Good day and thank you for standing by. Welcome to the Selevation Q3 2026 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Larry DeMaria. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Xelevation's third quarter 2026 earnings call, our first as a public company. I'm Larry DeMaria, senior vice president of investor relations and capital markets. With me today are Michael Rubiera, our founder and chief executive officer, and Ken Krause, our chief financial officer. The call is being webcast live on the investor relations section of our website at www.excelvation.com, where you will also find our earnings release and the presentation that accompanies today's remarks. A replay will be available on the same site following the call. Let me remind you that today's presentation and remarks include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about our outlook, backlog, bookings, margins, Cash Flow and Capital Expenditures, Capital Structure and Leverage, Customer Demand and Diversification, Capacity, New Products and Markets, and Growth Plans. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. These risks, including those identified on slide two of today's presentation in the risk factors section of our final prospectus for initial public offering and in our other filings with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update any forward-looking statement. We will also discuss certain non-GAAP financial measures including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, free cash flow and net leverage. These measures should be considered in addition to and not as a substitute for our GAAP results. Reconciliations to the most directly comparable GAAP measures included in our earnings release and in the appendix to today's presentation. Michael will begin with an overview of acceleration and a third quarter business update. Ken will then review our financial results, capital structure and the 2026 outlook. Michael will close with the key takeaways before we open the line for questions. With that, I'll turn the call over to Michael.

Thank you, Larry, and good morning, everyone. Today is a milestone for us. Our first earnings call as a public company. To our new shareholders, welcome, and thank you for your confidence in Xelevation. And to our employees, thank you. You built the company investors see today, and you delivered the results we're going to walk through this morning. For those of you who are new to our story, my wife and I founded Xelevation in 2018 with a simple idea. Build a US-based manufacturing company that innovates and operates at the speed of technology. Today, we design, manufacture, and install highly customized thermal infrastructure and electrical distribution products. Our primary end market today is the domestic mission critical data center build out, and we sit at the critical point in that build out. We custom design, manufacture, and self-perform the installation of the complex integrated systems that are the last mile of construction, the final step before compute goes live and our customers can start generating revenue. Let's start with where we play. Our focus is the mission-critical white space, the server hall where power distribution, thermal management, airflow containment, and structural systems power, cool, and support the compute. While this infrastructure is a relatively modest share of the total cost, it is the critical path to ensure our customers get to compute faster, start generating revenue sooner, and avoid costly delays. Gray Space is a natural adjacency and a real opportunity for us to expand our offerings beyond the white space over time. And while most of our business today is tied to data centers, most of the products are in-market agnostic and we expect to target new markets as we grow. So what makes Xelevation different? We own the whole process from design through fabrication, installation, and commissioning with one integrated team accountable from start to finish. We are not a standard product catalog company. We co-design our solutions with our customers to meet their unique needs. That matters more every quarter. Projects have been getting bigger, deployment schedules keep compressing, and for our customers, a delay is not just a construction problem. It pushes back the moment their major investments in land, power, and compute start generating revenue. Fragmented multi-vendor models add handoffs and add risk. Our model takes them out. Customers are buying speed to compute and certainty of execution, and you can see that in the three results on this slide. First, we have broadened our customer base. We added seven significant new accounts in the third quarter alone across mission critical end markets. This has also significantly diversified our customer base, and at this point, only two customers represent a double digit percentage of our bookings for the quarter, with our largest customer representing less than 20% of revenue for the third quarter. Within our core United States market, we are also working to diversify the states where we do business. Since we are in the last mile, we go where the customers need us and where power and permitting are not a risk. Second, we are winning a bigger share of each customer's wallet. We began shipments of our SkyBridge modular solution in late August, a product that comprises a significant amount of our backlog that did not exist in the first quarter. By selling a complete modular unit that includes all of our products and services, We have seen our average order size grow 4x year-to-date versus a year ago. Third, we are investing deliberately in capacity ahead of expected need so that we are positioned to meet rapidly growing demand. The market is quickly shifting towards modular factory-built infrastructure. We positioned excelevation for that shift. Our U.S. operating footprint has grown to approximately 1.5 million square feet, up from less than 170,000 square feet at the start of 2025. and we have built all of this efficiently with capital expenditures of approximately 3% of revenue year-to-date. Our domestic model makes that capacity even more valuable. Our manufacturing and supply chain are predominantly US-based and close to where our customers are building to enable us to respond faster and remain more agile than many of our competitors. For selective scopes, we can go from raw materials to shipment in as little as 24 hours and we're investing in our people to match. Excelevation Academy builds skilled trades in-house, and our built-together ownership program makes our employees owners of the company. I'll come back to that in the end. Put it all together, a broader customer base, a growing share of wallet, and capacity in place ahead of expected demand, and you have a platform built for sustained, profitable growth. Now to the quarter. The headline, our differentiated model delivered robust growth Solid profitability and strong cash flow generation all in the same quarter. Revenue grew approximately 66% from prior year quarter to $202 million. Gross margins were 29.3% while adjusted EBITDA was approximately $38 million, an 18.7% margin. Ken will take you through the details in a moment. And demand remained strong. Bookings in the quarter were approximately $770 million, up more than 350% year over year. bringing year-to-date bookings to approximately $1.9 billion and backlog to $1.7 billion. Book-to-bill was approximately 3.8 times, our second consecutive quarter above three times. Once again, orders materially outpaced revenue. That expanded our backlog, increases our confidence in our 2026 guidance, as well as our visibility into 2027. We also landed a major new relationship. This quarter we received the largest order in our company's history from a new customer, with delivery expected over the next six to 12 months. That customer provided a significant upfront deposit, which strengthened our cash flow and liquidity. This customer first engaged us over the summer. They needed a new partner who could custom design a unique solution to their specific need, which would reduce their time to compute. Execution of the program is progressing as planned. We are also building to meet growing demand across all customer segments. During the quarter, we opened second flight and broke ground on third flight, our next facility in Dayton, right next to our first and second flight facilities. Third flight will add approximately 286,000 square feet and is expected to be operational by late summer 2027. It will add capacity ahead of demand, supported by our backlog and pipeline. It will expand our modular capabilities and gives us room to grow over our power products. Demand in the quarter was broad-based across our entire portfolio and customer segments. Our power products, which include remote power panels, branch circuit webs, and power distribution units, are strategically important. They increase our content per installed megawatt and let us deliver a more complete scope as part of our modular solution and simplifies the total project complexity for our customers. Customers continue to prioritize modularity and prefabrication because moving work from the job site into a controlled manufacturing environment reduces field labor, limits handoffs, and improves schedule certainty. That momentum drove backlog to a record $1.7 billion, with the third quarter booked a bill of 3.8 times. In addition, our pipeline of new business remains healthy and gives us further confidence for 2027 and beyond. As a reminder, Our pipeline only includes projects where our engineering and solution teams are actively designing the specific white space solution for a specific job site that is already under construction with a hard timeline requirements for delivery. That means those projects are beyond the permitting electrification stage and in many cases we were the specified basis of design for the end customer. Now I know the financial markets have been volatile and investors continue to debate the pace and returns of AI infrastructure investment. So let me tell you what we're seeing from our customers. The demand signals remain strong. Strong orders, a record backlog, a healthy pipeline, and continued demand for faster deployment. Program timing designs and site schedules can and will change, but our relatively short lead times, in-house engineering, and Domestic Manufacturing position us to adapt while staying focused on a broader demand trend. We stay focused on what we can control. Internally, we call it winning in the turns, staying close to customers, executing with discipline and investing where we see the greatest long-term opportunities. Innovation is core to our DNA. In fact, over 80% of our third quarter product orders came from offerings we developed in the prior 12 months. That number says a lot about our culture. It is built on speed, agility, and an entrepreneurial spirit. We work behind the curtain with our customers to design solutions that solve their specific needs and challenges. And that means we become the specified basis of design for all of their projects and campuses. While we talk a lot about our patent-pending SkyBridge modular solution, the truth is it is just one of eight unique platform designs today. This is what has allowed us to grow so rapidly and is the foundation of our future success. And our growth strategy goes well beyond any single product. We see five reinforcing levers. One, expand wallet share with our key blue chip customers. Two, broaden the customer set and geographies. Three, increase power and thermal content per megawatt. Four, expand lifecycle retrofit and maintenance services. and five, selectively apply our capabilities in adjacent mission critical electrical markets. Over time, we also intend to expand from our current white space focus into selected gray space solutions where our design, manufacturing and installation model can create a similar advantage. We intend to pursue all of this with discipline. Finally, I want to come back to our people. Through the Built Together Ownership Program, more than 1,800 employees are now owners of this company. That alignment matters. It drives retention, quality, and the sense of urgency our customers feel every day. We move at the speed of technology and our employees think and act like owners. One more point on this because I know it matters to our shareholders. The majority of the cost of the built together is borne by our pre-IPO shareholders who put the program in place. The remainder is funded through our standard equity incentive plan within the share reserve we laid out at the time of the IPO. So this program does not add dilution beyond what investors already saw in our prospectus. Public shareholders get the benefit of a workforce of owners with the vast majority of the costs carried by the shareholders who came before them. I'm also pleased to announce the promotion of Ericka Harrison to Chief Commercial Officer. Ericka has been a key member of our leadership team and has led the critical manufacturing capacity expansion over the past few years. Before I hand it over, let me sum up. Record backlog, Strong growth with solid profitability and cash generation, a broadening customer base, and capacity in place ahead of demand. This is a strong start to our life as a public company, and we are excited about what is ahead. With that, I'll turn it over to Ken. Thank you, Michael, and good morning, everyone.

We are pleased to deliver strong third quarter results, our first quarter as a public company. We delivered robust revenue growth, healthy margin levels, and we're positioned extremely well as we start the fourth quarter. Our customer base is starting to broaden. We are beginning to see projects in new geographies and our pipeline of new business is very healthy. During my prepared comments, I will compare revenue with the prior year quarter and also discuss sequential performance. That's Q3 performance relative to Q2 of this year. which I believe provides the clearest view of our current operating trajectory as we scale. Unless otherwise noted, balance sheet figures are as of September 30 and therefore precede the closing of our IPO and refinancing that occurred in early October. We delivered a strong third quarter with revenue of approximately $202 million, up 66% year over year and more than 11% sequentially. During the quarter, we began ramping up production of our modular systems, moving away from our more traditional on-site assembly. We're just starting to see the benefits of this transition and expect continued growth and improved profitability in future quarters. With that said, growth continued to be broad-based and almost entirely organic, driven by backlog conversion, increased activity on newer programs, and new customer contributions. We're beginning to add new customers and penetrate new geographies, which are helping us build a more sustainable business model. No single customer accounted for more than 20% of revenue in the quarter, which is down considerably from prior quarters. Furthermore, states like Texas no longer comprise more than 50% of our business, as we see demand in new states like North Dakota, Wisconsin, Indiana, and many others. Profitability improved from the second quarter, with gross profit rising to $59 million from $48 million and gross margin expanding approximately 260 basis points to 29.3% from 26.7%. Higher volume, pricing, and a more favorable project mix drove the improvement, partially offset by certain inefficiencies associated with the initial modular production ramp and certain legacy projects. SG&A in the quarter was approximately $27 million, or 13.1% of revenue. SG&A increased 68% year over year, and excluding approximately $5 million in recurring transaction costs and certain non-cash items, SG&A would have increased much more modestly, reflecting controlled growth alongside our expanding revenue and customer base. Adjusted SG&A was about 11% of sales, in line with our low double-digit target. Potential results highlight the platform's earnings potential. Approximately $21 million in additional revenue generated about $11 million in additional gross profit and $13 million in additional adjusted EBITDA, representing incremental margins of roughly 52% and 63%, respectively. While we don't expect those incremental margins to repeat every quarter, they do, however, demonstrate the operating leverage available as we increase manufacturing utilization, spread fixed costs over higher volumes, and shift towards more modular production. Adjusted EBITDA was approximately $38 million, or 18.7% of revenue, compared with approximately $25 million in the second quarter. Net income was about $3 million compared with a net loss of about $2.5 million in the second quarter. Adjusted net income was $21 million versus $15 million in Q2 2026. Our earnings release and presentation provide the reconciliations and the items excluded from our non-GAAP measures. Cash generation was strong. Net cash provided by operating activities was approximately $63 million and free cash flow was $55 million. Working capital benefited from the significant upfront customer deposit that Michael had mentioned previously. Customer deposits and milestone billing help align cash receipts with procurement and production requirements on larger programs, reducing the amount of capital required to support our growth. CapEx was 3.7% of revenue. We continue to target and expect CapEx at or below 3% of revenue going forward. Our ability to expand in a capital-efficient manner while customers help fund project working capital through deposits and milestone billing supports attractive returns on invested capital. As of September 30th, cash and cash equivalents was approximately $109 million. Total debt was approximately $665 million, and net debt was approximately $557 million, using the definitions in our public presentation. The quarter end balance sheet reflects our prior credit facilities as the IPO and refinancing closed after quarter end. We incurred non-cash debt extinguishment costs in October of $10 to $11 million associated with the replacement of the pre-IPO credit facilities. Following quarter end, we used the net primary proceeds of $171 million from the IPO and borrowings under new senior credit facilities to repay the prior credit agreement. The new facilities consist of a $400 million revolving credit facility and a $250 million term loan A, both of which are maturing in 2031. Pricing is so far plus 150 to 250 basis points following the initial pricing period. compared with SOFR plus 450 to 525 basis points under the prior facilities. The refinancing materially reduces our cost of capital and improves our financial flexibility. We expect cash interest costs to approximate $8 million in the fourth quarter. At September 30, net leverage under the definition shown in our presentation was four times. Pro forma for the IPO and refinancing completed after quarter end Net leverage was below three times. Our priorities are clear, support high return organic growth while continuing to de-lever and build the financial profile of an investment grade company over time. Transitioning to slide 17, today we're introducing fiscal 2026 guidance. We expect revenue of 905 to $915 million up more than 100% at the midpoint versus 2025, and adjusted EBITDA of $155 to $165 million, representing over 75% year-over-year growth at the midpoint, with a margin of 17.1% to 18%. I remind you that 2026 is a transition year with some inefficiencies driven by the second quarter transition from stick build to the third quarter launch of SkyBridge modular production and the wind down of legacy contracts. During the first nine months of 2026, we incurred approximately $23 million of losses that are not expected to repeat in the next year. That equates to about 350 basis points of margin year-to-date and about 250 basis points of margin for the full year. Our guide incorporates current backlog, expected program timing, production capacity, and normal fourth quarter seasonality, including fewer working days around the December holidays. Our $1.7 billion backlog as of September 30 and continued Order Momentum positions us to finish 2026 strongly and to enter 2027 with meaningful visibility and a strong foundation for continued profitable growth. I'd further reinforce that our pipeline remains healthy and broad-based. We expect to provide 2027 guidance when we report fourth quarter results in the first quarter of next year. Finally, on margins, we continue to see a path to the mid-20% range for recurring adjusted EBITDA margins. We have opportunities to improve margins associated with procurement savings, insourcing automation, the benefits of modular, and fixed cost leverage, to name just a few. Quarterly margins will move with project timing and mix, but the third quarter sequential incremental margin demonstrates the earnings power available as revenue scales across our platform. In closing, we are positioned well as we look towards 2027. Demand is strong. We have opportunities to continue delivering robust above market levels of growth, and we are starting to see a broadening of our customer and geographic exposure. We are focused on executing and driving towards the full profitability potential of our business. Our goal is to be a mid 20% adjusted EBITDA margin business over the medium term. and the trajectory of our quarterly results is demonstrating that potential. Our cash flow profile in the quarter demonstrates the strength of our business model. As we scale, we have the potential to deliver very strong cash flow and return on invested capital in our capital light business model. With that, I'll turn the call back over to Michael. Michael?

Thank you, Ken. Let me close with a few takeaways. First, we delivered a strong quarter. Revenue grew 66% year-over-year, gross margin improved to over 29%, and adjusted EBITDA increased meaningfully from the second quarter. Second, demand remained strong. We had bookings of approximately $770 million in the quarter, growing over 350% over the prior period, bringing year-to-date bookings to approximately $1.9 billion and our backlog to $1.7 billion. We are also beginning to broaden the customer base. Finally, we continue to expand the value we provide customers through modular solutions, power products, and self-performed installation, and increasing our content per megawatt. We're pleased with the quarter and we remain focused on execution. We have significant demand in front of us, capacity in place to support growth, and a team that is moving quickly to serve our customers. We will continue to invest and execute with discipline. Before we take your questions, I want to thank our employee owners. They made this quarter possible and through the Built Together Ownership Program, they share in the value they help create. Our IPO was an important milestone, but it is also just the beginning of a new chapter. We are excited about the opportunity ahead and focused on earning your confidence quarter by quarter. Operator, please open the line for questions.

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again Please stand by while we compile our Q&A roster. Our first question will come from the line of Tomohiko Sano of J.P. Morgan. Your line is open.

Tomohiko Sano Good morning, everyone. Tomohiko Sano Good morning, Tomo. Tomohiko Sano First of all, congratulations on becoming a public company. So maybe start with you added several significant new customers this quarter. How are you seeing those relationships develop beyond the initial projects, like, for example, through repeat orders, expansion to additional campuses, or a broader scope of the products and services?

Yeah, thanks, Thomas. This is Michael. That's a great question, and one we're really proud to share. So with all of these new customers who we started doing work with in Q3, we've actually started to also engage with them to design their future platforms. So, for example, one of the Frontier Cloud customers, we're already on project number four with them. One of our other customers who actually was the largest customer order that we received in Q3, we're engaged with them to look at developing a solution that can actually provide their products across the entire globe, which we're really excited to do. And we've also already engaged with them on another large campus bill that they're going to execute in 2027. So it really speaks to the value of our model, which is we're not selling them a standard solution. We actually engage with their engineers to develop the solution that they need and want and help design something that's unique to their specific challenges.

And our next question will be coming from the line of Joe Ritchie of Goldman Sachs. Your line is open.

Hey guys, good morning and congratulations on your first quarter out as a public company as well. Look, your backlog grew, you know, about 50% sequentially and now covers, you know, it's almost 2x your revenue base for 2026. As you think about 27 and where your backlog is today, I'm just trying to understand how quickly you can turn the backlog and whether lead times have extended at all in your business.

Yeah, thanks for the question, Joe. It's Ken. The business, we have good visibility out in the 27, and we're starting to have increased visibility out in the 28. When we look at our business today, Not only is the backlog healthy, but the pipeline is healthy as well. It's a multiple of what our backlog is. And so it gives us good visibility as we think about the next several quarters, but also into 28. So we continue to benefit from continued wins and opportunities to work with new customers. It's interesting, when we look at some of the work we're doing with some of the larger customers that we interact with, We might be the basis of the design across four or five different designs, but we're currently only working on maybe two or three. So we've got that opportunity very much ahead of us. And so it provides a sense of optimism as we think about the future.

And Joe, this is Michael. One thing that has been consistent over the history of Xelevation is our lead times in our business are a red line. It's not something we move. Our team knows it. We've designed the organization to not adjust our lead times at all. So we've scaled this business to maintain what we believe to be the industry best lead times. And we will continue to have the industry best lead times as we go forward.

That's helpful, guys. And I guess maybe just a follow-on question. Ken, you gave some good margin color on what's not going to repeat in 2027 in terms of some of the headwinds that you saw in 2026. I'm just curious, as you look at the gross margin that you're booking in your backlog relative to what you're showing in the P&L today, how does that compare in the pricing that you're getting on the types of orders that you're winning?

Yeah, we continue to see good margins. We're getting paid for the value we're providing, the value that Michael referred to, the ability to move quickly, to accelerate time to token, the ability to customize. We're very much being paid for that. And as a result, we're seeing good margins. Progress on the gross margin. You know, in the quarter, we posted a 29 plus percent gross margin. That's up from just over 26 percent in the second quarter. And as we think about the future, we certainly see a low to mid 30 percent gross margin ahead of us based upon what we're seeing in the backlog, but also what we're seeing with our productivity opportunities across the manufacturing floor.

Great. Thank you, guys.

Thank you.

Next question will be coming from the line of Devin Leonard of Bank of America. Your line is open.

Hi there. For the seven customers added in the third quarter, how long did it take for them to go through qualification? Should we be thinking three months, six months, and could you size how many or give any color on the prospect you currently have in the qualification process?

That's a great question. Honestly, this industry moves very, very quickly. and with the customer we landed in Q3 that was the largest customer, we went from first conversation to basically basis of design in under four weeks. So additional customers that we're currently engaged with that are new customers that we anticipate landing in Q4 is also following that same sort of trajectory. There's a lot of urgency in the marketplace and a lot of expectation that their partners are able to execute. So time to compute has always been a very, very sensitive and high priority focal point for this industry. And if anything, it's getting to be even more of a major trigger for who our customers are deciding to partner with as they go forward.

And it's interesting, Michael, you know, the things that I highlighted during the course of my prepared comments. One, these customers are helping us diversify our geographic base significantly. Not too long ago, states like Texas were well over 50% of our business. Today, they're well under 30%. So we continue to see diversification across the geographies, bringing in states like Indiana, North Dakota, Wisconsin, just to name a few. and then just the customer concentration as well. You know, when you look at Q3, there was no single customer that comprised greater than 20% of our revenue. That's down considerably from a few quarters ago. So we're making great progress at winning new customers, expanding wallet share with existing customers and continuing to grow and create a more sustainable business.

Got it. And then just as a quick follow-up, how successful have you been in attaching maintenance and services in the recent months? I know customers are very focused on speed. Are they willing to engage in discussions on service as well early in the process?

Yes, especially, let's say, on some of our power product solutions. So we are engaging with them on discussions for long-term contracts now. It is a relatively new part of our business and at this stage relatively still less significant versus the initial, but it is a major area of focus for us as we go forward and we've actually dedicated some new high-level resources to focus on building out that model.

And our next question will come from the line of Mark Vanderplum of Morgan Stanley. Your line is open.

Great. Thank you, operator. Good morning, guys. Michael, good morning. Congrats on first quarter as a public company. But I wanted to follow up here. You guys called out or you actually called out strong share gains in the release yesterday. Could you help us frame where those gains are coming from? And separately, I thought slide seven really kind of highlighted some of the progress you guys have made over the past year. But if you could unpack that Forex growth and order size you guys have seen over that time. Is that a function of the scale of the projects, the content, project mix, price, or some combination really of all the above?

It's definitely a combination of all of the above. But to the first question, so we talk a lot about SkyBridge as our modular solution. That is, let's say, our standard product offering for the broad market. But we actually have seven other modular platforms that are specific for specific customers where we're the sole basis of design for those customers design. And those other seven platforms are very, very different from SkyBridge. Most of those discussions started at the beginning of 2026 and we're now just starting to see orders come through for those platforms. And if you were to talk with our customers or see a project, our name is actually on the designs that go out to all the general contractors across the US for those specific campus work. So that is, we're starting to see the return on all that investment that we made with those customers at the beginning of the year. And the truth is those same customers are now engaging us on even new platforms that they'll roll out in 2028, 2029, and 2030 and beyond. and that's a really really powerful differentiator because when we design the solution for our customers or with our customers we are then the ones who are in line to actually of course take those projects as we go forward so that has driven a lot of it but also the modular solution is really kind of bundled all of our products into a singular offering so when we sell to a customer we don't sell 50 different line items we typically sell a single line item which is the total project execution So we have seen our content per megawatt increase substantially across the board. And that's what's really driven our average order size, which is increased by 4x versus last year.

Great. And just a quick follow up. As we kind of entertain the migration from white space to gray space, do you guys kind of foresee A similar strategy where you want to get in early on the design process and kind of come to market with more modular solutions? Or how are we thinking about addressing the gray space and what sort of milestones should we be looking for there?

Yes, 100%. The entire category is moving to more and more modularity across the entire data center build. And anything you can do off-site in a controlled environment and deliver complete drastically reduces the time that takes to turn on a campus. So that is definitely our strategy going forward as well as we look to migrate into the gray space.

Great. Thanks, guys. Thank you.

And our next question will be coming from the line of Guy Hardwick of Barclays. Your line is open.

Hi. Good morning. Michael, Larry, and Ken.

Good morning.

One question I have is just Yeah, just want to drill down a little bit on, you know, a follow up to Joe's question earlier. During the whole IPO process, I probably got asked more about the pipeline than anything else. So I think investors will want to know or hear, have some indication as to what percentage of the backlog is deliverable in 2027.

Yeah, you know, it's interesting. It's a great question, guys. Ken, I'll take that. You know, I think the majority of our backlog certainly should ship during the course of 2027. We're not booking out multiple years necessarily. But the pipeline, when we think about 28, that's where the pipeline really starts to step in and give us a sense of confidence. But the better part of that backlog, I'm not saying all of it, but a better part of that backlog is going to probably ship over the course of the next 12 to 18 months. That's just the nature of our business. Customers are engaging with us because of our ability to respond quickly and accelerate their ability to get online. And as we all know, that white space is the last mile. And so we stand between the final stage of build out of the data center and the data center actually going online. And there's a real value for us to be able to help accelerate that. And so as a result, the backlog for the most part will ship out over the next 12 to 18 months.

One thing too that's really, I apologize. One thing that's really, I really want to kind of clarify because our business is a bit different than others, is nothing is in our pipeline, let alone our backlog, that isn't an active job site already. That's already been pre-permitted and pre-electrified. So we do not, if for something to come into our pipeline, which is a multiple of our backlog, our engineering team is actively engaged and then designing that solution. And so we can't design a solution for a site that doesn't exist. So we have a lot of visibility to the outlying years, let's say four to six years out for where campuses will be built. but that is not in our pipeline at all. We don't bring anything into the pipeline unless the site has already started construction and we know when the white space build out will need to start.

Yeah, it's interesting. The other point I think Michael's getting at there is cancellations. You know, a lot of, always a lot of questions around what's the risk of cancellation and the backlog. And for us, we really don't see it. It's a very small component of the data center. It's the final mile. It's well after permitting and power has been established. And so we just, our business, fortunately, doesn't feel the impact of those sorts of things.

Thank you. Just one follow-up. Ken, I think you provided the bookings as less than 20% from one customer. Are you willing to give the breakdown of the backlog by customer concentration?

Yeah, it's actually improving just the same. It's maybe not at 20% yet, but it might be more like a 30% sort of figure in the backlog. You know, that backlog is secure. Never see any cancellations coming out of that backlog historically. And so we feel good about it. It's diversifying across the geography, but it's also diversifying across the customer set.

Thank you, Kent. Thank you, guys.

And our next question will be coming from the line of Brian Drabb of William Blair. Your line is open. Drabb.

Hey, you got it. Yeah, Drabb. Thank you very much. Congratulations on the milestone. First, I just want to ask a little more specifically on the gross margin, which is headed clearly in the right direction, but can you say more specifically for the fourth quarter where you expect gross margin to land given what you're seeing so far in the quarter? And just at a higher level related to gross margin, Are you seeing any challenges related to supply chain that are just so common across the industry right now? And maybe just reaffirm for us your relative advantage that you really have given the largely domestic supply chain.

Certainly. Thank you, Brian. It's Ken. A couple of questions there. I'll try to cover them all, but Mike will step in if I don't. Thank you very much. to deliver for our customer. And that's part of the reason why we're benefiting and we're winning share. We have sufficient capacity out here in Southwestern Ohio. We continue to build on additional capacity very efficiently. If you look at CapEx, we've spent very little in CapEx, roughly 3% of sales year to date. Thank you for joining us. 29 plus percent gross margins in Q3. That was good to see. We're not done yet. We certainly see opportunity for upside there. In fact, if you look at the midpoint of the guide for Q4, that infers roughly a 20 percent EBITDA margin. Q3 was 18.7, so it implies that we're going to see continued improvement on that gross line. And that's what we're seeing. As I said earlier, the backlog continues to come in at a very healthy pricing level, but we also continue to see good delivery and good realization of those gross margins. It's one thing to get it priced and get it in the backlog at a certain margin. It's another thing sometimes to get it out of the factory into the customer with that same sort of margin. And we're starting to see that. We've got challenges there as we've talked about ramping and meeting this growing demand, but we certainly have optimism in our ability to deliver improved gross margins as we think about the future.

Okay, that's really helpful. And can I just ask for a little more detail on the seven significant new accounts? Can you tell us, you know, what category some of those customers are in? Are there any new hyperscaler customers? And then also maybe elaborate on when you say geographic diversification, where you had success in that respect?

Yeah, we won't give, of course, any specific customer names, but We are selling to all five hyperscalers. We're doing projects for all five hyperscalers. We're doing projects for basically all the blue chip neoclouds as well as the blue chip colo customers. So in Q3, we saw a nice mix between those three buckets. From a geographic standpoint, we're obviously we have a large field network that's spread across the US and can cover every state. And so we are seeing and We're seeing jobs pop up in new places, but more importantly, we have the teams to be able to support wherever our customers need to build the data center. So, as Ken mentioned, 12 months ago, Texas was a disproportionately large portion of the data center builds that were happening in this country. We see a lot now happening in places like Indiana, North Dakota, Iowa, of course, Alabama, Mississippi, Louisiana. So we're really seeing a lot of additional projects start in locations where we hadn't historically done a lot of work.

That's really helpful.

Thanks very much.

Thank you.

And our next question will be coming from the line of Luke Junk of Robert W. Baird and Company, Inc. Your line is open.

Good morning and congrats to me as well. Thanks for taking the question. Hoping we could start with an operations question. Just any color you could share on how Modular slash SkyBridge is ramping. You're in the first half of 4Q26 coming out of that initial launch in the August and September timeframe. And then maybe just any KPIs you're able to share on the ramp as well. Thank you.

Yeah, thanks, Luke. Modular is ramping extremely nicely. So we were well prepared for the transition. We actually, one of the things we did, which was really a differentiator, is we actually brought in our teams of field installers 90 days prior to first production to help us both build and design the work cells as also to work through the kinks of being able to execute these projects. Because the modular solutions these days also have a lot of additional components that we weren't initially expecting, things like lighting, sensors. electrical cabinets things that are very different that our customers are asking us to do to again take time out of the field and put it in a controlled environment in the plants. We shipped our first unit in late August and we're actually really proud to say in the month of September we shipped close to 200 megawatts of capacity in the first 30 days of production and we're only getting started with the demand that we see in front of us we've actually started to look at adding a second shift for modular and have in place the capability to do both wrap shifts over the weekend as well as third shifts if needed as we continue to scale this business. But I would give a lot of kudos to our operations team. They absolutely executed this very, very well over the last 60 days and we couldn't be more proud of what they've been able to achieve in such a short period of time.

Yeah, Luke, you know, it's interesting. If I just think about the ramp of this business in the modular space, Q3, we started to ship those products and their solutions. Q4, become more meaningful. It won't be all of our business at that point. We're still doing a little bit of the The more traditional stick built. I imagine by Q2 of next year, we will be in full swing. I certainly expect to be hitting our stride at that point with the modular design and shipping those products. But we're seeing great success. We're seeing good performance across the factory. And the operations team is really knocking it out of the park and stepping up and delivering for our customers.

Appreciate that, all very helpful color. In terms of my follow-up, I want to ask about your comments on the pipeline. And Michael, forgive me if this is somewhat myopic, but I would be curious to see if there's any change you've seen in the nature of your customer pipeline engaged in post-election. Just insofar, the modular certainly seems like one of the unlocks in the current environment, or maybe what you might expect to see on that front. Thank you.

Thanks, Luke. We have not seen any sort of real change in customer behavior. Since the election, one thing we're seeing, and this started before the election, we're seeing timelines compressed even more, which actually plays into our strength. And even more importantly, with some of our active projects that we have going on today, we're seeing customers want to parallel execution. So to give you an example, There are a few campuses where we were doing Building 1. Building 2 was supposed to start next year, Building 3 soon after that. And our customers are asking us if we can do Building 1 and Building 2 simultaneously now. So the focus on time to compute is becoming more and more critical for our customers. And it also means that they're much less tolerant if their vendors are not able to execute with a set timeline. Now, our business The way we design this as a child of COVID is that we're incredibly agile, incredibly fast, and are able to design custom solutions for our customers. So we're seeing a lot of the new customers that we mentioned coming in in Q3 and Q4, they're looking for certainty. And they're looking for certainty in being able to execute designs that they need for their go-forward platforms in compressed timelines. And so for us, that's the perfect combination because we custom design everything. and we operate with best in class lead times.

It's interesting, Michael. It's about delivering on commitments, right, with the customer. And we kind of, you know, when we think about that, not only do we think about delivering on commitments for our customer, but we think about delivering on commitments with our shareholders. You know, there's, you hear about all this positive and all of the momentum in our business. And we have, and as a result, we have, you know, all of that momentum provides a high degree of confidence and what we expect to do here in 26 and also in 27. Quite frankly, we probably have an upside to the guide, but we're very cautious as we enter the public markets. We really want to develop a reputation for consistently delivering and, if anything, outperforming your expectations. We have a good line of sight into 27 and expect another strong year. We'll unveil those expectations as we do our Q4 call early next year.

Really helpful. I'll leave it there. Thank you.

And our next question will be coming from the line of Nigel Coe of Wolf Research. Your line is open, Nigel.

Hi, guys. This is Aidan for Nigel. Just had a quick question on the cash flow performance. So first, the down payment, if orders are four times as large today, should we think of down payments as being more of a material tailwind to cash flow generation going forward? Are you pushing to receive more cash up front? And then given how strong 3Q cash performance was, how should we think about the avenues for deploying excess cash in the balance sheet going forward?

Thank you. Yeah, thanks for the question, Aidan. I appreciate that. It's Ken. Cash flow performance was exceptional in Q3, well ahead of what a lot of folks expected. And those down payments are a really important part of it. We're certainly Starting to see more and more of that activity. We're really focused on aligning the billing cycle, the collection cycle with our manufacturing cycle. You know, if you go back in time, we were under billed for quite some time. We're now moving towards more of an over billing or deferred revenue sort of benefit, if you will. So that's certainly a big part of what we're doing. We're not only doing it with one customer, but it's a big part of our entire and so on. So that's helping us accelerate the cash generation in the business in Q3 and starting to set up for some nice progress here as we go into next year. From a cash deployment perspective, you know, we entered the market prior to being a public company where we were well over four times leverage. We entered the market in October and right after entering the market, we took the primary proceeds and We service the debt. We pro forma leverage that's under three times. Our focus is to continue to de-lever in the near term, get that ratio or that metric down under two times, and then start to introduce more balance across the capital allocation strategy in considering share repurchase and other uses of capital across the spectrum. We continue to look at M&A, and as you might know, M&A has been a part of the strategy. It hasn't been a part of the strategy in terms of growing and bringing customers, but how do we bring new technology, new know-how, and new people into the business? And we'll continue to deploy it in that manner, but we're continuing to look at opportunities to grow our business and expand our position with our customers through M&A as well. So more to come, but we're really happy with the cash flow performance that we're seeing thus far.

Thanks, Ken. Great to see the cash up front. Thank you.

Thank you.

And I would now like to turn the conference back to Larry for closing remarks.

Hey, thank you for joining us and for your interest in acceleration. We look forward to updating you when we report fourth quarter results and to meeting with many of you in the months ahead on the road. Have a great day. Thank you.

And this concludes today's program. Thank you for participating. You may now disconnect.