Good afternoon. Welcome to the Archrock conference call. Your host for today's call is Megan Repine, Vice President of Investor Relations at Archrock. I will now turn the call over to Ms. Repine. You may begin.
Thank you, Angela, and hello, everyone. Today, we are excited to provide more detail on Archrock's agreement to acquire HiVolt. Earlier today, Archrock issued a press release announcing the transaction, and we have also posted an accompanying presentation on the Investor Relations section of our website. During this call, we will make forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, based on our beliefs and current expectations, as well as assumptions made by and information currently available to the Archrock management team. Although management believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that those expectations will prove to be correct. Please refer to the cautionary statement regarding forward-looking statements on slide two of this presentation.
You may find further information on the risks and uncertainties that apply to any forward-looking statements in our filings with the SEC, which are accessible on our Investor Relations website. In addition to our discussion today, we will reference certain non-GAAP financial measures. Please refer to the cautionary statement regarding non-GAAP financial measures on slide three of this presentation. Joining us on today's call are Brad Childers, President and Chief Executive Officer of Archrock, and Mohit Singh, Chief Financial Officer of Archrock. After our prepared remarks, we will open the call for questions. I will now turn the call over to Brad to discuss the transaction, starting on slide four. Brad?
Thank you, Megan, and good afternoon, everyone. Earlier today, we announced an agreement to acquire HiVolt, a proven, differentiated prime power microgrid infrastructure platform. HiVolt develops, owns, and operates behind-the-meter microgrids, delivering reliable, utility-grade power under long-term power purchase agreements. Combining that platform with our leading natural gas compression capabilities is an important next step in our strategy to power a cleaner America. Archrock brings longstanding customer relationships, operating expertise, and the financial flexibility to support growth. HiVolt brings permanent prime power infrastructure, a history of year-over-year profitable growth, vertically integrated development, ownership and operations, and an experienced, proven management team. Together, we are creating an integrated energy infrastructure platform that can meet more of our customers' needs, particularly where grid power is constrained. That means deeper relationships, accelerated contracted cash flow growth, and even more significant growth opportunities ahead.
What makes this combination particularly compelling is its foundation in oil and gas, an established prime power microgrid business serving customers we know under long-term power purchase agreements. That gives us a clear opportunity to expand our energy infrastructure offering today with potential future upside from other markets. We've evaluated opportunities in the power market for some time and remained disciplined. HiVolt stood out for its differentiated infrastructure and disciplined capital return and operating characteristics that are comparable to our compression business. We're pursuing this opportunity from a position of strength and believe it will advance our strategy and create long-term value for our shareholders. Turning to slide five, let me start with a brief overview of the transaction terms. Archrock will acquire HiVolt in an all-cash transaction with an aggregate value of up to $450 million.
The consideration consists of $415 million in cash at close, plus a potential $35 million in earnout incentives based on the achievement of certain commercial milestones. The transaction is expected to close in early 2027, subject to regulatory approvals and other customary closing conditions. Following the close, HiVolt will operate as a separate business segment within Archrock. HiVolt will continue to be led by current CEO Josh Evans. The HiVolt team is incredibly talented, and we look forward to welcoming Josh and the HiVolt team to Archrock and maintaining their organization, personnel, and operations, as well as their strong presence in Midland, Texas, while expanding HiVolt's footprint nationwide. Mohit will discuss the financial benefits of the transaction in detail later on during today's presentation, we're confident that this agreement will support Archrock's long-term growth strategy and value creation objectives.
Turning to HiVolt, we're pleased to have identified a business that is highly complementary to ours. Founded in 2019, HiVolt addresses the growing need for reliable, long-duration power where customers cannot afford to wait for the grid. Its owner-operator model brings development, engineering, deployment, operations, and maintenance together under a single accountable provider. Today, HiVolt is a vertically integrated prime power infrastructure platform that develops, owns, and operates behind-the-meter microgrids under long-term power purchase agreements. Its capabilities span the full value chain, from fuel gas interconnections and pipelines through power generation substations, battery energy storage systems, controls, and private-line infrastructure. HiVolt also manages permitting, construction, regulatory compliance, and ongoing operations, providing customers with an integrated solution and a single point of accountability from fuel supply through power delivery. This is permanent, utility-grade infrastructure designed for continuous operations, not a temporary or backup power solution.
HiVolt's centralized generation facilities can serve multiple customers or sites through private-line networks. The infrastructure is designed to be modular and scalable, allowing customers to meet their current power requirements while retaining the flexibility to grow over time. The business has scaled meaningfully since its founding. Today, HiVolt has over 80 MW of contracted prime power capacity with significant near-term contracting opportunities and over 50 miles of private-line infrastructure, with gross margins of approximately 65%. Its existing assets are connected in the Permian Basin, or concentrated in the Permian Basin, where Archrock has its largest operating presence, creating a strong foundation for integration and continued growth. Just as important, HiVolt brings an experienced management team with a practical operating mindset and a demonstrated ability to execute.
That combination of proven assets, an integrated model, full value chain capabilities, and owner-operator accountability differentiates the business and makes it a compelling strategic fit for Archrock. Throughout the course of our discussions, it became clear that the addition of HiVolt would support Archrock's next chapter of success. Slide seven shows an existing HiVolt project in the West Texas Permian Basin, just to give you a sense of the infrastructure behind these solutions. It brings the integrated prime power microgrid model we've described to life, fuel and electrical infrastructure working together as one system. With that infrastructure model in mind, let's turn to the specific benefits of bringing these businesses together. As outlined on slide eight, there are five areas that stand out. First, it broadens our energy infrastructure portfolio, combining compression and prime power microgrid capabilities across the energy value chain.
HiVolt's behind-the-meter prime power generation, battery energy storage systems, fuel gas pipelines, private-line infrastructure, and operating capabilities are highly complementary to Archrock's leading compression services. We also serve many of the same blue-chip customers. This shared customer base creates opportunities to deepen those relationships, cross-sell our offerings, and address a broader set of critical energy infrastructure needs. Second, it expands our growth opportunities through prime power microgrids for upstream and midstream customers seeking to electrify despite grid constraints and interconnection delays. HiVolt's prime power microgrid infrastructure provides reliable power to customers whose electrification plans or operational growth are limited by access to grid electricity. Archrock's established customer relationships create opportunities to bring HiVolt's capabilities to more upstream and midstream customers facing these challenges. Over time, Archrock's broader geographic platform may also provide opportunities to extend HiVolt's capabilities into additional markets as customer demand develops.
Third, it adds recurring cash flows with strong visibility and attractive risk-adjusted returns. HiVolt's over 80 MW of contracted prime power capacity are supported by long-term, take-or-pay style, capacity-based power purchase agreements with an initial term of five to eight years. Capacity-linked revenue and fuel cost adjustments support predictable cash flows and remove direct commodity price exposure, creating infrastructure quality revenue streams that complement our existing compression business. In addition to its contracted prime power capacity, HiVolt has visibility into significant near-term contracting opportunities. Fourth, a contracted procurement framework provides a strong foundation for continued growth. HiVolt has sufficient equipment on order to deliver forecasted growth for 2028. The company secured access to more than 500 MW of near-term generation equipment using high-quality Caterpillar engines, exceeding forecast requirements and supporting future growth. This reduces a key supply constraint.
Archrock adds complementary Caterpillar operating expertise, training capabilities, and an established network of technicians, parts, warehouses, and service facilities that can help HiVolt scale efficiently while maintaining a high standard of reliability. Finally, it provides exposure to attractive prime power microgrid growth. HiVolt already has a proven prime power microgrid business and a growing pipeline of oil and gas opportunities. Oil and gas remains the primary end market and supports the transaction thesis, while future industrial markets provide potential upside. We will remain disciplined and pursue those opportunities only where the commercial structure and expected returns meet our investment criteria. Taken together, this combination brings together two complementary operating platforms, expands our addressable market, and adds a new source of recurring cash flow growth. We believe it positions Archrock to solve more of our customers' infrastructure challenges while creating meaningful long-term value for shareholders.
Turning to slide nine, I'd like to spend a minute touching on several of these benefits in more detail. Archrock and HiVolt are complementary infrastructure businesses with comparable capital and return profiles and complementary operating capabilities. Together, they broaden our ability to address customers' compression and power infrastructure needs. Archrock and HiVolt serve many of the same blue-chip upstream and midstream customers. That shared customer base creates opportunities to deepen relationships and cross-sell our compression and prime power microgrid offerings. Archrock's established relationships also provide a foundation to introduce HiVolt's capabilities to additional customers seeking reliable power to support their operations and growth, particularly where grid access is constrained. HiVolt's long-term power purchase agreements are central to its cash flow profile. These take-or-pay style, capacity-based power purchase agreements have an initial term of five to eight years and provide meaningful revenue visibility.
In addition, fuel cost adjustments remove direct exposure to commodity prices. That combination gives HiVolt infrastructure quality revenue streams that complement our contract compression business. Turning to the next slide, HiVolt's operating capacity and growth opportunities through 2028 fall into three buckets: operating, contracted and awarded, and identified business in development. HiVolt has approximately 61 MW currently in operation and generating revenue today. Approximately 55 MW of capacity are contracted or verbally awarded. HiVolt also has visibility into an additional 61 MW of capacity. These are opportunities with identified customers and projects that are under discussion. Approximately 70% of expected 2028 EBITDA is supported by operating and contracted and awarded opportunities. In addition, more than 95% is expected to come from stable prime power opportunities with upstream and midstream customers. Oil and gas microgrids underpin our transaction thesis, and future industrial market opportunities represent potential future upside.
On slide 11, you'll see that one of the practical constraints in this market is equipment availability. HiVolt has sufficient equipment on order to deliver forecasted growth for 2028. The company's secured access to more than 500 MW of near-term generation equipment reduces this key supply bottleneck. Its standardized generator blocks range from approximately 1.4 to 2.5 MW, with a 2.5 MW unit as its primary growth platform. It provides scalable architecture across upstream, midstream, and industrial markets, with returns and capital efficiency comparable to Archrock's compression business. HiVolt has demonstrated availability of more than 99% using Caterpillar engines in its prime power operations. That reliability is essential to HiVolt's microgrid offerings. Customers depend on these systems for continuous utility-grade, not simply backup power, and pay for reliable capacity under long-term power purchase agreements. This is also an area where Archrock adds directly.
Our Caterpillar operating expertise and training capabilities strengthen HiVolt's competitive position and create opportunities to share technicians, parts, warehouses, and service facilities. Slide 12 puts HiVolt's growth opportunity in context and makes an important distinction. HiVolt is not a temporary power or a mobile power rental business. It is a microgrid and resiliency platform bringing together integrated fuel and electrical infrastructure to deliver reliable prime power under long-term power purchase agreements. That combination of reliable prime power and integrated infrastructure positions HiVolt to serve customers who need continuous power but cannot wait for the grid across its core oil and gas market and potential future industrial markets. As the slide shows, average interconnection waits are approximately five years in major markets and up to seven years in some markets. Oil and gas behind-the-meter power is the primary end market serving upstream and midstream customers.
Management estimates the U.S. oil and gas behind-the-meter power addressable market at approximately 10 to 13 GW. These customers need reliable power to support their operations and electrification plans. HiVolt's prime power microgrid infrastructure addresses that need and broadens our ability to serve customers' compression and power infrastructure requirements. As you can see, the strategic rationale for our agreement with HiVolt is extremely compelling. I'll now turn it over to Mohit to walk through the financial benefits of the transaction. Mohit?
Thanks, Brad. Let me walk through the financial profile. As outlined on slide 13, the transaction includes $415 million cash payment at close and an earnout of up to $35 million that is contingent on HiVolt achieving certain commercial milestones. The upfront purchase price, plus the portion of the earnout paid through 2028, represents a transaction multiple of approximately 6.1 times the midpoint of HiVolt's expected 2028 adjusted EBITDA range. Approximately 70% of that expected adjusted EBITDA is supported by operating and contracted and awarded opportunities. We expect to fund the $415 million cash payment at close, together with approximately $10 million of transaction fees and expenses, through borrowings under our existing ABL facility. The transaction is expected to be debt-free, so we will not assume any HiVolt debt.
The transaction is expected to result in pro forma leverage consistent with Archrock's stated target range of three to three and a half times. As shown on slide 13, we expect pro forma leverage of approximately three times by year-end 2027. This financing approach is consistent with our capital allocation priorities. Archrock's significant free cash flow can fund growth in both our contracted compression fleet and HiVolt's prime power microgrid infrastructure while continuing to provide attractive return of capital to shareholders. Finally, the transaction is expected to be immediately accretive to earnings per share and cash available for dividend per share. Brad?
Thanks, Mohit. Before we open the line, I want to reiterate our enthusiasm for today's transaction. With the addition of HiVolt, we're creating an integrated energy infrastructure platform that is well-positioned to support our customers while delivering accretion of earnings per share and cash available for dividend per share, cash flow growth, and additional potential for value creation across end markets. We look forward to working with Josh and the HiVolt team to execute on the opportunity ahead. Thank you for joining us today, and we're now happy to open the line for questions.
Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. For today's event, we kindly request everyone to please limit yourself to one question and one follow-up only. Your first question comes from the line of Eli Jossen with JPMorgan. Your line is now open.
Hey, guys. Thanks for the time today. Maybe just wanted to start on CapEx. I know that there's kind of some moving pieces within the deck. Can you just help frame how much CapEx is needed to hit the 2028 number, and then beyond that, what it might look like to get up to 500? I guess just trying to get a sense of if there are capital commitments tied here and how much those might be. Thanks.
Thanks for the question. We are not giving CapEx guidance today for either segment, either compression or for the power business. Right now, we are very focused on consummating the transaction and bringing it to close, and we will definitely give CapEx guidance next year when we give guidance overall for our 2027 platform.
I will add to what Brad said, Eli. CapEx per MW can range widely depending on the project. When you think of stable upstream and midstream customers, they represent more than 95% of the adjusted EBITDA that we are expecting in 2028. When you think of those projects, the blended CapEx rate in our assessment is about $1.3 million-$1.5 million per MW for these type of oil and gas projects. Hopefully that helps you scale the numbers. As with our compression business, we remain disciplined in how we deploy capital as we deliver on HiVolt's customer commitments.
Got it. That's helpful. Then, maybe taking a step back, I think you guys are market leaders in contract compression, and Brad Childers and team, you've been pretty consistent with your focus on, I guess, you framed today as well, finding the right transaction, but not necessarily kind of jumping into power. Just want to get a sense of what's changed. I know you gave some rationale, but just further on why now, why this transaction, would be helpful. Thanks.
Sure. When we think about the journey that Archrock has been on, we've been very focused on transforming our company and investing with just tremendous discipline in our core operation, which is contract operations, looking at accretive acquisitions over time, also with the same amount of discipline, focusing on high-quality assets, high-quality operations, great customers, and the right geography. In a way, this transaction fits exactly into that framework, which is we are focused on investing the substantial free cash flow this business generates into expanding our footprint and energy infrastructure. We have discussed power in the past, and what we have said is that we want to focus with discipline on infrastructure-like operations that were comparable to the contract operations business we already have. HiVolt presents exactly that complementary business that is infrastructure-driven. Its capabilities complement our core business very tightly.
HiVolt and Archrock share the same customers, the same communications with our customers. For us, a few of the things that came about in the marketplace is that HiVolt was already powering some of our electric motor drive compression. We've had customers that have come to us and asked us when we are going to be able to provide them with compression. So what we found with HiVolt was that infrastructure-related business, same overlapping customers, same geography, same core capabilities around the engines, and customers that wanted that service. That's what really informed our value assessment of the HiVolt opportunity. It comes with an incredibly strong management team and great return profile. When I think about the cash that we can invest in HiVolt, it's very comparable from a gross margin perspective, overall IRR perspective, payback period on equipment that's infrastructure-related with contract terms that are comparable.
We're very confident that with that similarity, that compatibility, that comparability, it's going to give us this tremendous opportunity to expand the value opportunity we have to create value for our investors.
Great. Appreciate all the color, guys. Thanks.
Yep.
Your next question comes from the line of Doug Irwin with Citigroup. Your line is now open.
Hey, team. Thanks for the question. You identified a few different buckets of growth here to get to that 175 MW in 2028. Are you able to maybe just expand a bit on what that opportunity set might look like, and then I guess more specifically, how much of that 55 MW might be on firm contracts versus verbal deals?
Yes. First, on the good news front, the opportunity set is the same that HiVolt has already contracted in their portfolio. It's with the same customer base. These are upstream and midstream operators that are looking for that prime power provider, that stable microgrid utility-grade power. That's the same opportunity set. As far as the contracted versus the verbal awards, we're not going to break out that split, but suffice it to say that these are actually awards that are pending and being contracted as opposed to anything less than It's not a letter of intent, it's not a memorandum of understanding. These are not attenuated, "We might do something." These are awards that are in the process of being contracted. So we believe that it's a very firm opportunity set within that.
Okay, that's helpful. Then maybe a follow-up just on the competitive landscape. We obviously hear a lot about data center power needs, but could you maybe expand a bit about what you're seeing in the landscape for these microgrid solutions? You obviously pointed to a large addressable market, then just in general, where HiVolt and now Archrock might have an edge relative to some of the competition out there.
I want to be really clear that the investment thesis with HiVolt is to expand this microgrid offering of prime power infrastructure and utility-grade power to primarily the oil and gas market, first and foremost, with midstream and upstream customers. The opportunity set we see in the portfolio, and it underwrites the sizing of the market that we put in the deck of 10 to 13 GW, is that market, and that's what we're focused on capturing. The opportunity set we see to capture that market is robust looking ahead. So we believe strongly that's the market that we're going to focus on. But other industrial users and potentially data centers will provide potential upside for us. We just know that there are a lot of people chasing that market.
What we find is that this prime power market, this infrastructure, this microgrid expansion that we're looking at, that's servicing a very critical market that we think is very much on a growth incline curve. They cannot get the power they need, and HiVolt is there to help.
To put a finer point on that, the prime power for upstream and midstream customers represents more than 95% of the 2028 EBITDA. That's an important point to make that, as Brad said, the existing business and the go-forward business with visibility into 2028 is majority dominated by microgrid and traditional energy customers.
Got it. Very clear. Thanks for the time.
Your next question comes from the line of Steve Ferazani with Sidoti. Your line is now open.
Evening, Brad, Mohit. Appreciate the time tonight. Can you talk a little bit about how this integration process could be different from your previous ones where you were just adding compression, which you know really, really well? More complicated and synergies, you didn't mention them. If it's a separate business segment, do you see any synergies on the cost side?
Number one, when we close this transaction, we will operate Archrock Power. The HiVolt team will operate as a separate operating segment and report as a separate operating segment of Archrock. The integration around the base business, it will keep the businesses operating at a separate operationally. There's no desire to seek cost synergies in this transaction. That's not a part of our thesis, and that should not be a part of our future. There will, however, be tremendous operational and revenue synergies going forward, including taking what is today just primarily a Permian-based business and allowing it to expand to other regions in the country because of Archrock's extensive footprint in other producing places and basins.
There also will be great operational synergies in facilities, personnel, training. The mechanical aptitude that we have working on Caterpillar equipment as Archrock translates very directly in supporting the same operational needs for the HiVolt team. We're excited about those synergies, but they're not going to be cost-based. They're going to be, candidly, very growth-based. Finally, I'm just going to point out, as I said in the prepared remarks, HiVolt brings an extensive portfolio of experience, successful year-over-year track record of growing their business profitably and delivering against customer needs. We're very excited about the capabilities that we get to bring onto the Archrock platform with the HiVolt team.
That's great. So flipping to the other side, because you talked about cross-selling revenue synergies, where the opportunities are. I'm just trying to think through this, and I know you're just announcing this deal now, but I'm thinking different sales teams, very different skills, potentially selling to a different group within the customer base. Is that going to be a little bit harder than maybe on paper it looks like? Or it might be too early, but how are you thinking about that?
The point you're making is really valid. When we think about compression, it is primarily a sales activity, an account management activity that's well-established and well-practiced by a team across a broad customer base. On the other side, when you think of the microgrid prime power market, it is much more of a project development, business development sales effort, and those two sales approaches are distinct. What's fortunate for us is at Archrock, we have experience with projects as well as with sales, and we have a deep bench here that understands project management and business development along with sales activity. Even more importantly, the HiVolt team does too. They've a great bench on their business development team and great demonstration of business development success in the way they've built the business to date.
We expect to be able to bring those competencies together and manage the future business development needs for this power segment and for Archrock Power, for the HiVolt operation. We expect to do that well.
Okay. Thanks, Brad.
Yeah. Thank you.
Your next question comes from the line of Elvira Scotto with RBC Capital Markets. Your line is now open.
Hey. Great. Thank you. Can we go back and just talk a little bit about the, I think it's 61 MW of kind of identified business potential. What is the confidence level in converting that to contracted capacity? Then just to go back to the competitive environment, does HiVolt compete with others that are providing this service? Are there other competitors that they're competing with for, say, the 61 MW?
Yeah. Thanks, Elvira. Two parts to your question. I will take the first one first, which is trying to unpack the composition of the MWs. If you look at slide 10, we have 61 MW of currently operating projects, which is straightforward and easy to understand. As Brad said earlier, the next bucket, which is the 55 MW of contracted and awarded, is a combination of things which verbally have been awarded, are being papered up, and definitive documents have to be executed. Thereafter, the last part of the funnel is the future opportunities where the business development efforts of the HiVolt team, in talking with all the customers across oil and gas applications, both on the upstream and the midstream side, they have developed a pipeline of projects. Those are similar to the existing operating projects or the contracted and awarded projects.
The fact that they have built this platform and the contracting structure, that is what they are going out and scaling with other customers. We have a lot of confidence in that 61 number. Of course, that needs to be delivered over time, and we have time till 2028 to get to the 175 MW of projects. That was the first part of your question. The second part of it was more around competitive landscape, and HiVolt occupies a pretty unique niche in that space. At one end of the spectrum would be retail genset type of business, in which anybody with a piece of equipment can show up at a site and provide power. What HiVolt does is quite a bit differentiated, where their platform, which is fairly well established, is a one-stop solution.
Not only are they coming and designing the equipment for the customers, they are procuring the gas, they are procuring all the balance of plant which is needed to deliver the power. They are building the private-line infrastructure, and after designing and constructing it, over time, they are even operating that for customers. From a customer's point of view, it is a one-stop solution for the customers, and that makes it very, very differentiated compared to what we would consider just a retail genset type of a business.
One thing-
Thanks
-I'd like to
Yes
One thing, Elvira, I'd like to add on to that and point out that what I think is really exciting about this opportunity is that the offering is unique, but there is competition. I think primary competition is the customer themselves, much like we have in our compression business. This level is actually so comparable that the customer is the first competitor, and then the grid is the second competitor. But it's because it's a more permanent infrastructure-related position than some of the others are pursuing in this space, which are more gensets on location. That's not what HiVolt does. HiVolt has their own property, their own location. They don't just drop equipment onto a competitor's location. It's a differentiated offering when you think of that.
Stepping back, in addition to it having the same customer dynamics as our compression business, this is a really strategic move that's at a size where we get to help this business scale and take it from where it is today and provide it with that infrastructure, the footprint, the capital, to really see it scale over time. So, we got a lot of confidence that the business development book is good, and the conversion of the opportunity set into value creation for the benefit of, in the future, Archrock and our investors is going to be strong.
Great. That's helpful. Just to follow up, I know these are five- to eight-year initial terms on these PPAs. I guess, when did the earliest contracts roll? How is renewal visibility? What happens after the contract rolls? Are there price escalation mechanisms built in?
Yeah. Thanks for the follow-up, Elvira. The contract duration is, as you said, five to eight years. The important thing I will point out to you is that the payback periods are within four to five years. Maybe the point you are trying to get to is what is the re-contracting risk at the end of the contract expiration? The important thing is the equipment is already paid off, and at that point, once it is there on site for the customers, the question is, does the grid show up at that point? If not, you would expect a similar level of stickiness with the customer that they should more than likely renew that contract. The other part of it is, most of these oil and gas applications are on sites which are fairly remote.
If you think of grid and the grid build-out, it is easier to visualize that for perhaps high-power need data center projects. For more retail-type oil and gas applications, the grid build-out feels a little bit stretched to think about that. That gives us additional comfort around the stickiness of the customer and our ability to renew it when the contract comes up for renewal.
One thing I would emphasize is that the business is young enough that we have not seen a rollover. In the market that we are looking forward to entering and seeing for the future, we still think there is going to be such a shortage of both power and the equipment that redeployment is going to be an opportunity. I think more interestingly than that, what HiVolt has seen is that when one rollover where a customer, they had private-line extended off to one customer that discontinued that operation under the contract that had the maturity, another customer came right in, and they redirected new wire from that existing platform to another customer. There is just an incredible amount of stickiness behind the way this infrastructure business has been and will continue to be built.
Got it. Great. Thank you very much.
Thanks.
Your next question comes from the line of Nate Pendleton with Texas Capital. Your line is now open.
Good afternoon, and congrats on the deal. Can you talk about the-
Thank you.
current assets and those on order? Are they all in that 2.5 MW range? And perhaps, is there any desire to extend that to larger units?
Right now, all the equipment is basically in the 1.9 MW to 2.5 MW frame. Going forward, it is primarily going to be the 2.5 MW platform that we are going to be expanding with under the opportunity set that we see ahead right now. We are very excited about that scale, that size, and the operation of that CAT equipment for the future opportunities. I do not know if HiVolt would say the same thing. There is always the opportunity to see potential for larger equipment come into the mix, but it is not in the order book at this time.
Got it. Thank you for that. As my follow-up, can you talk about the availability of balance of plant to support that growth, and if that has already been included in that 500 MW procurement framework that you outlined?
Sure. The power equipment really remains mostly the long lead. There are some balance of plant constraints, but the equipment right now, we are highly confident we have all the equipment on order, including balance of plant equipment, to meet the objective of the 2028 EBITDA target and MW target that we have established overall in the business. So, high confidence in that we have the right equipment to be able to do that.
Great. Congrats again.
Thank you.
Thank you.