter of Next Energy is being written. We closed our first power purchase agreements, Sunnyside and Topanga Terrace Rehabilitation and Subacute Care Centers, both in California. Under these agreements, Next Energy will design and build fully integrated on-site smart microgrids combining rooftop solar, battery storage, gas generators, and our patented AI-driven controller. These are long-term structured agreements with annual escalators built in. This is not equipment sales, but it's contracted energy relationships that generate annuitized revenues over the long term, some as many as three decades. We believe finalizing these agreements validates the model. The market exists, customers are ready to commit, and Next Energy is ready to execute. Our pipeline of planned smart microgrid projects stands at approximately $750 million, spanning municipal, tribal, healthcare, multifamily, and commercial facilities, all in various stages of development. We are now converting that pipeline into executed contracts. Before I turn it over, I want to explain something about how this part of the business operates, because I think context matters when you're looking at our numbers. We are deploying multi-million dollar energy infrastructure projects to large operational entities, which require engineering studies, permitting, utility interconnection approvals, project financing, and organizational decision-making that can span years. The contracts we are closing today are the result of development work that started 18 to 24 months ago. Therefore, when you look at the business, you should be looking at what we've already closed, what's in the pipeline, and how that builds from here, because each contract represents millions of dollars in revenue, and a proven track record accelerates the pipeline behind it. The fuel business funds the operation today. The energy business is where the exponential growth will come from. That is the architecture of this company, and 2025 was the year we demonstrated that both sides of the business can work. I will now turn it over to Joel to break down what is behind the numbers. Joel?

Thank you, Michael. Good morning. I want to walk through 2025 financials plainly because there is an important story inside these numbers that does not surface in the headline loss figure. Revenue for the full year came in at $81.8 million, compared to $27.8 million in 2024, an increase of $54.1 million, or 195% year over year. Cost of sales was $74.9 million, up from $26 million, rising proportionally with expanded volume and geographic footprint. Gross profit reached $6.9 million versus $1.8 million in 2024, nearly four times higher year over year. Revenue scaled, gross margin improved, and gross profit grew. That is the business working. Gross margin expanded quarter over quarter throughout fiscal 2025, demonstrating the company's ability to drive operational efficiency while continuing to grow its revenue base. Our gap net loss for 2025 was $88.2 million. I want to walk through the major components because the bulk of that figure is not cash out of the door, and it's important that you understand the distinction. The largest driver is stock-based compensations. which is totaled at $42.6 million. This is entirely non-cash. This figure represents the equity cost of attracting and retaining the talent to execute a merger, integrate two fleet acquisitions, enter four new states, and close the company's first energy infrastructure contracts, all in a single year. It is all the primary reasons that our adjusted EBITDA tells a fundamental different story than our net loss. Interest expands to $17.3 million. This includes $9.6 million in non-cash amortization of debt discount, a gap accounting charge that does not represent current cash paid. The remainder reflects interest on our outstanding borrowings used to fund the company's growth and working capital. We are committed to reducing our reliance on high-cost, short-term debt as operating cash flow continues to scale. We also recorded an $8.5 million impairment charge. This is a one-time, non-recurring, non-cash accounting adjustment related to assets recorded in connections with our merger and . As part of the year-end process, those assets are evaluated under GAAP, and we recorded a write-down based on that assessment. This does not reflect any deterioration in customer relationships, contracts, or operating assets. It impacts the reported net loss, but has no effect on cash or how the business operates going forward. When you strip out these items, the non-cash stock compensation interest inclusive of debt discount amortization, depreciation, amortization, and the one-time impairment, you get suggested evident loss of $17.1 million for 2025. compared to $8.9 million in 2024. Net cash used in operating activities was $16.7 million in 2025. We continue to run the company's growth through operating cash flow and equity capital market activity and debt facilities. Our February 2025 equity rate of $50 million provided critical working capital that supported the execution you see in these results. We are a growth company in a capital intensive industry, and we continue to invest into expanding our energy infrastructure pipeline. Fuel business provides operational momentum. Energy business provides long-term upside. They represent a company that generated $81.8 million in revenue and $6.9 million in gross profit in its first full year as a combined entity. I will turn it back to Michael for closing remarks.

Thank you, Joel. I want to close with this. The energy market in the United States is fragmented, inefficient, and expensive. Businesses that consume enormous amounts of energy, commercial fleets, logistics operators, hospitals, distribution centers, are managing that energy the same way they have for over 20 years, working across multiple vendors with very little integration, visibility, or control. We built a platform that changes that. On-demand fueling with real-time dispatch optimization. On-site microgrids that eliminate fragmented utility dependence and replace it with intelligent integrated infrastructure. A unified operating system that lets a business see, manage, and optimize all of its energy needs in one place through our proprietary Next Energy dashboard. The fuel side of the platform works. We established that in 2025. The energy side is just now starting to convert pipeline into contracts, and those contracts are long-term, high-value, and destined to compound. The progression is already starting to show up in the numbers and in what we have executed so far. $27.8 million to $81.8 million in revenues in one year. Gross profit nearly quadrupled. Seven consecutive months of record revenue. Our first energy infrastructure contracts signed and a pipeline at over $750 million. This is the year we just had. We are more focused on the next one. Thank you for all being here. I'll now hand it back to Sharon to take us through the Q&A.

Thank you, Michael. We'll now move to questions that were submitted in advance. This first question is for Joel. You recorded $42.6 million in stock-based compensation in 2025. Who received that compensation? What was it tied to? And how should investors think about dilution going forward?

Well, 2025 was not a normal year for this company. We did a merger, brought two fleets, built an executive team, an advisory board, and launched an energy infrastructure business. I remind you, all in the same year. The equity issue was tied to that buildup. A lot of that work was compensated in equity, and that's what's reflected in that figure. It's not something you should expect to see at this level going forward. As things stabilize, those numbers come down. And yes, we're very aware of what dilution means to our shareholders, and that's always a part of the conversation and the decisions we make.

Okay, thank you, Joel. Here's another one for you. Cash at year-end was $384,000 and the working capital deficit since at approximately $25 million. The company has been relying on high-interest instruments to fund operations. How does Next Energy get through this next year, 2026, and what does the financing plan look like?

Look, the cash position at the end, at year end, does not tell the whole story of where we are liquidity-wise. Our cash position reflects the timing of debt facilities and operating cash flows, working capital, and it doesn't give the full picture of available liquidity. We have active debt facilities in place, and we continue to have access to capital markets, as we have demonstrated, like in our February 2025 equity race. As infrastructure contracts close and move towards construction, they bring project-level financing structures that are standard in the industry and don't rely solely on corporate balance sheet funding. We are not managing this business on $384,000. We're managing it on a combination of operational cash flow, debt facilities, and the capital markets access we've consistently demonstrated. The goal for 2026 is to reduce our dependence on high-cost short-term debt by growing operating cash flow, increasing working capital, and closing contracts that carry their own financing. That's the plan, and we're going to execute against it.

Thank you, Joel. Michael, the following questions I will direct to you. The energy infrastructure business is described as a long-term growth engine of the company. When those contracts do start generating revenue, what does the margin profile actually look like, and how does it compare to the fueling business?

It is a completely different margin profile. The fueling business operates on fuel margins. We buy fuel, we deliver it, and we earn the spread plus the service fee. Those margins are in the high single digits to low double digits, and they improve as we optimize routes and density. The energy infrastructure business operates on a contracted rate over a multi-decade agreement. Once those assets are deployed and operating, the ongoing cost structure is largely fixed. You have maintenance, monitoring, and debt service on the project financing, and the revenue is locked in by contract with annual escalators. We expect the margin profile on a stabilized microgrid to be significantly higher than what we generate in fueling. The fueling business is a strong, scalable cash generator that the energy business is a different kind of asset completely. And when those contracts start producing revenue, we believe it has the potential to meaningfully change the financial profile of this company.

Thanks, Michael. Here's the next question. Given the current cash position and working capital deficit, what does the path to cash flow break even look like? And what are the two or three things that need to happen operationally to get there?

There are three things. First, the fueling business needs to continue scaling its gross profit, and it is. We went from $1.8 million in gross profit in 2024 to $6.9 million in 2025. And Q4 margins tell us there is more improvement ahead. Second, we need to close and monetize energy infrastructure contracts. Each one that closes and moves towards construction is expected to represent significant revenue and significantly improve our cash positions. And third, we need to right-size our operating expenses relative to where the business actually is today, not where we are building to. We've been spending ahead of this revenue on the energy side, and that's just the nature of how the business works. But as those contracts start closing and revenue comes in, that ratio flips. That's what we're focused on.

Great. For our final question, As the fueling business matures and energy contracts begin to close, how is management thinking about capital allocation? Where does investment get prioritized, and what guardrails exist to prevent a company from overextending on either side of the business?

Great question. The fueling business funds itself at this point. It generates positive operating cash flow, and the capital requirements are largely tied to feed expansion, which we can pace based upon demand. So the capital allocation question is really about the energy side. And there, the discipline is built into the structure of how we develop projects. The capital to build each project comes with the project through project financing, not from corporate balance sheets. What we invest corporately is in the development and sales process, engineering work, permitting, customer relationships. And that's a deliberate, contained investment. It's not open-ended. The more projects we close, the cheaper and faster the next one gets. The guardrail is the model itself.

Okay. Thank you. That concludes our Q&A. Michael, any final words from you?

Nope. Just want to say thank you. We are heads down and focused on execution, and we're looking forward to seeing you next quarter.

Ladies and gentlemen, thank you so much. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.