Data Storage (NasdaqCM:DTST) Q3 2025 Earnings Call November 19, 2025 10:00 AM ET Speaker3Greetings and welcome to the Data Storage Corporation third-quarter earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your hos ...

Core Viewpoint - Baytex Energy Corp. has announced the sale of its U.S. Eagle Ford assets for US$2.305 billion to focus on its higher-return Canadian operations, enhancing its financial position and shareholder returns [1][2][5]. Transaction Details - The transaction is valued at approximately $3.25 billion in cash and is expected to close in late 2025 or early 2026, pending regulatory approvals [1][5]. - A US$200 million deposit will be made by the buyer, which may be forfeited under certain conditions [5]. Strategic Focus - The divestiture allows Baytex to concentrate on its Canadian assets, particularly in heavy oil development and the Pembina Duvernay, which are expected to drive long-term value creation [6][8]. - The company aims to maintain a disciplined growth strategy with an annual production growth target of 3-5% at WTI prices of US$60-65 per barrel [11]. Financial Position - Post-transaction, Baytex will have a net cash position and plans to repay outstanding credit facilities and senior notes, resulting in an industry-leading financial position [6][8]. - The company intends to return a significant portion of the proceeds to shareholders, potentially through share buybacks and maintaining its current dividend of $0.09 per share [6][8]. Production and Reserves - The Canadian portfolio produced 65,000 boe/d in the first nine months of 2025, reflecting a 5% growth compared to 2024 [9]. - The Eagle Ford assets being sold had proved plus probable reserves of 401 million boe as of December 31, 2024, with Q3 2025 production averaging 82,765 boe/d [13]. Future Outlook - Baytex plans to provide detailed guidance for 2026 and a three-year outlook following the transaction's completion, highlighting its streamlined Canadian asset base [12]. - The company has identified approximately 212 drilling locations in the Pembina Duvernay and expects to transition to a one-rig drilling program targeting production of 20,000-25,000 boe/d by 2029-2030 [10].

Financial Data and Key Metrics Changes - Net income per share was $0.09 on a fully diluted basis, and core FFO per share was $0.74, reflecting a 3% year-over-year increase [13] - Cash available for distribution was $29.3 million, exceeding consensus expectations for the quarter [13] - The company maintains its full year 2025 core FFO per share guidance in the range of $2.98 to $3.30 on a fully diluted basis [18] Business Line Data and Key Metrics Changes - The company advanced several key development projects backed by long-term non-cancelable leases, indicating a focus on disciplined growth [6][7] - Soft term lease exposure declined from 5.2% at year-end to 4.7%, demonstrating progress on renewals and tenant engagement [15] Market Data and Key Metrics Changes - The company is operating in a challenging market environment with elevated cost of capital, partly due to a recent dividend reset [9][17] - The company expects an additional $115 million in liquidity later this year from the FDA Atlanta lump sum repayment [16] Company Strategy and Development Direction - The company focuses on delivering reliable performance through mission-critical infrastructure and long-term leases [5][6] - The strategy emphasizes disciplined capital deployment and selective growth into high-quality assets that align with government missions [7][8] - The company aims to rebuild its shareholder base with long-term public investors who understand its mission and strategy [9] Management's Comments on Operating Environment and Future Outlook - Management noted that government real estate decisions are becoming more strategic and cost-conscious, positioning the company as a trusted partner [10] - The company is committed to executing its development pipeline with excellence and deepening relationships across federal, state, and local agencies [11] Other Important Information - The company has $122 million of revolver capacity available, maintaining a leverage ratio within the target range of 6.5 to 7.5 times [16][17] - The company is not pursuing growth for its own sake but is targeting opportunities that create durable value [18] Q&A Session Summary Question: Can you talk about your return expectations for the crime lab development project? - The development is expected to create about a 150 basis point spread to the cost of capital, consistent with other development growth targets [21] Question: What's the size of the pipeline of opportunities you're looking at? - The pipeline volume is estimated at $1 billion to $1.5 billion, with a focus on finding the best deals to meet growth goals [22]