ERock (NYSE:EROC) reported third-quarter revenue of $153 million, nearly four times its second-quarter total, as work accelerated on a power project supporting Meta’s data center complex in El Paso, Texas. The company reaffirmed its full-year outlook and announced plans for a new Houston assembly facility to meet demand extending into 2028.
Net income was $8.9 million, which Chief Financial Officer Ian Blakely said marked ERock’s first profitable quarter as a public company. Adjusted EBITDA rose to $12.6 million from a loss of $14 million in the prior quarter.
Chief Executive Officer John Carrington said demand remained strong across the company’s customer segments, despite volatility in AI infrastructure. He said ERock’s production capacity is sold out through 2027 and into early 2028, and that the company is now pursuing orders for later deliveries.
El Paso project drives revenue growth
Third-quarter revenue increased from $40 million in the second quarter. Power system sales rose to $136 million from $27 million, primarily reflecting generator deliveries and installation work on the El Paso project, Blakely said.
Ongoing services revenue, excluding pass-through reimbursable variable revenue, rose 23% sequentially to $8.6 million, helped by seasonal activity. Blakely said service revenue from large projects is expected to begin contributing late next year and in 2028.
Gross profit was $34.9 million, while adjusted gross margin rose to 24.1% from 22.2% in the second quarter. Blakely attributed the improvement to higher product margins, partly offset by lower installation and services margins.
ERock is working with El Paso Electric to provide 366 megawatts of power for Meta’s data center complex while the site awaits grid interconnection. Carrington said most civil work was complete, generators had begun arriving at the site and installation was expected to finish by mid-2027.
Asked about regulatory risks, President Corey Amthor said the company did not see a delay in the project’s certificate process. He also said a site for an Anthropic project had not yet been named and that ERock did not currently see permitting issues that would prevent projects from moving forward on time.
Houston facility to add capacity
ERock expects its existing Hyperion facility to exit 2026 at an annual production capacity of approximately 1.2 gigawatts. Its planned Atlas facility in northeast Houston is expected to begin ramping production in late 2027 and reach about 900 megawatts of annual capacity by the first half of 2028.
Atlas could expand to 1.2 gigawatts over time, bringing combined capacity with Hyperion to as much as 2.4 gigawatts annually. The company expects to spend $20 million to $30 million on Atlas and plans to fund the expansion with existing liquidity.
Blakely said ERock would commit to capacity beyond the initial 900 megawatts as additional contracts are signed. He also said the facility’s final cost will depend in part on whether the company invests in more tooling and automation to lower costs over time.
To support production, ERock signed a fixed-price agreement with Hyundai for engine long blocks covering 2027 and 2028. Carrington said the agreement secures supply for existing backlog commitments and provides visibility into generator costs. The companies are also discussing supply for 2029 and later.
Backlog and margin outlook
Contracted power system sales backlog stood at approximately $1.6 billion on Sept. 30, down from $1.7 billion at the end of June as projects converted into revenue. Carrington said more than $300 million in bookings after quarter-end brought backlog to a record; those bookings will be reflected in fourth-quarter reporting.
Blakely said the post-quarter bookings included a mix of commercial and industrial and data center business. Some customers made financial commitments to preserve project schedules while certain contract details were still being finalized.
Margins on projects delivered in 2026 and 2027 generally range from the high teens to the low 20s, Blakely said. More recently priced deals have margins in the mid-20s or higher, but he said the benefit is largely a 2028-and-beyond development because near-term production is already contracted.
Carrington said customers are also facing longer waits for grid connections. Bridge-power periods that previously started at around three years are increasingly extending to five to seven years, he said. ERock generates roughly three times as much ongoing services revenue during bridge periods as it does when systems operate in backup and dispatchable modes, according to the CEO.
Full-year guidance reaffirmed
ERock maintained its 2026 forecast for revenue of $435 million to $465 million and adjusted EBITDA of $3 million to $9 million. Blakely said the outlook implies fourth-quarter revenue of $211 million to $240 million and adjusted EBITDA of $17 million to $23 million.
The company ended September with $549 million in unrestricted cash, no outstanding debt and an undrawn $250 million credit facility. Blakely said fourth-quarter growth is expected to be driven largely by continued product and installation work on the El Paso project.
About ERock (NYSE:EROC)
ERock, formally Eagle Rock Energy Partners, L.P., was a Houston-based master limited partnership focused on natural gas and oil. Its businesses included midstream services such as gathering, processing and treating natural gas, as well as exploration and production activities. The partnership operated assets in several U.S. regions, including the Permian Basin and Gulf Coast. In 2014, it sold its upstream business to Vanguard Natural Resources and its remaining midstream operations to Regency Energy Partners, ending its operations as an independent company.
