TeraWulf Inc. (WULF) Earnings

Management highlights

### Core Strategic Model - Focus on securing power-advantaged large-scale data center infrastructure, contracting with high-quality AI and high-power compute customers, delivering capacity in phased rollouts, and selectively recycling capital to fund new higher-priority growth opportunities. - Prioritize regional portfolio diversity to avoid over-reliance on a single grid, regulatory regime, political environment, or labor pool, and to support growing demand for geographically distributed AI inference capacity. ### Q2 2026 Operational Milestones - At the Lake Mariner campus, the CB3 development was fully completed and brought online in early July 2026, bringing total operating revenue-generating capacity at the site to 102 megawatts. Completion of CB3 also activated $600 million in Google credit support for FluidStack's lease obligations. - Construction at CB4 and CB5 at Lake Mariner is proceeding per the updated customer-aligned schedule: CB4's first data hall is on track to begin revenue generation in late September 2026, and CB5's first data hall is expected to start energization in early January 2027. - Post-quarter end, the company signed a 20-year lease for 401 megawatts of capacity with Anthropic at its Justified Data Campus in Kentucky, representing $19 billion in total contracted revenue over the initial lease term. - Post-quarter end, TerraWulf acquired the 1 gigawatt-scale Muskie Data Campus development site in Eastern Kentucky, developed in partnership with investment-grade utility Kentucky Power (AEP), with initial service targeted for Q4 2028 and potential expansion to 2 gigawatts total capacity. - Post-quarter end, the company agreed to sell its entire 50.1% interest in the Abernathy joint venture for $530 million, generating a 20% internal rate of return on initial investment, to free up capital and management focus for directly controlled large-scale projects. - The Federal Energy Regulatory Commission approved the proposed acquisition of the Chesapeake, Maryland Morgantown site, clearing a key regulatory milestone for the transaction, which will support development of up to 1 gigawatt of integrated generation, storage and data center capacity in the power-constrained Mid-Atlantic region. ### Construction & Labor Management - The company addressed industry-wide electrical labor constraints at Lake Mariner by adding a second electrical contractor and scaling the on-site workforce to approximately 1,000 peak electricians to maintain delivery schedules. - Evolving customer design requirements for next-generation AI hardware were incorporated into construction plans, with amendments to FluidStack's leases adding incremental contracted capacity and over $500 million in total incremental lease revenue over the initial term, in exchange for a $150 million TerraWulf contribution to fit-out costs.

Guidance

- Management reaffirms its long-term annual target of contracting 250 to 500 megawatts of incremental critical IT capacity per year, aligned with current labor availability and operational execution capacity. - Full-year 2026 adjusted SG&A expense is projected to remain within the previously guided range of $75 million to $100 million, unchanged from prior guidance. - Total project cost for the Wolf Compute build-out at Lake Mariner is now estimated at $9.1 million per critical megawatt, which remains within the original guidance range of $8 million to $10 million per megawatt. - Management expects existing liquidity (including expected proceeds from the Abernathy sale) is sufficient to fund all committed remaining Lake Mariner development, planned equity investment at the Justified campus, Muskie development requirements, the Chesapeake acquisition, and other active pipeline opportunities without needing to access public equity markets. - The company projects pro forma capitalization for the Lake Mariner Wolf Compute project will shift to 32% equity / 68% debt, from the prior 26% equity / 74% debt, after the FluidStack lease amendments and additional TerraWulf capital contribution.

Segment performance

TerraWulf reports total Q2 2026 revenue of $44.8 million, up from $34.0 million in Q1 2026. The only core product segment is High-Performance Compute (HPC) leasing, which generated $31.9 million in revenue in Q2 2026, a 52% quarter-over-quarter increase, and represented 71% of TerraWulf's total revenue for the quarter. Reported HPC leasing segment profit margin was 28% for Q2 2026, while adjusted HPC margin (excluding one-time pre-revenue and development costs) was approximately 80%, approaching the company's long-term target margin of 85%.

Risks & headwinds

- Industry-wide constrained availability of electrical and HVAC construction labor creates execution risk, limits the pace of annual capacity growth, and puts upward pressure on hourly labor costs for new development. - Evolving regulatory restrictions on large-scale data center development are emerging across multiple major U.S. power markets (including New York and Texas), which could delay or block development of projects that do not meet new permitting, grid reliability, or environmental requirements. - Large backlogs of power generation and transmission projects across major markets mean that interconnection queue positions do not guarantee timely access to power, creating execution risk for less advanced projects that do not have firm contracted power arrangements. - Long 20-year lease terms require assessment of tenant credit quality not just at signing, but over multiple years, creating risk if tenant financial profiles deteriorate over the lease term.

Analyst Q&A

• Q: What is the typical framework for utility partnerships like the one at Muskie with Kentucky Power, and will utilities share project economics going forward? /

  A: For integrated utilities like Kentucky Power/AEP, utilities independently secure generation resources to support the contracted load, after TerraWulf commits to covering required transmission build-out costs and posts credit for the allocated energy capacity. Project terms are always location-dependent, with pricing for transmission and energy set at current market rates, aligned with the specific grid needs of each site.

• Q: Why hasn't TerraWulf done a direct deal with a high investment-grade hyper-scaler before the Anthropic lease, and is this a deliberate strategic choice? /

  A: Credit quality of the tenant (both at signing and over the full 20-year lease term) is TerraWulf's top priority, and the company is very satisfied with the strong credit quality of its existing tenants. Moving upstream to deal directly with the ultimate end customer (as with Anthropic) improves operational efficiency by enabling more precise facility design and operations tailored to the customer's needs, and the company expects tenant counterparties will naturally diversify as its site portfolio grows.

• Q: What is the pace of portfolio expansion, and how do the company evaluate community and regulatory risk when selecting new markets? /

  A: Management prioritizes brownfield sites with existing electrical infrastructure and strong local community support, and invests significant time engaging local stakeholders early to address misinformation. Regional diversity is a foundational portfolio principle to reduce exposure to single-grid or single-regulatory risk, and meets customer demand for geographically distributed capacity for AI inference. The 250-500 megawatts per year contracting guidance reflects current execution and labor constraints, and management prefers to prioritize delivering on contracted commitments before expanding the pace of growth.

• Q: How does TerraWulf manage construction labor cost risk and protect project returns? /

  A: For new leases, equipment prices are mostly locked in via 12-month rolling vendor forecasts and deposits. For labor, while hourly costs have been creeping up industry-wide, the company works with EPC partners to lock in price ranges, and improved reference design from completed projects gives better visibility into required labor hours. Incremental cost increases are passed through to customers, and the company only pursues projects that deliver a mid-teens yield on cost that exceeds its weighted average cost of capital, preserving tangible equity value for shareholders from day one.