Presenting Desmond O'Kell.
Good day, folks. I have actually prepared mine so I do not get a little wild, and they will have me saying there was one minute left. I am only on slide six, so we will keep this nice and disciplined. I am Desmond O'Kell, president of Evolution PowerX Corp. We are a Canadian company. We have spent more than two decades building a successful industrial services business. Today, we are evolving into something considerably larger, a provider of reliable, scalable, natural gas power generation solutions. Our investment thesis is straightforward.
We are taking an established, profitable business and positioning it to capitalize on one of North America's most significant emerging challenges, meeting rapidly growing electricity demand. What is particularly interesting about our position is that we are not attempting to commercialize an unproven technology. We are deploying established, highly reliable turbine technology into markets where the economics are increasingly compelling.
We are doing so with existing customer base, experienced operating teams, a business that already generates meaningful cash flow. I will direct your attention to the forward-looking statements and financial disclosures, which are also available on our public filings. This slide illustrates the foundation we have established. Since 2021, we have delivered approximately 18% compound annual revenue growth while building business, generating adjusted EBITDA margins in the mid-30%. Importantly, we have achieved this while investing heavily in our power generation fleet. Today, we have more than 40 MW of mobile generating capacity, exclusive Canadian turbine relationships, and a substantial insider ownership position. We are not a startup pursuing an unproven opportunity. We are an established cash-generating business entering an accelerated growth market. There is another important point I would like to emphasize. Over the past several years, we have been deliberately reinvesting a substantial portion of our operating cash flow into assets that generate reoccurring rental revenue.
These are long-life productive assets, and our investment decisions have been guided by the returns we expect those assets to generate over the operating lives. As our fleet expands and utilization increases, we believe earnings potential of that investment becomes increasingly evident. In many respects, we have spent the past several years building the foundation for the growth opportunities that are now emerging. There are six compelling elements to our investment proposition, but I would emphasize three. First, we have a turnkey platform that combines power generation with infrastructure necessary to deploy it. Secondly, we have exclusive Canadian access to two highly differentiated turbine technologies. Third, our equipment delivers exceptional reliability, significant fuel cost savings, and dramatically reduced emissions compared with conventional diesel generation. Combined with attractive equipment economics and disciplined capital allocation, these advantages provide a strong foundation for compounding shareholder value.
I would also like to draw attention to the competitive barriers we have established. Entering the distributed power generation business requires considerably more than purchasing generating equipment. It requires engineering capability, electrical integration, field service infrastructure, experienced personnel, customer relationships, and the ability to support critical power applications around the clock. We spent years developing those capabilities. Our competitive advantage is not simply the equipment we own. It is the integrated operating platform we have built around that equipment. Our operations are organized into two complementary divisions. Our site infrastructure division represents the established foundation of our business with long-standing customer relationships and specialized equipment. Our power solutions division is our primary growth engine. What makes Evolution unique is our ability to deliver not only just electricity, but the supporting infrastructure, distribution, and operational expertise. We offer customers a complete solution rather than simply renting them a generator.
This illustration demonstrates how our two divisions work together. Historically, industrial sites relied on numerous independent diesel engines and generators. We can replace much of that conventional generation with a centralized gas turbine power distributing electricity through the site. The result is a more efficient, quieter, cleaner, and potentially significantly less expensive operating environment. Rather than managing numerous individual diesel engines, fuel deliveries, and maintenance schedules, a customer can utilize a coordinated electrical system powered by natural gas. Our turbines can be synchronized into microgrids, allowing generating capacity to be scaled to the customer's requirements. Because we can utilize natural gas that is available on-site or nearby, we can significantly reduce dependence on diesel transportation and associated logistics. We are not simply changing the fuel source; we are helping the customers change the way they power their operations.
We have built our reputation serving many of Canada's largest and most sophisticated energy producers. Those relationships have provided the foundation for our power business. What is particularly exciting is that our technology is not confined to oil and gas. Mining, remote communities, industrial facilities, construction, and increasingly, data centers all face similar challenges securing dependable electricity. Our established energy sector business gives us the platform to pursue these additional markets. One of the advantages of working with major energy producers is the demanding environment in which our equipment operates. These customers expect reliability, operational discipline, and measurable economic benefits. Successfully operating in these conditions, there we go. Importantly, many of these emerging markets require longer duration solutions, potentially creating attractive reoccurring revenue opportunities. This is arguably one of the most important slides in the presentation.
Our turbine technology is greater than 99% uptime, limited schedule maintenance, and continuous remote monitoring. Depending on fuel availability, customers can achieve approximately 60% fuel savings compared with diesel, potentially approaching 100% when utilizing otherwise flared natural gas under these assumptions. The reductions in particulate matter and other harmful emissions can be extraordinary. These are not simply environmental benefits; they are meaningful operating advantages that directly influence customer economics. Our experience, when you can improve reliability and materially reduce costs, customer adoption becomes a compelling proposition. Diesel engines require regular servicing, fuel deliveries, and considerable ongoing maintenance. Our turbine technology is designed for extended continuous operation with comparatively limited scheduled maintenance requirements. In remote locations where every service interruption and fuel delivery carries additional costs, those differences can be substantial. We also have an important advantage in fuel flexibility.
Our systems can utilize different natural gas sources, including gas that might otherwise be flared or remain underutilized. For customers, this can turn an existing energy source into a productive source of electricity. From an environmental perspective, the ability to reduce diesel combustion, particulate emissions, and noise is becoming increasingly valuable. The compelling feature of our technology is that economic and environmental benefits can work together rather than compete with one another. We are entering a period of extraordinary growth in electricity demand. Artificial intelligence, data centers, manufacturing, and broader electrification are creating requirements that existing electrical infrastructure may struggle to accommodate. The challenge is not simply producing more electricity; it is delivering dependable power where it is needed, when it is needed. For many industrial users, access to electricity has become a critical factor in determining whether projects can proceed on schedule.
Grid connections and major transmission upgrades can require substantial investment and extended development timelines. Distributed generation offers another option. It allows customers to locate power generation closer to where the electricity is consumed and, in suitable applications, reduce their dependent on constrained grid infrastructure. We believe this creates an important structural opportunities for companies capable of delivering reliable, rapidly deployable generating systems. Natural gas is abundant, relatively economical, and capable of providing continuous dispatchable electricity. Unlike many large-scale generation projects, our natural gas power systems can be deployed relatively quickly. For industrial customers facing constrained grid access or lengthy connection timelines, this flexibility is particularly valuable. We believe natural gas will play an increasingly important role in meeting North America's growing electricity requirements. An important distinction is that our business does not depend on one particular forecast for electricity prices or one specific energy policy.
Industrial operators need electricity that is reliable, affordable, and available when required. Because our systems are modular, customers can expand generating capacity as their requirements evolve rather than committing immediately to much larger installations. That flexibility has meaningful economic value. Western Canada possesses an enormous natural gas base, particularly in the Montney and Duvernay formations. We're seeing substantial capital commitments and strategic transactions involving some of the world's largest energy companies. That investment reinforces our view that Western Canadian natural gas development has a very substantial runway, and importantly, Evolution is already operating in the heart of these producing regions. The significance for our business is straightforward. As natural gas resources are developed, producers requiring drilling, completions, processing, and production infrastructure, we can participate in that development through our traditional infrastructure businesses while simultaneously expanding the role of our power solutions.
We see the growth of the Canadian natural gas production not simply as an increase in industry activity, but as an opportunity to increase the amount of revenue we generate from that activity. Canada's emerging LNG industry represents a generational development opportunity. The projects highlighted here represent more than CAD 100 billion in announced capital investment and significant potential in incremental demand for Canadian natural gas. That translates into drilling, completions, production infrastructure, and supporting electrical requirements. Our business is positioned to participate in that activity across multi-stages of development. What makes this particularly interesting is the duration of the opportunity. Major LNG infrastructure requires substantial initial development, but the underlying natural gas supply must continue for decades. That creates long-term requirement for upstream production and associated infrastructure. As production activity expands, the demand for reliable site electrification can expand alongside it.
For Evolution, this represents a potentially sustained market opportunity rather than simply a short-term construction cycle. Industry forecasts point towards increased Canadian production and exploration spending over the coming years. For Evolution, this is particularly encouraging because our opportunity extends beyond simply benefiting from the greater activity. We're also increasing the amount of electrical infrastructure we can provide on each project. That gives us two potential growth drivers, a larger overall market and an expanding share of the services required in that market. As customers adopt electrification, the amount of equipment and infrastructure required per location can increase meaningfully. In some applications, generating equipment can remain deployed well beyond the initial drilling or construction phase. That has the potential to extend duration of customer relationships and support a more diversified revenue profile. As drilling and industrial activity expands, our addressable market grows with it.
We have an opportunity to increase market penetration through broader turbine deployment and additional applications. The combination of market expansion and market share gains creates the potential for growth well beyond the underlying industry. Opportunities in data centers, mining, and remote electrification provide additional upside beyond our traditional markets. I would emphasize that these are two distinct opportunities. The first is increasing participation in markets where we already operate and have established customer relationships. The second is introducing our technology into industries where reliable distributed electricity is becoming increasingly important. Our addition of the 3.2-MW SPG4 turbine platform is particularly relevant here. It significantly expands the size of the individual power requirements that we can address, complementing our smaller Flex energy turbines. That means we can pursue a broader range of applications from smaller distributed power installations to substantially larger industrial requirements.
We believe the combination of scalable technology and expanding end markets gives Evolution multiple avenues for future growth. Capital discipline has been fundamental to our business. Our priorities are clear. Invest in high-return organic growth, pursue accretive acquisitions, maintain balance sheet flexibility, and return capital to shareholders when appropriate. Our acquisition of FlexEnergy Canada and the addition of the SPG turbine platform illustrate how we are building capability and expanding our addressable market. We have also retired more than 12 million shares through our buyback program since inception. With insiders owning more than 30% of the company, management's interests are meaningfully aligned with those of our shareholders. I think it is worth emphasizing how we approach growth. We are not interested in expanding our fleet simply for the sake of increasing generating capacity. Each investment must be evaluated against expected utilization, operating economics, and return on invested capital.
Our objective is to deploy capital into assets that can generate attractive cash flow over their useful lives. Where opportunities arise to acquire complementary businesses or capabilities at sensible valuations, we have demonstrated a willingness to pursue them. At the same time, we recognize that maintaining financial flexibility is essential, particularly in capital-intensive businesses. Our capital allocation framework is designed to balance those priorities while remaining focused on long-term per-share value creation. To summarize, Evolution offers investors a combination that we believe is increasingly difficult to find. An established and profitable operating business, a growing fleet of differentiated power generation assets, exclusive Canadian technology relationships, strong customer relationships, attractive operating economics, and exposure to rapidly expanding electricity markets. We have already generated nearly 500 GWh of electricity through our platform.
Our focus now is to build on that foundation, expand deployment, and translate growing demand into sustainable earnings and shareholder value. Many companies pursuing opportunities in the power generation sector are still developing their technologies, establishing their first customers, or seeking capital required to commercialize their businesses. We have an established operating history, meaningful cash flow, a substantial installed equipment base, and long-standing relationships with sophisticated industrial customers. We have also demonstrated the ability to acquire businesses, integrate operations, and invest in productive assets while maintaining a disciplined approach to capital. We believe that investors have an opportunity to participate in the growth of the power solutions business that already has the operating foundation required to execute. As our power solutions business becomes an increasingly important contributor to the overall operations, we believe the market will have an opportunity to reassess how Evolution is understood and valued.
Our management and board bring decades of experience in building, financing, and operating businesses. We've successfully navigated multiple industry cycles, and we've been deliberate in positioning Evolution for this next phase. I'll leave you with one thought. Evolution PowerX is no longer simply an industrial services company participating in the energy sector. We're becoming a power solutions company addressing a much broader and rapidly growing need for electricity. We have the equipment, customer relationships, operating experience, and financial foundation to pursue that opportunity. Perhaps most importantly, we're approaching this opportunity from a position of established commercial activity, rather than relying on a future commercialization of an unproven concept. We believe the demand for dependable distributed electricity is creating a significant and enduring market opportunity. Our objective is to translate that opportunity into growing earnings, strong return on invested capital, and ultimately, meaningful long-term shareholder value.
That's the end of the slide deck, and I'd love to take any questions if there are any.
Thank you. In terms of a growth CapEx decision, how would you favor Flex turbine versus SPG4 Turbine [inaudible].
It would be customer demand. Obviously, over the last, I would say four and a half years, we've built our turbine fleet, and staying ahead of customer demand. We've been good at it and lucky at it to match that demand, always have equipment available when that demand is there. So we've read that pretty well. But there's a very differentiated delivery between a 333-kW Flex unit and this is almost 10 times larger, 3.2 kW from the 333 kW. So, it would require specific load requirements we would address, because the reason why we went to pursue a larger platform is that more and more of our customers were coming to us with larger load needs. Now, what we're experiencing, we can synchronize till the cow's gone home several Flex units. But after about the seventh unit, the dollar per kilowatt starts to get a little expensive.
As we were finding ourselves needing solutions for larger power, which is a natural extension of what we are doing with our customers, we went in pursuit of a larger platform. We found this one. It is a very remarkable unit. I will talk about it here a little more. To answer your question, it is a completely different ask from the project site or the semi or permanent installation. It is quite a big difference.
Regarding the new SPG4, it has already received in the port?
We have received it. We just finished its CSA approvals. We have got three named clients that we are looking at first deployment. We are just dealing with site requirements and specifications and who has the first start date. It will be deployed here shortly. It has been received very enthusiastically. And those three potential deployments are in the energy sector.
[inaudible].
Much of deployment and setup is a bit common between the two, but there are several nuances that are different between the Flex and the SPG that has to do with the controls. Your hand was up here earlier. Yeah.
You talked about investments [inaudible].
Well, we've talked about this before. We like to keep some of this stuff a little bit proprietary, but I think if you look at our financial results, on a consolidated annual basis, we've been fairly consistent with overall margins in the mid-40s, high 40s, and adjusted EBITDA in the mid-30s. That's three times, 33%, 35% your return on capital inside of three years. That's consistent with what our performance has been.
[inaudible].
Well, that varies. Project sites are several weeks to several months. In many cases, with our top 10 clients, we're with them for a year-long program, going from site to site to site. Many of the sites that we're on in the energy sector are multi-well pads, four to 15, 16 wells. We could be at a site for drilling operations for three months. Drilling operations move off, we might be operating their completions and fracking systems, where we're on that site for another three, four months. Then when that pad is finished and complete, we'd move to the next pad with them on their yearly program. You know, it just varies what these things. But we do have an element of the business. When we bought FlexEnergy Canada, their business was basically financed 12, 24, and 36 months.
More semi-permanent and permanent installations on 12 and 24, 36-month rental programs. Our traditional business is temporary project power and infrastructure. We have a blend of different lengths of how we're on site. Robert, you got a question here.
Yeah. I just wanted to ask if you could provide a breakdown between growth and maintenance CapEx.
This comes up quite a lot. With a fleet of our size, it is very consistent year -to -year that CAD 2.5 million - CAD 3.5 million in maintenance CapEx is about the right size year after year for maintenance. Lately we've been between CAD 12 million and CAD 16 million in CapEx spend. Of that, expect CAD 2 million - CAD 3.5 million to be maintenance CapEx.
That's pretty low. Most of it is growth CapEx.
Has been, yes.
[inaudible].
Sure—
[inaudible].
Sure. As our fleet grows, that is going to inflate as well. Yes. The answer is yes to that. Yeah.
Thank you. Do you think that the market is valuing, is evaluating your company, like you are now 19 times the next 12 month price to earnings. Do you think that the market is valuing your company because of the data center opportunity?
I don't think so. I don't think we are getting credit for that. Until we start deploying into the data center, that has not happened yet. With the addition of the 3.2 MW SPG unit, we have been standing in front of data center builders here for the last 40 days. There will be deployment into that infrastructure build from us. We are talking with a number of organizations at the moment. This 3.2 MW SPG unit is right in that small, modular, scalable, data infrastructure. This meets that need. What is interesting is that we have access to the inventory. Our arrangement with SPG out of Houston, they have a significant inventory in stock, so we can supply. That is something different that we are finding when we are talking to these infrastructure builders.
We seem to be the only one that if we engage, we can deliver power, build, and deliver power in about eight or nine months on site. That's lightning fast in the turbine electrification business. We're seeing what the market has to offer, and it seems like we're gaining quite a bit of attention because we do have the ability to get the inventory and get it built and onto site.
[inaudible].
Well, we have a big fleet. We don't just have power generation. Obviously, we have our site infrastructure fleet as well. Right now, we are hitting an inflection point. Today, we had a new client news release. We have more new names that we're bringing on. Inside of the month of February, we are going to be pinned on utilization. We're at a very, very high utilization going into this Q4. It's expanding activities with existing clients, and we're bringing on some new clients. We see the talk from the clients for 2027 seems to be extremely robust. We're looking at a robust 2027 from what we're hearing from the clients at this point, certainly in the energy sector.
[inaudible].
Yeah. Call it 95%. Yeah. Good. Thank you for.