AIRJ earnings call analysis

NASDAQ:AIRJ Q4 2025 Earnings Call Transcript Generated on 6/8/2026 Operator | Conference Operator: Greetings. Welcome to the AirJewel Technologies fourth quarter and full year 2025 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Tom Devine, Vice President of Investor Relations and Finance. Thank you. You may now begin. Tom Devine | Vice President of Investor Relations and Finance: Thank you and good morning. With me today for our full year earnings call are Matt Jor, Chief Executive Officer, Pat Eilers, Executive Chairman, Brian Barton, Chief Commercialization Officer, and Steven Peng, Chief Financial Officer. During this call, we'll be referring to a presentation which is available on the webcast platform and on the investor section of our website. I would like to point out that many of the comments made during the prepared remarks and during the Q&A section are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors in the forward-looking statement sections of our filings with the SEC. Although we believe the expectations expressed are based on reasonable assumptions, they are not guaranteed that future performance and actual results or developments may differ materially. And now, I'll turn it over to Matt Jor. Matt Jor | Chief Executive Officer: Thanks, Tom. Good morning, everyone, and thank you for joining us for our full year 2025 earnings call. This is an important call for AirJewel. 2025 was the year we built the foundation for commercialization And 2026 is the year we intend to convert that foundation into a commercial pipeline to revenue. Before I review our accomplishments and outline our plan for the year ahead, I want to take a moment to talk about something that has become impossible to ignore, the growing urgency of water resilience. In Corpus Christi, Texas, home to one of the nation's largest petroleum ports, the main water reservoir has dropped below 10% capacity, its lowest level on record. The city's own projections indicate it could reach a water emergency within months, meaning supply will be unable to meet demand. The governor of Texas has publicly warned that the state may need to intervene. Industrial operations that produce jet fuel for Texas airports and support billions of dollars in economic activity face the prospect of curtailment due to lack of water. The city's proposed long-term solution is a desalination plant that will cost over a billion dollars and is years away from producing any water. Meanwhile, in the Middle East, the unfortunate ongoing conflict has caused immense human suffering. Our thoughts are with the people in the communities affected there. It has also exposed a critical vulnerability for the more than 100 million people who depend on desalination for their water supply. Desalination plants in Bahrain have been damaged by military strikes. Facilities in the UAE and Kuwait have been hit by missile debris. As Bloomberg columnist Xavier Blas recently observed, water is now more strategically important than oil. These desal plants are centralized facilities that represent single points of failure for entire populations. These risks are real, and they are often underappreciated until they become urgent. They stem from the same structural problem. The world's water infrastructure is concentrated, brittle, and increasingly vulnerable to disruption. Whether the stress comes from drought, industrial and population growth, or geopolitical conflict, the result is the same. Communities and industries are exposed to water supply risks with very limited alternatives. AirJewel offers a fundamentally different approach. Distributed water generation from the atmosphere that operates independently of pipelines, reservoirs, and centralized desalination. AirJewel systems generate water on site, behind the meter, and at the point of need. They require no municipal water connection. These systems produce pure distilled and potable water from ambient air using waste heat. We've proven this in the field. Over the past year, AirJewel systems have operated in Texas, Arizona, California, and Dubai. The macro tailwinds that we've discussed on prior calls remain in full force and have been exacerbated and exposed by the current war. Data center expansion and the onshoring of advanced manufacturing is exponentially driving an increase in industrial water and power demand. But the events of recent weeks have elevated the conversation from efficiency and sustainability to resilience and security and even survival. That shift is accelerating interest in exactly what AirDuel can deliver. In our year-end call in March of last year, we laid out a clear set of objectives for 2025. Validate our technology in the field, develop products for commercial launch, strengthen our partnerships towards building a commercial pipeline, and ensure sufficient capitalization to support commercialization. we delivered on these commitments. On technology validation, we said we would move from laboratory demonstrations to real-world field deployments. In Dubai, we operated an air jewel system at a government advanced technology facility, showcasing our technology to public and private sector customers across the Middle East. In Hubbard, Texas, we deployed the first US field demonstration of air jewel, showing our ability to produce pure water from air and generating months of operational data across diverse environmental conditions. At Arizona State University, an independent academic evaluation is ongoing in one of the most demanding air environments in the United States. On product development, we said we would advance our products toward commercial readiness. Last year, we made a deliberate engineering decision to focus our initial builds on our so-called A250 platform, which we'll now be referring to as our AirJewel platform. core product. This is our core two-chamber system optimized for industrial dehumidification and water generation. This allowed us to build, deploy, and learn from multiple systems in the field. And those learnings have directly informed the design of our A1000, which we'll now be referring to as AirJewel Prime. This is our larger water generator for industrial scale applications that we're currently building. Both products share a common sorbit chamber architecture and produce distilled and potable water that meets FDA bottled water standards. On partnerships, we said we would leverage our strategic relationships to accelerate commercialization. GE Renova invested additional capital and commenced a strategic waste heat integration project with us. We'll also be deploying an air dual system at GE Renova's New York facility to support our waste heat strategic project with them. and to be used as a demonstration system for GE Vernova's customers. Additionally, we were selected for the Net Zero Innovation Hub to showcase our AirJuul system for Google, Microsoft, DataFor, and other leading data center infrastructure companies. We established defense sector credibility through a CRADA with the U.S. Army and an agreement with a defense contractor for anti-corrosion applications. And we announced an exclusive Middle East distribution agreement with 10X Investment an Emirati-owned company with well-established relationships across government, commercial, and industrial sectors throughout the Gulf. On commercial pipeline, we said we would develop strong customer engagements with a path to commercial sales. We are now actively engaged with customers across several industry verticals. We introduced the water purchase agreement business model, and we developed a defined, repeatable customer engagement process that is advancing prospects toward commercial deployment. Brian will take you through that process in detail shortly. On the balance sheet, we said we would ensure sufficient capitalization to support commercialization. We completed a $15 million private placement anchored by GE Vrnova, filed an S3 shelf registration, and completed a $23 million equity offering in January 2026, ensuring that we have the runway to execute on our plan with zero debt. Let me highlight the key milestones from the fourth quarter and the first several weeks of 2026. Some of these were discussed on our third quarter call in November, but I want to place them in the context of the full year and the momentum we're carrying into 2026. During the fourth quarter, we continue to advance our defense sector relationships. Our CRADA with the U.S. Army, which we announced in October, is focused on integrating Air Jewel with tactical waste heat recovery systems to deliver resilient water supply for forward deployed troops. In December, we announced a collaboration with Red Dot Ranch to bring off-grid water solutions to rural residential communities in Pescadero, California, demonstrating Air Jewel's value proposition for distributed residential water generation. We deployed an AirDuel core system in January and completed the first stage pilot in February. In December, we also commissioned an AirDuel core system at Arizona State University for independent academic evaluation by Dr. Paul Westerhoff and his team of globally recognized experts in atmospheric water harvesting. In January, we announced an exclusive distribution agreement with 10X, providing AirDuel with market access across six Gulf countries. and we commenced our partnership in the Net Zero Innovation Hub program in Denmark that I mentioned earlier. Looking ahead, 2026 is the year when AirDuel transitions to commercial pipeline building. We expect to secure multiple long-term customer commitments across data center, industrial, defense, and international markets. Importantly, the customer relationships we build in 2026 are laying the foundation for scaled commercial business in 2027 and beyond. As I mentioned earlier, one of our recent announcements was our exclusive distribution agreement with 10X across the Middle East, a region where water demand has far exceeded natural supply and where recent conflict has further exposed its fragility. I'd like to turn it over to Pat Eilers to discuss the significance of this part of the world in terms of energy, water, and the opportunity it represents for an air-jewel solution in that region. Pat? Pat Eilers | Executive Chairman: Yeah, thanks, Matt. Even good morning. I have spent a considerable time in the middle east region over the past two years with air jewel and the last decade since my black rock days. And I want to share some perspective on why it is an important region for air jewel. The middle east is one of the most water stress regions on earth. Gulf nations depend on desalination for 70 to 90% of their drinking water. At the same time, the region is experiencing massive growth in data center development, advanced manufacturing, and infrastructure investment. Each of these sectors requires substantial quantities of water. Governments and enterprises across the Gulf are actively seeking technologies that can strengthen water security while reducing energy intensity. Matt described the recent attacks on desalination infrastructure in Bahrain, and elsewhere in the Gulf. Those events have exposed a vulnerability that has concerned regional leaders for years. The concentration of critical mineral supply in small number of centralized coastal facilities. Communities have already lost access to drinking water when individual plants have gone offline. The fragility of this infrastructure is now visible to the entire world. This is exactly why distributed water generation matters. Air jewel systems operate independently of desalination infrastructure and can be located where water is needed rather than relying on pipelines or trucks. They can be deployed onsite at industrial facilities, military installations, and community water systems to produce pure distilled water from the atmosphere. This capability has significant value in a region where water resilience is now a national security priority. We recognize that the current conflict in the region creates uncertainty around the near term timeline for deployments. We are monitoring the situation closely and working with 10X, our partner, to ensure we are positioned to move forward when conditions are favorable. At the same time, these events are reinforcing the strategic urgency of water resilience across the Gulf, and the conversations we are having with prospective customers reflect that urgency. We are confident that the long-term opportunity in the Middle East is substantial, and we intend to support the increased need for water resiliency. Now I will turn it over to Brian Barton, our Chief Commercialization Officer, to discuss our product roadmap, and commercialization plans for 2026. Over to you, Brian. Brian Barton | Chief Commercialization Officer: Thanks, Pat. Let's start with the AirJewel A250, which we're now referring to as AirJewel Core. As Matt mentioned, we made a deliberate decision in 2025 to focus our initial system builds on the Core platform. The Core is a two-chamber system that shares the same sorbent chamber architecture as our larger AirJewel Prime water generator. By building, deploying, and iterating on the core systems throughout the year, we accomplished two things simultaneously. First, we gained important engineering learnings that helped us improve the overall design of the system. Second, and equally important, we used the core system as a proof of value surrogate for the prime system. Every core deployment demonstrates to customers the performance, water quality, and economics of the AirDuel platform. directly de-risking the pathway to prime commercial deployment. We are finalizing the core product design and preparing for UL and NSF certification, which are required steps before commercial launch. We expect the core product to be commercially available in late Q4, 2026. For industrial dehumidification applications, there will be an additional core product, will be optimized for maintaining low humidity environments in a range of approximately 30 to 40 percent relative humidity with significant energy savings compared to incumbent desiccant wheel technology for this product we are targeting commercialization in 2027. on cost reduction we have made substantial progress we have sourced lower cost components across multiple subsystems and are evaluating their reliability in our current builds We are also simplifying the overall system design, which reduces both manufacturing complexity and cost. The sorbent chamber remains the only custom manufactured component. The balance of the bill of materials consists of commercially available parts. Turning to the prime, this is our larger water generator designed for industrial scale water production using waste heat. Prime is the product that the majority of our data center and industrial water customers are ultimately looking for. The learnings from our core systems have directly informed the prime design, and we are building our first prime system now in Newark, Delaware. Once operational, it will serve as a critical outdoor showcase unit, enabling customers to see the full-scale system operating in real-world conditions. We will provide updates on prime deployment timing as the build progresses and we gain operational experience with the full-scale system. Water productivity per chamber continues to improve through ongoing optimization of our sorbent performance and cycle tuning across a range of temperature and humidity conditions. These improvements directly translate to better economics for our customers, and we expect to continue to make gains as we move into commercial production. We're also initiating a dedicated optimization of the core platform for the standalone dehumidifier market. focused on system performance optimization for dry storage and anti-corrosion applications. This targets a large installed base of approximately 1.3 million industrial dehumidification systems globally. And our longer-term HVAC integration work with Carrier continues to benefit from the engineering and productization work underway on both the core and prime systems. On manufacturing, our coating line is operational in Newark, producing the sorbent coated contactors central to AirJules operation. We are advancing process developments to establish a scalable, repeatable manufacturing process. Our Newark facility has sufficient production capacity to address expected sales volume through 2027. As demand increases beyond that, we expect to transition to contract manufacturing for both contactor production and full system assembly. We're initiating those conversations now and preparing for assembly documentation required to support that transition. On slide nine, I want to walk us through our process for converting strong customer interest that Matt and Pat described into commercial deployments. We have developed a defined repeatable customer engagement process with four stages. Stage one is discovery and evaluation. where we assess product market fit for a specific customer, benchmark AirJules performance against the customer's alternatives, and complete a techno-economic analysis. This stage typically takes one to three months, and we are actively engaged with customers across several industry verticals. Stage two is proof of value. In some cases, the techno-economic analysis from stage one or prior deployments are sufficient for customers to move to commercial structuring. In other cases, we deploy a demonstration unit onsite and validate performance in the customer's operating environment. The customer validates water quality, observes waste heat integration, economics, and confirms real-world performance and reliability. Our deployments in Hubbard, at ASU, in Dubai, and in Pescadero have all served as proof of value demonstrations. Today, the core system is our primary proof of value platform because it operates on the same architecture as the prime and demonstrates the same sorbent performance, water quality, and energy economics. As prime becomes operational, it will serve as an additional proof of value asset at full scale. This stage typically takes six to 12 months. Stage three is commercial structuring. Once performance is validated, we define the commercial model, which could be a water purchase agreement, direct unit sale, or a lease. We also align on product configuration, site engineering, deployment scope, and pricing. The stage typically takes three to six months. Stage four is deployment and scale. Multi-unit commercial deployment, expansion within the customer's portfolio and across geographies, and recurring revenue through service maintenance and WPA contracts. This is the long-term value creation engine. I should note that these stages are not strictly sequential. For customers with strong strategic urgency or established familiarity with our technology, commercial structuring discussions often begin while proof of value work is still underway. This parallel progression can compress the overall timeline from initial engagement to commercial deployment. Putting it all together, here's what to expect from us in 2026. The core system for both industrial dehumidification and smaller scale water production applications will be our first commercial products to launch late Q4 this year, following completion of certifications. Our first prime system is being built now, and once operational, it will serve as our showcase for industrial scale water generation customers. Through our partnerships with the net zero innovation hub for data centers, we expect to deploy an air dual system later this year. This deployment will directly demonstrate AirJules performance for Google, Microsoft, DataForce, Danfoss, and other leading data center companies. Through 10X, initial commercial deployments in the Middle East are planned for late 2026, subject to regional conditions. And across our defense partnerships, we anticipate deployments in 2026 in both water resiliency and anti-corrosion applications. And in the residential market, we're planning for additional partnerships and deployments that can unlock new developments in water scarce regions. Through these various deployments and partnerships, our focus in 2026 is on building the deployed reference base and contracted customer relationships that support scaled commercial activity in 2027 and beyond. Every deployment we execute this year validates AirJewel for an entire category of customers and advances our pipeline toward commercial conversion. The customer engagement cycle we are outlining is the engine that converts interest into commercial deployments. We're advancing customers through this process with discipline and the pipeline is growing across multiple verticals and geographies. Now I will turn it over to Steven for the financial update. Steven Peng | Chief Financial Officer: Thank you, Brian. I will now walk through our financial results for the fourth quarter and full year 2025 and also provide some color on our 2026 outlook and liquidity position for the year. We can turn to the financial results slide in the presentation. As a reminder, Aerojoule Technologies accounts for its 50% ownership in the JV or GE Vernova using the equity method. The numbers I will discuss are for Aerojoule Technologies, and the results from the joint venture are reflected in the loss from investment in Aerojoule JV lines. For the fourth quarter, Aerogeo Technologies reported net operating expenses of $3.2 million. This is inclusive of approximately $0.7 million in administrative and engineer expenses reimbursed to us by the joint venture under our statement of work. For the full year, net operating expenses at Aerogeo Technologies were $13.6 million, which compares to $11.2 million in 2024. The year-over-year increase is driven primarily by a $4.2 million increase in non-cash stock-based compensation expenses. is offset by lower professional fees and a shift in the R&D line from ARJ to the joint venture. Our net loss for the full year is $9 million. The primary components below the operating line were our loss from investment in ARJJV of $39.3 million, offset by a non-cash gain of approximately $25 million from changes in the fair value of earn-out liabilities and subject investing shares. The $39.3 million JV loss compares to $5.3 million for the full year of 2024. The primary driver of the variance is the non-cash impairment of in-process R&D that reduced net income at the joint venture. This is a non-cash accounting adjustment related to a change of valuation of intellectual property contributed to the JV at formation. It has no impact on our joint venture's operations cash position or ability to execute on the commercialization plan. Now let's turn to our joint venture. The total JV cash outflows for the year was approximately $18 million, which is consistent with the guidance provided on our third quarter call. The JV received capital contributions totaling $17.8 million from AeroJewel Technologies during the year. $5 million of that came from GE Vernova through their April 2025 equity investment in AeroJewel Technologies. The joint venture remains in the development and proposition stage. And there was nominal revenue of approximately $110,000 during the fourth quarter from the sale of AeroJewel Core Systems to Arizona State University. AeroJewel Technologies ended 2025 with approximately $22 million of cash on the balance sheet. Subsequent to year-end, we completed an equity offering in January 2026 that raised approximately $22 million in net proceeds. Following that offering, our combined pro forma cash position across Airdrieu Technologies and the JV was approximately $44 million of no debt. With respect to liquidity, we have sufficient cash to fund our operations, the JV, and our planned commercial deployments through 2027. We expect our combined cash spend across the corporate entity and the JV in 2026 to be approximately 25 million. The January offering combined with our existing cash and liquidity provides a clear runway to execute on the commercialization plan that Matt and Brian have both outlined. Looking ahead to 2026, at the joint venture level, we are budgeting approximately 17 to 19 million in operating expenses to support the productization, manufacturing, and commercial deployment activities that Brian described. This is in line with our 2025 spend level. At Airtrue Technologies, our corporate operating expenses are expected to be approximately $15 million for the full year, of which approximately $8 million is non-cash stock-based composition. With the successful execution of our registered offer in January, along with our effective S3 registration status, we continue to maintain strong flexibility in managing our capital position and balance sheet. Going forward, we will remain opportunistic in evaluating any financing and strategic opportunities that enhance our balance sheet and support long-term value creation. With that, I will pass it back to Tom for the Q&A portion of the call. Operator | Conference Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, you may press star 1 from your telephone keypad. and a confirmation tone to indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Thank you, and the first question we have comes from the line of Michael Legg with Leidenberg-Salmon. Please proceed with your questions. Michael Legg | Analyst at Leidenberg-Salmon: Thanks. Good morning, and congrats on the quarter. Nice progress here. I wanted to ask a little bit about, you know, you talked about the customer engagement. Can you talk about, you know, how you're going about engaging the customer from a feed-on-the-street perspective, from a distributor perspective, and how is the outreach going? And talk about that a little bit, please. Brian Barton | Chief Commercialization Officer: Thanks, Mike. This is Brian. I think if I understand your question correctly, it's really around our process of engaging customers. Is that accurate? Yes. Tom Devine | Vice President of Investor Relations and Finance: Yes. Brian Barton | Chief Commercialization Officer: Yeah, so it's worth noting that there's really, I think, three ways in which these conversations are initiated. One is through direct engagement from the customer themselves. That's when they reach out to us. And then, of course, there's warm introductions that happen across our network and to the tops of these organizations. And then there's really kind of meeting folks through direct conferences or trade shows or or suppliers and that kind of thing. And so there's really a lot of activity in all three kind of categories of how we reach our customers. You know, there's a lot of them that come to us, frankly, because this is an urgent topic for a lot of data center builds in particular in that market. You know, one thing to note on the data center market is there's a lot of builds that are happening and a lot of builds that end up getting canceled, canceled projects due to permitting on the water side where everything seems to be moving ahead, but then you can't secure the water permit. And so that's one thing that's really driven a lot of engagement for us in the data center market. And there's other verticals as well where that outreach has been predominantly customer driven. in the industrial sector as well as in the residential sector, which we believe is a significant value for AirJewel to unlock different kind of frozen residential developments. Does that address the question, Mike? Michael Legg | Analyst at Leidenberg-Salmon: Yeah, thank you. Great. And then on the supply chain, you mentioned almost everything except one is commercially available. As we scale over the coming years, Is there anything that's a scarce supply chain or that you don't have redundancy on that we should be thinking about? Brian Barton | Chief Commercialization Officer: I don't think so, Mike. Most of these components that are in the box, so to speak, are kind of already at scale, you know, pumps and motors and valves. The custom, you know, part of our sorbent chamber is an aluminum vacuum chamber that is produced at scale through, you know, cast aluminum manufacturing, and this is Um, a very commodity industrial process. Uh, it's just our form factor is a bit unique. Um, but it's, it's, it's, uh, you know, totally available at scale. Um, the thing inside the vacuum chamber is our sorbent coated contactor. Um, the contactor is, you know, already at scale commodity, many vendors, uh, millions of parts globally already produced. So that's a standard offering that we then coat with the metal organic framework sorbent material. We do that in-house really to define the process of coating, but coating parts is also a commoditized process. There are many vendors that can do this at scale. AirJewel has taken, like this is kind of the, core aspect of our intellectual property, and we need to define and own kind of the optimization of that process and lock it down before we engage with a select, you know, partner to take that to scale. Michael Legg | Analyst at Leidenberg-Salmon: Okay, great. And just one last question. You mentioned a $10 million cap call on the Air Jewel joint venture at year end. Can you explain that and then also talk if there are any other major CapEx needs for 26? Thanks. Brian Barton | Chief Commercialization Officer: Yeah, Steven, you want to take that? Steven Peng | Chief Financial Officer: Yeah, Mike, you're asking about the 2026 capital call, correct? Tom Devine | Vice President of Investor Relations and Finance: Yeah. Steven Peng | Chief Financial Officer: Yeah, so that capital call, those two capital calls are kind of the normal course funding plan for this year. As we laid out in our prepared remarks, what our anticipated total spend for the joint venture will be. And these two capital calls are part of the funding contribution to fund the JV for those perspective expenses. And I'm sorry, the second part of your question? Michael Legg | Analyst at Leidenberg-Salmon: Any other major CapEx for 26? Steven Peng | Chief Financial Officer: No, nothing other than, again, the forecast that we provided in our prepared remarks around our cash needs. CapEx at the joint venture has largely been funded through last year to help support the build-out that Brian described. Michael Legg | Analyst at Leidenberg-Salmon: Okay, great. Thanks. Congrats on the progress. Thanks, Mike. Operator | Conference Operator: Thank you. Our next question is from the line of Alex Furman with Lucid Capital. Please receive three questions. Alex Furman | Analyst at Lucid Capital: Hey, guys. Thanks very much for taking my question, and congratulations on all the milestones you achieved in 2025. I wanted to ask about gross margins. You know, what kind of gross margins are you expecting initially for your first couple units of sales? And then as you think about longer-term contracting, transitioning to contract manufacturing, what kind of gross margins do you think you'll be able to achieve at scale? Steven Peng | Chief Financial Officer: Yeah, maybe I can take that. I think for this year, we're really just focused on deployments. And so I think the gross margin is less of an emphasis for us in terms of what our long-term objectives are, which are around 30, 35% at scale as we move into contract manufacturing. So this year, as we're focused on really the customer pipeline build-out and the validation of our technologies, the focus is more on offline and customer-engaged execution. And as we move into 2027, as alluded to, as contract manufacturing, that margin is targeting. And so our conversations around both our design and our building materials will ultimately help unlock the gross margin profile that we're pursuing long-term. Alex Furman | Analyst at Lucid Capital: Okay, that's really helpful. Thank you for that. And then nice to see the first You know, obviously small revenue here for the JV in Q4. Should we expect to see similar small revenue, you know, throughout 2026 as we get closer to the full-scale commercial launch at the end of the year? Steven Peng | Chief Financial Officer: Yeah, we do. We envision these deployments, some of them will be piloted in nature, will be paid deployments. So we expect some modest revenue that will continue to grow here in 2020 at the joint venture level. and given some of the accounting treatment of the JV that will flow through the equity income or loss from the JV line. Alex Furman | Analyst at Lucid Capital: That's really helpful. Thanks. And then you guys mentioned the water crisis in Corpus Christi and kind of the trade-off between AirJewel and desalination. Just curious how close your economics are getting to competing with large-scale desalination progress project and how much of a selling point is, you know, the lack of a, you know, massive upfront capex for these types of projects as you start engaging with communities like that? Brian Barton | Chief Commercialization Officer: Yeah, thanks, Alex. You know, I think it's important to think about how desalination actually gets built. It's a multi-year permitting and planning process and typically desal plants are, you know, billions of dollars of infrastructure that goes into the ground. You know, then they clean up the saltwater, of course, and then they have to dispose brine, and brine disposal back into the source is a point of concern often. Economically, the comparison, desal is, you know, probably is definitely cheaper than air-dwell technologies for water creation. It's about, you know, five to ten times cheaper in terms of operating costs. The difference is, like, really the value of when you would deploy AirJewel is when the time to those permits and capital are constraining economic development. We're in a period of time right now where there's immense build-out, and we talk about Corpus Christi, who is right on the gulf, as you point out. But the timeline to unlocking those development projects is really a constraint, and Another thing I'd like to point out in terms of the water that's produced from AirJewel is distilled, very plain, zero TDS. This is actually difficult for RO water or desal water infrastructure where there's residual TDS or things that come along. Water quality is a main value driver. you know, if we were kind of like bucket at large, like where is the value for air drill technologies? It's in terms of speed to market, distributed water, resiliency water, where that water is yours, right? And it's your asset that you own. And then it's around water quality. Matt Jor | Chief Executive Officer: And Alex, this is Matt. Alex, this is Matt. I'll add to two things here that Stephen and Brian said. Regarding your gross margin question, you might recall we've established a water purchase agreement business model, and that has been well received by customers. And to Brian's point about distributed water, if you envision these air dual water plants at the site, you know, wherever there's waste heat and every data center there is waste heat, every industrial operation there's waste heat. you can envision an air to a water plant. And so the gross margin question when you take that model is easier to maintain as long as you're focused on where that water has value. And that distilled water that Brian brought up has tremendous value. So we're pretty confident because you get to, we place these air to a water plants and sell the water for a 15, 20 year period. So that gross margin question on sale of equipment also applies to water being sold. So just wanted to add that to your question. Alex Furman | Analyst at Lucid Capital: Okay. Thanks, Matt. That's really helpful. Really appreciate the thorough response from all of you. Matt Jor | Chief Executive Officer: Yep. Thanks, Alex. Operator | Conference Operator: Thanks. Our next question is from the line of Julian Mitchell with Barclays. Please receive your question. on for Julian Mitchell\ Hi. Good morning. This is Drew on for Julian Mitchell. You know, thanks for taking our question. So we just wanted to get a sense of, you know, what commercial opportunities, you know, you're expecting to turn into firm orders and, you know, I guess more broadly, like on a global scale and then more specifically in the middle East. I know you guys touched on that a bit during the call, but if there's any additional color you could provide there, that'd be great. Brian Barton | Chief Commercialization Officer: Sorry, Drew. I'm not exactly. Yeah. So the question is around, uh, commercial deployments that lead to, sorry, deployments that lead to commercial activity. on for Julian Mitchell\ deployments, like leading into orders throughout the year, if there's any color on that. Brian Barton | Chief Commercialization Officer: Yeah, sure. So thanks for the question, Drew. You know, as kind of discussed on the call, there's a number of different market verticals that we're, you know, engaging into, be it on the residential side of unlocking, you know, whole residential built communities that are currently frozen and, you know, the development pipeline due to water permitting. as well as a number of data center engagements, as well as the US military in terms of water resiliency, as well as on dehumidification. So there's a number of verticals and customer conversations that are ongoing that are really kind of poised for these deployments and that proof of value conversation with each one of those customers. We will announce these as they happen. throughout the year and kind of give updates as to the success of those deployments and proof of values with those customers in different verticals. And then, you know, those will cascade into commercial commitments from those customers is our expectation on the overall process. Does that address the question, Drew? on for Julian Mitchell\ Yeah, absolutely. Thank you very much. Operator | Conference Operator: Thank you. At this time, there are no more questions in the queue, so I'll turn it back to Matt Schor for some closing comments. Matt Jor | Chief Executive Officer: Thanks, everyone, for joining us this morning. 2025 was a year of building for us, building systems, building partnerships, and building towards a commercial pipeline. In 2026, we expect to see the early results of that work through our first product launches, and additional customer deployments. Every deployment we execute this year and every customer relationship we advance is building the foundation for scaled commercial activity in 2027 and beyond. Thank you. Operator | Conference Operator: Thank you. This will conclude today's conference. Let me disconnect your lines at this time. Thank you for your participation and have a wonderful day. jsPDF 3.0.3 D:20260608224644-00'00'

NASDAQ:AIRJ Q3 2025 Earnings Call Transcript Generated on 6/8/2026 Operator | Conference Call Operator: Greetings. Welcome to the Aerojoule Technologies third quarter 2025 earnings call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. It is now my pleasure to turn the conference over to your host, Tom Devine, Vice President of Investor Relations and Finance. Thank you. You may begin. Tom Devine | Vice President of Investor Relations and Finance: Thank you, and good morning. With me today for our third quarter earnings call are Matt Dror, Chief Executive Officer, Pat Eilers, Executive Chairman, Brian Barton, Chief Commercialization Officer, and Stephen Pang, Chief Financial Officer. During this call, we'll be referring to a presentation which is available on the webcast platform and on the investor section of our website. I would like to point out that many of the comments made during the prepared remarks and during the Q&A section are forward-looking statements that involve risk and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors and the forward-looking statement sections of our filings with the SEC. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results or developments may differ materially. And now I'll turn it over to Matt Jor. Matt Dror | Chief Executive Officer: Thanks, Tom, and thanks, everyone, for dialing in this morning. Before I turn it over to Pat, who's going to review some of our recent milestones, and Brian, who will discuss our ongoing productization activities and customer engagements, I'd like to talk about some of the powerful macro trends that are fundamentally reshaping global water and energy markets. These converging forces are creating significant demand for the exact solutions that our AirDuel platform technology is designed to deliver. And AirDuel is well positioned to play a meaningful role in this transformation. The explosive growth of artificial intelligence is driving massive data center development across North America and globally. What's becoming increasingly clear and creating urgent challenges for hyperscalers and data center operators is that AI infrastructure has an enormous water and energy footprint. Modern data centers require millions of gallons of water annually for their cooling systems. And as AI workloads intensify, these requirements are escalating dramatically, especially in arid environments. Data centers are facing constraints relating to the availability of water in the quantity and quality that they require. This has some real operational impacts. Additionally, we're seeing mounting concern from some local communities over data center water consumption. In regions already experiencing water stress, data center developers often face having to truck in water at significantly higher expense in order to satisfy water requirements for data center operations and expansion. Some projects even face permitting delays and even outright opposition from local stakeholders. And there's growing recognition across the industry that water security isn't just an operational concern, it's becoming a fundamental constraint on AI infrastructure development. This was reinforced by Air Jewel's selection as a winner of the Net Zero Innovation Hub for Data Centers technology competition which validated AirDuel as a critical solution for sustainable data center operations. We also saw the recent launch of the Water AI Nexus Center of Excellence led in part by Amazon and the Water Center at the University of Pennsylvania that explicitly acknowledges the intersection of AI infrastructure growth and water resource challenges. And beyond data centers, the CHIPS Act and other industrial policy initiatives are incentivizing billions of dollars in domestic manufacturing investment, batteries, semiconductors, advanced electronics. These facilities have two critical requirements, substantial high purity water for manufacturing and precise humidity control for product quality and yield. Traditional approaches rely on municipal water infrastructure and energy intensive dehumidification. AirJewel's platform addresses both requirements simultaneously, dehumidification with high purity water generation, positioning us in a multi-billion dollar opportunity as domestic manufacturing scales. Underlying these trends is the fundamental challenge of water scarcity. Population growth and changing environmental conditions are exacerbating water stress across the United States and globally. The Western U.S., in particular, is facing severe and persistent drought conditions that are constraining development, agriculture, and industrial activity. Water scarcity is not just an environmental issue. It's an economic development constraint. Communities wanting to attract data centers, manufacturing, or residential development face constraints on water availability. Traditional approaches, deeper wells, pipelines, water transport, are expensive. environmentally problematic, and even politically contentious. And the military is increasingly focused on water resilience. Bases in water-stressed regions face operational constraints, and forward-deployed troops require reliable water supplies where traditional logistics are challenging. Our collaborations with the ERDC and across the defense sector for anti-corrosion reflect recognition that Air Jewel addresses critical national security challenges. At the same time, rising electricity costs are driving renewed focus on energy efficiency. Industrial facilities, commercial buildings, and data centers face intense pressure to reduce energy consumption, both for economic reasons and to meet corporate sustainability commitments. Traditional HVAC and water management systems are energy intensive, representing significant operational expenses and environmental footprints. AirJules platform technology is designed to deliver step change improvements in energy efficiency. By leveraging waste heat to produce water from air and utilizing advanced sorption materials for dehumidification, we can reduce energy consumption by up to 50% compared to traditional refrigerant based systems. In an environment where every kilowatt hour matters for both cost and sustainability, This efficiency advantage is increasingly valuable to customers. And lastly, we're benefiting from significant regulatory tailwinds. Governments globally are mandating the phase-out of high global warming potential refrigerants as part of climate mitigation efforts. The American Innovation and Manufacturing Act and similar regulations worldwide are forcing HVAC and indoor air quality companies to fundamentally rethink their technologies. Traditional dehumidifiers, air conditioners, and cooling systems rely heavily on these refrigerants. And these refrigerants are being phased out or face escalating costs and regulatory restrictions. This is creating urgent demand for alternative technologies that can deliver comparable or even superior performance. AirJules sorption-based platform can unlock a refrigerant-free system, positioning us as a solution to this regulatory transition. This is why we partnered with Carrier to integrate AirJewel technology into their next generation HVAC systems. What makes this moment particularly compelling is that these trends are not isolated. They're converging and they're reinforcing each other. AirJewel's platform sits at the intersection of all these pressures, providing solutions that address multiple needs for industrial, commercial, defense, and data center customers. This is why we're seeing accelerating interest from diverse industries, why prestigious partners like GE Vrnova and Carrier are collaborating with us, and why defense organizations are engaging on multiple AirJewel applications. The market is recognizing that AirJewel is a transformational platform for a water and energy constrained world. Now I'd like to turn it over to Pat Eilers to discuss some of our recent milestones towards our path to commercialization. Pat Eilers | Executive Chairman: Thanks, Matt. During the third quarter, we achieved several milestones that represent critical validation of our technology, demonstrate strong market demand across multiple sectors, and are advancing us toward multi-system deployments and commercialization in 2026. Our Hubbard, Texas deployment is operating 24 hours a day, seven days a week across diverse environmental conditions, generating critical performance data. This isn't laboratory testing. It's real world operation with full variability. The data we're collecting is helping us optimize system design, validate our performance in water quality expectations, and demonstrate to customers that our technology works reliably in demanding environments. This track record is increasingly important as we advance commercial discussions with customers who need confidence in consistent and reliable operation. During the quarter, AirJewel was selected as a winner of technology competition sponsored by the Net Zero Innovation Hub for data centers, which is a consortium founded by Google, Microsoft, DataForce, Vertov, Schneider Electric, and Danfoss. These are some of the most influential companies in global data center infrastructure, and this prestigious recognition validates our technology as a critical solution for sustainable data center operations. We look forward to collaborating with these partners on sustainable data center design and showcasing our air jewel system at the innovation hubs test bed facility in Europe this coming year. At the end of October, we delivered an air jewel system to Arizona state university's global center for water technology led by Dr. Paul Westerhoff, This is one of the leading research institutions in the field of atmospheric water harvesting. This collaboration with ASU will generate rigorous independent research data on air jewels performance and potential applications. Dr. Westerhoff also plans to demonstrate our air jewel system for industrial customers and operations in the Southwest United States. We also announced a cooperative research and development agreement known as a CRADA with the United States Army Engineer Research and Development Center to integrate air jewels waste heat to water capability for military applications. The military has rigorous requirements for reliability and performance in extreme environments. The fact that the ERDC has committed to Air Jewel for this program demonstrates confidence that our platform can meet these exacting standards. Beyond the immediate research program, this partnership positions Air Jewel for broader adoption across wider military applications. On our last earnings call, we mentioned a collaboration with the United States defense contractor to evaluate air jewels technology for anti-corrosion applications in high value military storage environments. I'm pleased to say that those discussions have come to fruition and we now have an agreement in place with that defense contractor. Under the agreement, we'll work together to establish a deployment project at a military storage facility and demonstrate how AirJewel provides dehumidification capabilities and substantial cost savings to the American taxpayer. This represents a significant expansion of our opportunities beyond water generation across military applications globally. These milestones provide the operational track record and customer validation needed to advance commercial deployments in 2026. Now I'll turn it over to Brian to discuss our ongoing customer conversations and productization activities. Brian Barton | Chief Commercialization Officer: Thanks, Pat. The milestones and partnerships that Pat and Matt discussed are translating directly into commercial opportunities as companies realize the value we can bring by delivering distilled water and compelling economics. Our water generation system is fundamentally unlike anything else on the market in that it produces clean distilled water with no contaminants. A critical differentiator driving these conversations is water quality. AirDuel delivers distilled quality water with zero dissolved solids, meeting EPA and FDA bottled water standards. Our sorbent-based process natively features three purification steps, and our Hubbard system is consistently demonstrating excellent water quality. This is important because our technology works best for customers lacking reliable sources of clean, pure water, and that's exactly who we're targeting. For many industrial customers in water stressed areas municipal water sources may not be reliable or have the desired quality and trucking water a $50 billion market is often the only viable option. We're actively engaged in discussions with customers to lock in additional deployments in 2026. And the breadth of this commercial pipeline demonstrates how the AirDuel platform can deliver across multiple industry verticals, including data centers, advanced manufacturing, and the military. We look forward to providing more specific guidance on deployment timelines as we are able. Through these customer conversations, a compelling business model has emerged with the introduction of Water Purchase Agreements, or WPAs. Several of our customers are exploring this structure as an alternative to traditional capital equipment purchases. Under a WPA, customers purchase water on a volumetric basis, dollars per gallon, rather than purchasing the capital equipment. AirJewel owns, operates, and maintains the systems, and customers pay for the water delivered. This is directly analogous to a power purchase agreement that has driven massive value in the power sector. For customers, WPAs eliminate upfront capital requirements and align economics with performance. They only pay for water actually delivered. And WPAs can improve project economics by converting capital expenditures to operating expenses. For AirJewel, WPAs create recurring revenue streams and can accelerate customer adoption. We're actively discussing WPA structures with several customers, and we believe this could become a significant component of our commercial strategy. Before I move to our productization efforts, I should mention that we're also making progress in adjacent markets beyond the industrial and commercial applications I've discussed, specifically in the residential dehumidifier market. This is an opportunity that would leverage our sorbent technology for high-volume consumer application in a multi-billion dollar market. We'll have more details to share on that soon. In preparation for these commercial deployments in 2026, we've been making significant progress on scaling our manufacturing readiness and productization of the AirDuel platform. During the third quarter, we celebrated the ribbon cutting of our manufacturing facility in Newark, Delaware, which is designed to support productization, assembly, quality assurance, and performance validation as we transition from demonstrating systems to commercially viable products. We also expanded our testing infrastructure with an additional environmental test chamber, enabling us to validate system performance across a broader range of conditions and accelerate our products development cycles. Productivation is absolutely critical to achieving our commercialization objectives. We have proven technology that works in the field. Our current deployments have demonstrated that. We have strong customer interest across multiple sectors. But to convert that interest into revenue, we must deliver systems that are economical and reliable with minimum maintenance costs. To this end, we are focused on three objectives, increasing our water output, reducing our overall system cost, and ensuring reliability. First, maximizing water output from our chambers. We're focused on optimizing our sorbent chambers to extract as much water as possible from each cycle. This isn't just about incremental gains. Improving water output per chamber directly translates to better economics for our customers and a more competitive positioning for AirDuel. Currently, our sorbent chambers in Hubbard are each producing 100 liters per day at 60% relative humidity. We expect this to increase to 150 liters per day per chamber, and with this 50% improvement, we can expect our 16-chamber A1000 product to deliver more than 2,000 liters of water per day, or around 500 gallons. Second, reducing overall system costs. We have extensive design for manufacturing efforts and supply chain activities underway to identify cost-effective components, optimize our bill of material, and establish relationships with suppliers who can support our volume production. Our goal is to ensure competitive economics for our customers while maintaining the performance and reliability standards they require. Third is our focus on ensuring reliability. Our customers, whether they're data centers, industrial facilities, or military installations need systems that work consistently over extended periods with minimum maintenance costs. We're implementing rigorous quality assurance protocols, stress testing components, and building redundancy into critical systems to ensure that when we deploy these units, they will perform as promised. The productization work we're doing now is directly enabling our 2026 commercialization goals. When we engage with customers about multi-unit deployments, whether it's tens to hundreds of units we're discussing at individual data centers and industrial sites, or defense deployments, they need confidence that we can deliver reliable, cost-effective systems. As we move through Q4 and into 2026, productization will remain a top priority. Every improvement in water output, every dollar we take out of our system, and every enhancement to reliability directly strengthens our competitive position and accelerates our path to commercialization. Now, we'll turn it over to Steven for the financial update. Stephen Pang | Chief Financial Officer: Thank you, Brian. We can turn to slide 11 of the presentation for a review of our financial results for the third quarter. As a reminder, AeroJuice Technologies accounts for its 50% ownership in the JV using the equity method. These numbers in the table are only reflected for Aerojoule technologies. And the results from the joint venture reflected in the loss from investment in Aerojoule JV line, which was $1.9 million for the third quarter. This is slightly lower than a $2.2 million loss in the first quarter and a $2.1 million loss reflected in the second. Aerojoule's net operating expenses during the third quarter were $3.1 million. This is inclusive of approximately $487,000 in administrative and engineering expenses reimbursed to us by the joint venture under our statement of work. Operating expenses were lower in the third quarter, primarily due to professional fees normalizing after our equity-related transactions in the second quarter, along with lower non-cash share-based compensation expense. We also amended our licensing agreement with Pacific Northwest National Lab, and as a result, reversed $475,000 worth of accrued loyalty expenses, which resulted in negative R&D expenses for the third quarter. Our net loss for the quarter is $4 million compared to net income of $2.5 million for the second quarter. And the main driver of this difference is primarily the non-cash losses associated with an increase in the fair value of our earn-out liabilities and subject-vesting shares, which are both non-cash. During the third quarter, Aerogeo Technologies contributed $2.75 million of capital to the JVOG Evernova, which is being used to support the ongoing productization and commercialization activities that Matt and Brian have touched on. Air Jewel Technologies ended the third quarter with approximately $26 million of cash sitting on the balance sheet between the two entities. Subsequent to the quarter end, we also contributed an additional $5 million of capital into the JV. Looking ahead, I'll reaffirm that we have sufficient cash and liquidity to support both our operations and those of the JV. As you've heard on this call, we are focused on products that productizing our AirJuice system, and preparing for multiple customer deployments in 2026. We expect the joint venture's full-year 2025 spend to be at the higher end of the guidance I previously provided on our prior earnings call of around $17 to $18 million. Today, as part of our ongoing capital market strategy and following our recent milestone of being a timely filer for over 12 months as a public company, we have filed a shelf registration statement, which remains subject to SEC review. We view this as a prudent step that gives us flexibility and efficiency in accessing the capital markets when the timing is right. For clarity, the S3 we filed today did not involve the issuance of any new shares. This filing simply ensures we're prepared to be opportunistic and reflects our disciplined approach to maintaining optionality and managing our access to capital. Now I'll pass it back for the Q&A portion of the call. Operator | Conference Call Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Again, that is star 1 to register a question at this time. Our first question is coming from Amit Dayal of HC Wainwright. Please go ahead. Amit Dayal | Analyst at HC Wainwright: Thank you. Good morning, everyone. Thank you for taking my questions. I just want to go over a line from the press release that says data from Hubbard is accelerating commercial adoption. How should we read this statement? Are you implying the potential pipeline or are there some pilots that are taking place? Any clarity on this sentence would be very helpful. Thank you. Brian Barton | Chief Commercialization Officer: Thanks, Ahmed. I'll take the question. Yeah, so the system in Alberta is generating immense amounts of data. And through that data and through our partnerships with customers, it's been a real catalyst to see systems operating in the field and performing very well, making clean water. At the same time in Texas, right, there are a number of hyperscalers that are looking to build operations in Texas. And so when we talk about a lot of the data center interest and then overlaid with the fact that they're building those data centers in the broader, you know, Texas area, it's been great for us to have that system on the ground performing well. And to date, many hyperscalers have come through and have seen that system operating. Amit Dayal | Analyst at HC Wainwright: Understood. Okay. Thank you for that. And then, you know, in the last earnings call, you had sort of talked about exploring product integration opportunities with GE Verona. How is that going? Any progress on that front? Any color on how we should see maybe that contributing to any commercialization efforts in 2026? Brian Barton | Chief Commercialization Officer: Yeah, thanks. So, just as a reminder, our previous announced collaboration with GE for NOVA is to really focus on the waste heat from gas turbines and integration of that waste heat into AirJules products, and so that we can deploy at sites that have perhaps behind-the-meter power gen or just in general the power generation capabilities of GE Vernova and then connecting to that waste heat. And so that project is in full swing. It's still in the, I would say, forming and paper exercise and really understanding how to integrate AirDuel, right? The next step would be actually integrating AirDuel. So we can look forward to seeing the progress on like a demonstration type of system. But really the first part is, educating our customers that have these assets these these gas turbines that are generating immense amounts of heat uh how to integrate those that waste heat directly into air jewel and so you know we can expect that this this initiative with with ge uh may first find life in in the field um through an actual project understood okay thank you and then um Amit Dayal | Analyst at HC Wainwright: You know, the R&D spend was pretty low in 3Q. I mean, if I'm reading it correctly, it was around 8,000 and change. Any reason for such a low spend, you know, as you get closer to commercialization? Should we think about it in a way where most of that R&D stuff is now out of the way and, you know, you're focusing more on the commercialization part of it? Like, just trying to understand why the R&D is, you know, at these levels. Stephen Pang | Chief Financial Officer: Yeah, I'll take that. As I mentioned, most of the R&D spend now is being born at the joint venture level. So if you take a look at the earnings slide, which is the supplement to our results, you'll see that spend be pretty consistent with what we've heard in prior quarters. And then the R&D spend directly as it relates to the AirJewel Technologies corporate balance sheet, that's reflective of reversal in the maintenance royalty expenses that we've been accruing that were previously being borne to Pacific Northwest National Labs and through a restructuring of that agreement, we were able to reverse the maintenance charges. So this quarter reflects that adjustment. But like I said, the R&D at the JV level remains pretty consistent with prior quarters and we would expect that to continue going forward. Amit Dayal | Analyst at HC Wainwright: Okay, thank you. I missed that. Appreciate it. Just last one, guys. What's the runway for the air geology? I know you put in sort of two and a half million in 3Q. How long will that sustain and what are your needs on that front going forward? Stephen Pang | Chief Financial Officer: Yeah, so as I also mentioned in our prepared remarks, we do expect the JV spend for the full year to come in at the higher end of the previously provided range of around $17 to $18 million. This year, that spend also was inclusive of a previously agreed upon statement of work we had with GE Vernova. We are evaluating kind of what that spend will look like for 2026. But I would expect that specific signal to work to likely come in lower from an aggregate spend standpoint for next year. On a go-forward basis, I'll also reiterate that our cash currently is sufficient to support both the corporate expenses as well as the JV spend through commercialization into 2026. Amit Dayal | Analyst at HC Wainwright: Understood. Thank you, guys. That's all I have. Operator | Conference Call Operator: Thank you. The next question is coming from Jake Sikeski of Alliance Global Partners. Please go ahead. Jake Sikeski | Analyst at Alliance Global Partners: Hey, guys. Thanks for taking the questions. So just starting with the water purchase agreement model, it looks like an interesting avenue for commercialization. Can you just comment on maybe the types of customers that are showing interest here? And would these be AirJewel-owned and operated systems under this model? Brian Barton | Chief Commercialization Officer: Thanks, Jake. Yeah, that's accurate. Airtel would own and operate these systems, and the customer interest that we're getting is... I'll comment on two respects. One, these are customers that need clean water at an operations site and they don't have access to cheap and abundant municipal water or groundwater. So they're somehow limited on the access to water or the water that they can get is not of the right quality that they need for their operations. So that's really where we're seeing a fair bit of traction. And in those conversations, You know, it typically goes like they really like what we're capable of delivering. They see the value and they want the air dual solution. But we're still early days in terms of deploying and demonstrating especially large amounts of water. And so, you know, to build the confidence that we can deliver the economics overall and have, you know, bankable projects, Airduel will own and operate these assets and simply sell the water that's produced at a set dollar per gallon. Pat Eilers | Executive Chairman: Yeah, I may just add, if you don't mind, Jake, this is Pat Eilers. Real quickly, I would just add that despite us putting up the CapEx for these projects, we're not raising capital at our cost of capital. It's a long-term offtake. We can look through to the investment grade status of the offtake customers that are looking at these WPAs. So it's very accretive. Matt Dror | Chief Executive Officer: Yeah, and I was just going to add, this is Matt, Jake. I was just going to add to what Pat and Brian said is that I love the idea of an asset that you can make money on over a 15-year period. You know, it just makes perfect sense to me. So that's another exciting proposition, especially, as Brian said, as we're in total control of the operation and the data that comes out of these things. So that's another facet. Thanks for the question. That's helpful. Operator | Conference Call Operator: Thank you. The next question is coming from Ryan Fink of B Reilly Securities. Please go ahead. Ryan Fink | Analyst at B. Riley Securities: Hey, good morning, guys. Thanks for taking my questions. Brian, you talked about water quality in the prepared remarks. How important is that water purity advantage when you're having commercial discussions with data centers and industrial customers? And can you talk about AirJuul's differentiation a little bit compared to other atmospheric water generation approaches? Brian Barton | Chief Commercialization Officer: Yeah, thanks, Ryan. So I'll take the first part first, and that is the water quality really depends on exactly who we're talking to, be it a food and beverage customer or an industrial customer or a data center operator. Data centers actually have many different needs for water across their operation. We most often think about evaporative cooling, but if the data center puts a power generating asset on the site, they may also need what's called demineralized water, which is distilled water. So it has zero TDS water for use in, for example, a gas turbine. And so there are actually a variety of needs for clean water and distilled water depending on, you know, the industry or the use of the water. So we're really well positioned to address, you know, water for a purpose and having clean water depending on who we're talking to. So that's the first part. And then, I'm sorry, remind me of the second part. Ryan Fink | Analyst at B. Riley Securities: Just the differentiation of Deerjewel compared to other approaches. Brian Barton | Chief Commercialization Officer: Yeah, thanks. So I think actually this comes down to two main points. One is overall economics and reliability. Conventional atmospheric water generators work well in humid climates. But it's only humid for, depending on location, half the day. So we're really starting to think about this more in terms of seasonal efficiencies. You could deploy a conventional system in Miami and it may work well. But even in Miami, it's not. you know, very humid in the peak midday sun. And so we, you know, it's really around seasonal efficiencies and operational costs for the entire duration of the year. So as we think about, you know, actual dollars per gallon, right, delivered from the asset, the asset's going to sit on the ground every month 24-7 and operate. And so really what we have to do to calculate levelized cost of water is think about the asset cost and how much water is generated for the entire length of the year. And so this is where AirDuel really shines because we can make water economically down to 30% relative humidity or so. And so now we have the full gamut of environmental conditions mostly accessible to us. And the other point that I stress on the call is really on our ability to generate clean water. When you condense water from the air, you often pick up other things, and there could be biological concerns. So you have to clean that water up quite a lot in order to get very good biological counts and very good contamination counts. And because Airduel kind of selectively pulls water vapor out of the air, and then we have a vacuum distillation process, the water that we make is natively very clean. Matt Dror | Chief Executive Officer: Yeah, hey, Brian, this is Matt. Ryan, I'm glad Brian said that. He's a PhD in chemistry, so I'm glad that he mentioned that last part because this whole system is completely unique in that, just as Brian said, it pulls water vapor out selectively, and only water vapor comes out and is condensed inside our condenser. If you think about what Brian talked about with the DX systems that are out there, other atmospheric water generators, they do just what conventional air conditioning systems. They condense on the outside of an evaporator. So all that stuff that's in the air goes right along with the water. So that's why we have this really unique advantage. So Brian, thanks for adding that second part. Ryan Fink | Analyst at B. Riley Securities: Yeah, and I appreciate all that detail, guys. And then secondly, just curious, how much of the validation work you're doing with ASU and Dr. Westerhoff helped uh your commercial discussions and does that project also help anything uh regarding regulatory approvals Brian Barton | Chief Commercialization Officer: Yeah, I would say first and foremost, the effort with Paul is independent validation, not just on how much water is generated per day or how much energy the system consumes, but also on the water quality side. So we'll have Paul's full academic and professional evaluation of those components. And at the same time, he is kind of the center spoke of a large network of of folks interested and industries interested in atmospheric water harvesting and when it makes sense and how it makes sense, right? So there's really, I think, a mature perspective on when these types of deployments make sense. And Paul is involved in those conversations with interested industries. And so he also serves as kind of an industrial advisor I think, a collaborator of sorts when people will come to him and ask, you know, how does the system work, and he's a key voice in that conversation. So those are the primary things. On the regulation side or certification side, not really involved. We're heavily pursuing this internally. We have to have, you know, certifications of the actual product from multiple perspectives and regulatory bodies. And then for individual deployments, like, for example, the one in Texas, the Texas TCEQ has to go through those validations at a particular location and then be vetted and approved as a public water, a portable water provider. So it's kind of location dependent in that respect. Matt Dror | Chief Executive Officer: Hey, Ryan, one thing that was stunning to me that Paul taught us is that In the greater Phoenix area, they consume about 1.2 billion gallons of water a day out of their aquifer and another billion off of groundwater, surface water. And yet every day, 25 billion gallons influxes into the greater Phoenix area in the air. That's how much water is in the atmosphere. That's something that I was stunned to hear Paul talk about. That's one of the reasons, I suppose, they're looking to the air for the water solution. Brian Barton | Chief Commercialization Officer: Yeah, it's actually quite obvious in the Phoenix area with the Palo Verde nuclear plant that's putting just an ungodly amount of water into the atmosphere. So you really see it. Ryan Fink | Analyst at B. Riley Securities: Yeah. Great. Appreciate all that detail, guys. I'll turn it back. Thanks, Ryan. Thanks, Ryan. Operator | Conference Call Operator: Thank you. The next question is coming from Sean Milligan of Needham & Company. Please go ahead. Sean Milligan | Analyst at Needham & Company: Hey, good morning, guys. I just want to go back to the WPA model. I mean, you gave some color earlier, but it seems like that would be a great model for you to pursue from a higher return perspective, but also from the customer in terms of like you're taking on the risk. I mean, can you frame up like how many discussions you're having there, you know, in terms of order of magnitude in your total pipeline? Like percentages, you know, is it 25%, 50%? Like what are the rate of discussions you're having on the WPA model? Matt Dror | Chief Executive Officer: It's an offer that we're making. Sorry, Brian. It's an offer we're making out across the board, Sean. Brian is going to be happy to talk about specifics here in the coming periods, but Brian, go ahead. Brian Barton | Chief Commercialization Officer: Yeah, Sean, I would just say that, you know, in our conversations over many months, the often goes to, you know, the risks of deployment and, you know, the assured guarantees, and so the WPA model kind of emerged and then we started outreach back to all interested customers. It's in the many dozens that we've discussed with and most of the conversations are going very well. There's a lot of positive reception on this business model for launching technology with us taking on the risk and just delivering against the water it needs. in, you know, final conversations or I would say approaching, you know, the final conversations with what we will take on in 26 and 27 and stay tuned for kind of that conversation. Matt Dror | Chief Executive Officer: Yeah, I'll add to that. Sean, I'll add to that. The thing that we learned in, well, we're learning across the board, but in the New Orleans conference last year talking about data centers, where are we going to get all the power from? It's one of the reasons why power purchase agreements are so compelling. We realize now it's the same thing with water. Where are you going to get all the water to do all these new developments? And so these WPAs are really emulating the PPAs that you're familiar with. Sean Milligan | Analyst at Needham & Company: Yeah, like who are you, I mean, what are you pricing against in the WPA model? like other water suppliers and then just kind of like how your pricing maybe fits against that. Yeah, great. Go, go Brian. Brian Barton | Chief Commercialization Officer: yeah so it's really kind of unique in in the situation where a customer needs you know distilled water um and and they they don't have access right so municipal water is typically you know is quite quite affordable if it's available and so you know we're specifically talking to folks that may have to truck in water and and trucking in water can can be pretty expensive. It can be $0.50 to $0.75 per gallon. And so that's really the main comparison if you want to deliver clean, pure water and certainly cheaper than the cost of trucking in at those price points. Really, as we take these WPA conversations forward, we're really in the position, I think, unique position that we can only take on so much, right? Like there's a real strategy and logic to, okay, what can we actually deliver against in 2026 for customers that really need this technology and are gonna grow the pipeline and the demand signals um you know out into the future so while we have many conversations ongoing we're going to be fortunate enough to to be selective on who and where and how we deploy the initial wpas that's great color and then one last question on the uh net zero innovation project um congrats on that but i was curious in terms of you know the timing of that and then just sort of uh Sean Milligan | Analyst at Needham & Company: Is it a single unit or what's the scope of that project and the timing in terms of, like, when that starts, how long that runs for, and maybe what, like, expected outcomes for you all could be off of that project? Because it sounds like it's a chance to kind of highlight the benefit for this to data centers. You're also doing that concurrently via other discussions. So just kind of curious about, like, you know, how important that project could be in the future for you all. Brian Barton | Chief Commercialization Officer: Yeah, thanks, Sean. It's actually, you know, I think a really exciting thing to be recognized as a winner for this Net Zero Innovation Hub. You know, this kind of consortium or hub, right, is founded from Google, Microsoft, DataForce, Vertiv, Schneider, and Danfoss. And so there's amazing visibility to these key players in the industry, to the AirDuel technology. The project itself is... a kind of a test bed center data center that will be in the Denmark area. And AirDuel will deploy into that data center and really showcase how does it take waste heat from data centers in a circular way, reuse that waste heat and create clean distilled water for the data center or other operations locally. We view it as just a great catalyst for the conversation around circularity with these key data center partners, as well as a catalyst for real operational projects globally. Operator | Conference Call Operator: Thank you. Once again, ladies and gentlemen, if you do have a question, please press star 1 on your telephone keypad. The next question is coming from George Giannourakis of CounterCourt Genuity. Please go ahead. George Giannourakis | Analyst at CounterCourt Genuity: Hi. Thank you so much for squeezing me in. I appreciate it. So first question is looking at 2026, can you help us understand the sequencing? Will you see A250 dehumidification deployments first and then A1000, or will they launch simultaneously? Thank you. Brian Barton | Chief Commercialization Officer: Yeah, thanks, George. You will likely see the A250 product launch before A1000, simply out of the simplicity of a two-chamber system versus a 16-chamber system. Our engineering activities have started, so we're full swing in the design and build of A1000, but A250 is simply is ahead of the race because it started earlier. So we'll see that one go into the marketplace. And as a reminder, it as a dehumidifier is the same machine as it as an atmospheric water generator. and really it's the process of how it runs that distinguishes whether or not it's a dehumidifier or a water generator or both. In some cases, customers want to dehumidify spaces and also generate clean distilled water. So we'll see that one likely lead the pack by potentially a few months. George Giannourakis | Analyst at CounterCourt Genuity: Thank you. You've also talked about 2026 as an inflection point for commercialization. Could you possibly define what success looks like by the end of next year? Brian Barton | Chief Commercialization Officer: Thanks. Yeah, thanks, George. You know, for me, our key focus is firming the demand signals for where Airtel will be successful and how it will be successful. So generating that, affirming that pipeline for deployments and units, either through the WPA or units sold. And then, you know, the product that can deliver the compelling economics is the second key milestone for those deployments. And so really this is quite simple in that we are, you know, in those conversations to firm the demand, and then you will see and track the launch of the product and how it's capable of delivering the overall dollars per gallon or dollars per decommodified air or the savings for those customer opportunities. So those are the key things to look for and we'll be referring against. Operator | Conference Call Operator: Thank you. At this time, I'd like to turn the floor back over to Mr. Jor for closing comments. Matt Dror | Chief Executive Officer: Thank you, everybody, for joining us today. The message I hope you take away from this call is straightforward. We're capitalizing on powerful, converging macro trends that are creating significant demand for AirJuul solutions. We're systematically building the foundation for commercialization, validating our technology through real-world deployments, earning recognition from industry leaders, establishing critical defense partners, building a robust commercial pipeline, and advancing productization to deliver cost-effective and reliable systems. The progress we've made this quarter moves us meaningfully closer to our 2026 deployment goals. We have the technology, the partnerships, the manufacturing capabilities, and increasingly the customer demand to establish AirJewel as the leader in industrial-scale water from air. We're executing our strategy with discipline and focus, and we look forward to updating you on our continued progress in the quarters ahead. Operator | Conference Call Operator: Ladies and gentlemen, thank you for your participation and interest in Airdrill Technologies. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day. jsPDF 3.0.3 D:20260608224854-00'00'

NASDAQ:AIRJ Q2 2025 Earnings Call Transcript Generated on 6/9/2026 Operator | Conference Moderator: Greetings and welcome to the Airdrill Technologies second quarter 2025 earnings call. At this time, all participants are in listen-only mode. A question and answer session will follow a formal presentation. If anyone would require operator assistance, please press star zero on your telephone keypad. Please note this conference is being recorded. It's now my pleasure to turn the conference over to your host, Tom Devine, Vice President, Investor Relations and Finance. Thank you. You may begin. Tom Devine | Vice President, Investor Relations and Finance: Thank you and good morning. With me today for our second quarter earnings call are Matt Jor, Chief Executive Officer, Pat Eilers, Executive Chairman, Brian Barton, Chief Commercialization Officer, and Steven Peng, Chief Financial Officer. During this call, we'll be referring to a presentation which is available on the webcast platform and on the investor section of our website. I would like to point out that many of the comments made during the prepared remarks and during the Q&A section are forward-looking statements that involve risk and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors and the forward-looking statement sections of our filings with the SEC. Although we believe the expectations expressed are based on reasonable assumptions, they are not guarantees of future performance, and actual results or developments may differ materially. And now I'll turn it over to Matt Jor. Matt Jor | Chief Executive Officer: Thanks, Tom, and thanks everybody for joining us today. We're excited to share this morning that AirJewel has now progressed from proving and improving our AirJewel technology to building products and commercialization channels with our global partners. Since going public over a year ago, we've advanced our platform technologies, expanded our partnerships, and set a clear path to market. We're more convicted than ever that our products will enable a sustainable and resilient future for water and energy. That's why I'm eager to reiterate our purpose and vision with you today. Our purpose is clear, freeing the world of its water and energy constraints by delivering groundbreaking sorption technologies. This mission reflects our unwavering commitment to solving two of humanity's most pressing challenges, access to clean water and the increasing energy demand for air conditioning through the transformative power of our platform technologies. It's a bold statement, but it embodies what we've been building since day one. And our vision is equally inspiring and paints the picture of where we're headed, to be the leading technology platform that unleashes the power of water from air. We see a future where communities, industries, and nations can access this abundant resource available in the air all around them. Our platform approach means we aren't just delivering products. We're deploying an ecosystem of solutions, a platform that fundamentally redefines how the world thinks about water and power. This is the path we're on, and it's the future we're building every day. Now let's turn to some of our recent developments that occurred in the second quarter and over the summer. Pat's going to provide an update on our strategic collaborations and projects before I go into some updates on our product and operations. Pat? Pat Eilers | Executive Chairman: Yeah, thanks, Matt. Over the last couple of months, we've announced six new strategic collaborations that are helping us accelerate the commercialization of our AirJewel technology. In June, we announced an MOU with the developer of an AI hyperscale data center to advance the integration of AirJewel's waste heat to water technology for data center applications. We've talked at length in the past about how attractive the data center market is for us. Data centers use millions of gallons of water per day in their cooling systems, which poses a massive risk for data center operations in water stress regions. Recently, Sam Altman of OpenAI said that the future data centers, which could go beyond 10 gigawatts of power each, will require new technologies and new construction techniques. Our technologies are needed to improve water usage effectiveness, known as WUE, reduce reliance on municipal supplies, and build greater site independence. AirJewel is well positioned to be one of those technologies. Another recent announcement is our air-to-water project with the City of Hubbard, Texas. This will demonstrate our ability to use free waste heat to generate water. In the city of Hubbard, which is located in central Texas between Waco and Dallas, their water supply comes out of a well at a temperature of around 140 degrees Fahrenheit. The water then has to be cooled with an evaporative chiller before it can be treated for human consumption. In this project, we'll be putting an AirJewel A250 right at the well to capture the geothermal heat and use it to produce distilled water from air. This project will demonstrate the ability to use waste heat of any kind from sources such as industrial operations or power generation to produce water from air at scale. This project includes working alongside the CINDY engineers to pursue regulatory certification demonstrating that the water produced meets potability standards. This will enable AirJewel to support high volume municipal and industrial customers with onsite water production. We're grateful to be working with Mayor Alderman and Chief Patrick on this project for the benefit of the Hubbard community. Another intriguing collaboration we're exploring is with a company that provides anti-corrosion solutions to the US military. Imagine a storage depot full of sensitive hardware and electronics equipment. If this Expensive and specialized equipment is not stored at precise humidity levels. The moisture in the air can cause corrosion and render it useless. This is an expensive problem, costing the Department of Defense on average more than $20 billion a year on corrosion-related maintenance. Most facilities providing corrosion-resistant solutions rely on conventional technology to dehumidify the air, primarily desiccant wheels. Dexacent wheels require a lot of energy and are very expensive to operate. AirJuul's market-leading efficiency at removing moisture from air could significantly reduce operating expenses for customers, and in the case of the military, the taxpayer. Also during the second quarter, we announced a strategic project with GE Vernova to explore integrating our waste heat to water application into GE Vernova's product offerings. We see massive potential in pairing AirJewel water generators with gas turbines or reciprocating engines and utilize their waste heat to produce distilled water. Our AirJewel system operating in Dubai is continuing to effectively showcase AirJewel's technology and performance to potential customers in the Middle East. One of our board of directors, Dr. Marwa Zatari, recently visited Dubai and had the opportunity to see the system in action, as you can see on slide six of our presentation. The Middle East is an important market for us, especially given the water scarcity in the region and significant growth of high tech and water intensive industries. And recent expedition in Dubai included a model showing the farm of the future was specifically mentioned atmospheric water generation as an innovative approach to address water scarcity challenges. We're also looking forward to deploying systems in the U.S. In June, we announced an agreement to sell an air jewel system to the Arizona State University, one of the world's foremost research institutions in the field of atmospheric water harvesting. Once we deliver this system in the fall, The team at ASU intends to provide independent scientific validation of AirJuul's performance and engage with regional customers. Lastly, in June, we added two new directors who both bring incredible experience to the board, Denise Sterling and Thomas Murphy. Denise most recently served as Chief Financial Officer at Core Scientific, a publicly traded data center developer and operator. and she has many years of public company finance and accounting experience. Tom Murphy spent most of his career as a partner at the accounting firm Crow where he led the SEC commercial audit practice. Tom has also been appointed as our chair of our audit committee, a role for which he is perfectly suited given his background as an auditor. Both Denise and Tom attended their first board meeting in late July in Delaware and we were thrilled with our contributions right out of the gate. Okay, back over to you, Matt, for the rest of the quarterly updates. Matt Jor | Chief Executive Officer: Thanks, Pat. Moving on to slide seven, we've talked on prior earnings calls about our A1000 water generator, which is the foundation for our modular water generation platform for industrial-scale water users. Now we've introduced our A250 product, which is uniquely suited for that industrial dehumidification application that Pat referenced. Brian will go into more detail about this product line later. I'm excited to be announcing this because it demonstrates that AirJewel is not one product for one application. It's really a technology platform that supports differentiated products across water generation, dehumidification, and air conditioning. Using groundbreaking sorption technologies in our AirJewel systems, we can deliver more efficient and more economical solutions to customers across diverse markets. by unleashing the power of water from air. On the operations side, we've expanded our footprint in Newark to accommodate much larger environmental testing chambers. We've also continued to build our proprietary coating lines where we produce our sorbent coated contactors. And we've optimized the facility for manufacture and assembly of the air dual systems. That entire team, including our remarkable board of directors, was in Newark in late July for board meetings an official, even though we've been there a year, ribbon-cutting ceremony for the facility. It was a great event with several elected officials in attendance, along with representatives from our commercialization partners, GE Vernova and Carrier, as well as our UAE partner, 10X. We were eager to show off what Brian and the team have been doing in Newark, and we're just thrilled with how that facility and team have come together over the past year. On the financial front, which Stephen will cover later in more detail, We completed a $15 million private placement anchored by our partner GE Vrnova. This transaction closed in April, and it also brought several new institutional investors into our shareholder base. At the end of the quarter, we had $30.5 million of cash on the balance sheet and zero debt, by the way, providing us the runway to support our commercialization efforts. Now I'll turn it over to Brian to give you an update on our product and commercialization roadmap. Hey, Brian. Brian Barton | Chief Commercialization Officer: Thanks, Matt. Turning to slide eight, we've laid out how we're thinking about an air dual as a technology platform. The core technology, which consists of our advanced sorbents, vacuum chamber design, and process for separating moisture from air, provides the foundation for different products and applications. For example, in the middle of the page, we have our A1000 water generator. This will be our primary commercial product for modular, large-scale water generation aimed at industrial operations. In order to develop that product for our 2026 launch, we've been building and operating smaller systems this year, such as our A250 system. This allows us to optimize components and validate design requirements as we go. We've also been building out and are preparing to deploy several A250 systems. In talking to customers, we realized that there's a market for these smaller A250 systems, specifically for industrial dehumidification. We can deliver this product at our current performance specifications and reduce energy consumption by up to 80% compared to the incumbent systems. So rather than just serving as an engineering stepping stone to get us to the A1000, the A250 will be a product launched in 2026. So far in 2025, we've been successful in optimizing the system to achieve market-leading performance. Now, during the second half of the year, we're working on productizing and delivering pre-production systems to our customers. As we focus on the products to come, it's useful to remind everyone that the core of our technology platform is the Sorbent Chamber. To take this core component across the finish line, we've been working with our supply chain partners, like BASF, to provide the Sorbent at scale, and are otherwise working on scaling and designing for manufacturing the Chamber system. We anticipate that our initial products will all leverage the same sorbent chamber design. In this way, an A1000 system is simply a scaled up version of A250 with more sorbent chambers. This engineering decision enables our team to focus on optimizing the performance, quality, and cost of this core component. As we scale this sorbent chamber into the marketplace and continue to make improvements, all of our products will keep improving. And the real winner in this is our customers, who will see the levelized cost of water and the levelized cost of separating water from air continuing to decrease. On the right side of the page is another example of a future differentiated product that utilizes the AirDuel platform. Integrating AirDuel into Carrier's next-gen air conditioning system is a longer-term goal for us, but it will benefit from the engineering and productization that we are doing this year with the A250 and the A1000. Moving to slide nine, you can see how vastly superior the A250's performance is compared to the incumbent technology, which is a traditional desiccant wheel dehumidifier. This is the workhorse of the industrial dehumidification market, but it's an energy hawk. It requires over two kilowatt hours to remove one liter of water from the air. The A250 system is expected to use only 0.4 kilowatt hours per liter. That's an 80% reduction in energy, which translates directly into massive OPEX savings of up to $10,000 per year per unit, delivering a significantly lower cost of ownership to the customer. This industrial dehumidification market is relatively modest in size. We estimate around $3 billion in annual sales. But we expect that by delivering a superior product with this magnitude of cost savings, we'll be able to compete and attract meaningful market share. And we'll be able to leverage the lessons learned from this product offering as we continue to launch our A1000 water generator. When we talk about utilizing low-grade waste heat to produce distilled water at scale, we're talking about the A1000. In the images on slide 10, we've shown a modular configuration that can scale to meet the needs of even the largest water consumers like data centers and other industrial operators. The water requirements for data centers are enormous. A 100-megawatt data center could utilize 1,000 air-dual A1000 systems to supply it with all of the water it needs. With the rapid growth of data center development projected to grow by as much as 30 gigawatts by 2030, this is a huge market for us. We've talked in the past about tapping into waste heat that's handled by cooling systems, but we're also excited to be exploring the vast amounts of waste heat from power generators, like gas turbines and resit engines. Many new data center builds are now procuring these gen sets on their campuses for prime power, AKA their base load. And they emit tremendous amounts of waste heat that's relatively straightforward to capture. As Pat mentioned, We've already announced an MOU with the developer of a hyperscale data center, and we're working with them to integrate AirJewel into their data center designs to improve water and energy efficiency and site resilience. So as you can see, we're making significant progress when it comes to the AirJewel products, and we remain on track for commercialization in 2026. Now let me turn it over to Stephen for the financial update. Steven Peng | Chief Financial Officer: Thank you, Brian. We can turn to slide 11 of the presentation to see our financial results for the second quarter. As a reminder, Aerojewel Technologies accounts for 50% ownership in the joint venture using the equity method. These numbers in the table are only for Aerojewel Technologies. The results of the joint venture are reflected in the loss from investment in Aerojewel JV line, which is $2.1 million for the second quarter, which is in line with the $2.2 million loss that was incurred in the first. Aerojewel's net operating expenses during the second quarter was $4.2 million, This is inclusive of the approximately $545,000 in administrative and engineering expenses reimbursed to us by the joint venture under our statement of work. Operating expenses were higher in the second quarter, primarily due to increased professional fees incurred as a result of our equity-related transactions, along with increased non-cash share-based compensation expense. Our net income for the quarter is $2.5 million compared to $14.9 million for the first quarter. The main driver of this difference is primarily the non-cash gains associated with the change in the fair value over earn-out liabilities and subject vesting shares, which are non-cash in nature. During the quarter, the joint venture received a capital contribution of $5 million from GE Vernova. The $5 million contributed matched the $5 million that we had contributed to the joint venture in the first quarter. The $5 million was also structured as an equity investment in Airdrieu Technologies to mirror the initial $5 million investment in March 2024 as part of the $15 million pipe that we completed in April. Alongside GE Verinova's investment, we raised an incremental $10 million from existing investors and new institutional investors as well. We ended the second quarter with approximately $31 million of cash sitting on the balance sheet of the two entities. Looking ahead, I'll reaffirm that we have sufficient cash and liquidity to support both our operations and those of the venture to commercialize the technology. With respect to the JV budget, we had guided last quarter that we anticipated this would come in slightly higher than the original budget, and we now anticipate this to be 2 to 3 million higher than our original guidance of 13 to 15 million, which is driven largely by the acceleration of the productization and field deployments of our pre-production systems. However, the additional cash that we raised through the pipe is more than sufficient to absorb the increased spend, and we remain fully funded to support our commercialization efforts through the rest of this year and into 2026. I'll pass this back to the Q&A portion of the call. Operator | Conference Moderator: Thank you. And I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. One moment, please, while we poll for questions. And once again, that star 1 is to be placed in the question queue. Our first question is coming from Julia Mitchell from Barclays. Your line is now live. Julia Mitchell | Analyst, Barclays: Hi, good morning. Maybe you mentioned it a little bit in the prepared remarks, but maybe flesh out a bit more that opportunity of pairing air joule with the gas turbines and reciprocal engines, please. Brian Barton | Chief Commercialization Officer: Hey, Julian. This is Brian. Yeah, the idea in pairing air joule with receipts or gas turbines is really around combined heat and power plus water with air joule. Most RECIP engines operate at 35% efficiency, and combined cycle gas turbines can be in the 60% efficiency. What that means is that there's a lot of megawatts available as heat that can be recaptured that's effectively just dumped into the atmosphere. And so air dual plus utilization of this waste heat is really what we're excited about in terms of offering customers, through partnerships and collaborations, you know, Julia Mitchell | Analyst, Barclays: water and power that's helpful thank you and then the waste heat to water demo effort um you know maybe helps understand the choice of location understanding sort of potential partners in the area or you know local tax incentives and so on um any more color you could give on that well first you know just a reminder that we have this strategic project with gu vernova to incorporate air dual products into into their product line Brian Barton | Chief Commercialization Officer: And that's all about waste heat reuse for gas turbines. And more specifically, the recent project with the city of Hubbard, you know, Hubbard is a very unique situation where the sourcing of their drinking water comes from a well that is very high temperature, above 140 degrees Fahrenheit. And the city has to do a lot of work to treat that water before being delivered to the community. And so in this case, you know, Air Jewel, is tapping into that geothermal heat. So we're just going to pull heat off of that well line and then use that heat to separately drive the air-jewel system to create water and going through that with one of the first examples of using waste heat in this setting. Julia Mitchell | Analyst, Barclays: Great. Thank you. Operator | Conference Moderator: Yep. Thank you. Next question today is coming from Jake Zichelski from Alliance Resource Partners. Your line is now live. Jake Zichelski | Analyst, Alliance Resource Partners: Hi, guys. Thanks for taking my questions. Hey, Jake. Just starting with the MOU with the hyperscaler that you mentioned, Are you able to provide any additional color here? I mean, I realize the ink is still drying. I'm just trying to get a handle on what you feel like you might be in as far as moving towards something definitive down the road. Matt Jor | Chief Executive Officer: Hey, Pat? Pat Eilers | Executive Chairman: Yeah, no, I can take that for sure. Thanks for the question. I think everything that we announce, including this one, are opportunities that we think are near term in, you know, ideally less than a year to capitalize on the opportunities we have, including this one. So I think the ability to use waste heat, which we've already demonstrated, works. And as you're probably familiar, you know, converting electricity into compute throws off massive heat. That heat is usually either cooled or evacuated into the atmosphere and it just so happens to be an input for us to be able to, you know, grab atmospheric water that can then be used for data center cooling needs. So we're very excited about the opportunity on that front. Okay, that's helpful. Jake Zichelski | Analyst, Alliance Resource Partners: And then just maybe can you touch on how you're managing some of the noise around tariffs and how that might be impacting equipment sourcing as you head toward commercialization next year? Matt Jor | Chief Executive Officer: Yeah, Jake, it's a good question. I guess the entire country is watching for tariffs. The good news for us is we are in that stage where we've got the flexibility to source components from suppliers. We're evaluating a number of suppliers' for each different component. We already, Brian already mentioned BASF with the sorbent materials. We've also got other vendors for those sorbent materials that are domestic as well. So we're keeping an eye on it. The good news is we haven't set pricing and vendor, embedded vendors at the moment. As we go into 2026, that'll be top of mind. Jake Zichelski | Analyst, Alliance Resource Partners: Got it. Okay. That's all for me. Thanks again. Thanks, Jake. Operator | Conference Moderator: Thank you. Next question is coming in from Amit Dayal from HCV. Your line is now live. Amit Dayal | Analyst, HCV: Thank you. Good morning, guys. Congrats on all the progress. This smaller A250 offering, you know, it looks, you know, it sounds good that you are, you know, being a bit more aggressive in terms of bringing products to market. But is the key leading value proposition just around energy savings with this offering? Brian Barton | Chief Commercialization Officer: Hi, Ahmed. Thanks for the question. Primarily, it's energy savings for dehumidification. Yes, 100%. It provides the A250 as a dehumidifier. Currently operating in our research floor here is performing equivalently in terms of the humidity decrease and the actual work done, but at a tremendous energy savings. And so that's really an immediate opportunity And, you know, as iterated in the prepared remarks, you know, it's basically a miniaturized version of A1000. It's all the same shared components. So it's really, you know, a great finding for us that this product is going to be able to service the dehumidification market and provide a tremendous amount of energy savings. Amit Dayal | Analyst, HCV: Understood. Can you give me any examples, guys, of – you know, what kind of settings this would be ideal for and who you are going after in terms of customers, you know, for this product? Brian Barton | Chief Commercialization Officer: Yeah, let me just expand on that a little bit. So the dehumidification market with desiccant wheels is quite diverse. Desiccant wheels find themselves in battery manufacturing and pharmaceuticals, you know, and other very sensitive applications. They also are used prevalently as mentioned in the prepared remarks, in storage, storing high-value assets that could be subject to corrosion. So these can be primarily metal components, but also electronics. And so when we think about taking this dehumidifier to market, the easiest market for us to go after initially is this type of storage environment. followed by some industrial applications that are going to be, you know, kind of the next market for us to go after with respect to the performance and the controls. So hopefully that provides some additional color. Amit Dayal | Analyst, HCV: Well, that's very helpful. Thank you. It just helps to understand, you know, who you may be pursuing from a customer perspective. Matt Jor | Chief Executive Officer: One thing I might add, sorry to interrupt, but one thing I might add, Brian, is the volumes are pretty substantial. for these units. Amit Dayal | Analyst, HCV: Yeah. So, so, so in that context, guys, then, you know, one customer could order like four or five, 10 of these units at a time. Is that how we should think about it? Or is it maybe a smaller size of deployment per customer? Brian Barton | Chief Commercialization Officer: No, I think that's accurate. I mean, just to give a marketing context, um, maybe the mats, uh, reference. There's about 1.3 million dehumidification systems globally installed, and they have various sizes of offerings in terms of how much air they can dehumidify. And so this is a pretty substantial market. And with AirJewel, you know, launching a product with such substantial energy savings, we think we can capture, you know, a good chunk of that market. Of course, you know, going into the market selectively. But yes, we anticipate that the you know, our initial customer engagements are going to be excited to replace many units. At the same time, of course, there's always, you know, proof points and validations. So, you know, that's expected for kind of the ramp curve. But I do anticipate a significant future volume. Amit Dayal | Analyst, HCV: So, you know, I was getting to that part. How long do you think, I mean, it looks like you're ready to, you know, place these, the A250s with customers for testing, potential customers for testing, et cetera. How much time do you think they may need, like three months, six months, nine months to just get confident about the results they're seeing from this offer? Brian Barton | Chief Commercialization Officer: Yeah, let's just talk a little bit about timing. So the A250 and the A1000 are right now still targeting, right, mid-2026 product launches. the exact timing for when A250 gets launched as a formal product ready to take POs. We're working on the details of that. We'll provide a more meaningful update in coming quarters. Of course, we'll be working with our customer partners to kind of get these pre-production units into their factory floors as soon as we are capable of. And then, of course, they will want to go through a de-risking on their side to ensure the reliability and the performance, you know, is adequate. So without getting into too much detail, I expect that some customers are going to be relatively risk tolerant to their specific application and some are going to be more cautious in the validation phase before volumes pick up. But I think there are, you know, even with that, there's a significant opportunity you know, to revenue as we kind of go into 2027 especially. Amit Dayal | Analyst, HCV: Thank you for that. Just one last one from you guys. The A1000, right, I mean, it's a bigger offering with, you know, better savings and water generation or water distillation capabilities. Like, have you guys done any work on how much, you know, maybe a data center can save, you know, by using this versus, you know, other systems they may be using right now? Brian Barton | Chief Commercialization Officer: Yeah, thanks for that. Specifically around the A1000, it's really around the levelized cost of water that we can provide to our customers. And the situation is evolving globally, water scarcity and water security. And data centers in particular, they're building out operations and quite large operations very quickly. And, you know, data centers typically design for N plus one redundancy on all four technologies. Water is and should be one of them. And really, you know, data centers are being built in locations where they may be not secure 100% of their water needs. And so they need to have a technology to fill the gap. So AirDuel is really one of the only technologies that economically for a customer can close the gap on water generation, pulling water out of the air and providing that high-quality water to industrial operations at an attractive levelized cost of water. Amit Dayal | Analyst, HCV: Understood. Matt Jor | Chief Executive Officer: Also, Amit, you might, Brian, talk about some of the learnings, particularly in Europe, where it might accelerate their permitting process by a couple of years. Brian Barton | Chief Commercialization Officer: Yeah, I mean, I think this is not just a European-based thing. Obviously, there's some recent conversations around the requirements in Europe to utilize waste heat from data centers. And, you know, conventionally, that would mean district heating. Otherwise, right, air joules may be one of the only other, I think, practical applications of this scale of heat, you know, taking that heat to water for communities. But to Matt's point, The, you know, oftentimes data centers are looking for power and land and fiber connections and water. And, you know, part of that equation and, you know, doing site selection, the water is sometimes not available, but everything else is super attractive. And so that's really where, you know, we end up having a lot of excitement with our customers. Amit Dayal | Analyst, HCV: Got it. Thank you, guys. Operator | Conference Moderator: Thanks a lot. Thank you. Next question is coming from Jeffrey Campbell from Seaport Research Partners. Your line is now live. Jeffrey Campbell | Analyst, Seaport Research Partners: Thank you, and congratulations on all the progress. I just wanted to ask a couple of questions regarding the Hubbard project, the first one being, should we think of the data gathering and the potential certifications sought from the Hubbard project as different from the work with ASU, or is it complementary? Yeah, thanks, Jeff. Brian Barton | Chief Commercialization Officer: They're complementary, but different as well. So the work in Hubbard is primarily a way where we can tap and run for a length of time using that geothermal well that's there. It's not really a geothermal well, but it's a well that's providing hot water. And through operating at length, we will be pursuing the certifications that are required for Air Jewel to be a potable water, you know, utility, for example. So we'll be, you know, pursuing those with Texas Commission on Environmental Quality, as well as NSF. And so that program, that deployment at Hubbard is really after those certifications, as well as just demonstrating long-term, you know, well, outdoor deployment, whereas ASU is for independent academic validation as well as being a regional showcase for a number of customers in the Phoenix area. Jeffrey Campbell | Analyst, Seaport Research Partners: So, it sounds like the end of the year. Go ahead. I'm sorry. Pat Eilers | Executive Chairman: No, no, Jeff. Complete your thought and then I was just going to add just additional color. Jeffrey Campbell | Analyst, Seaport Research Partners: I was just going to say it sounds like the data that you're gathering at Hubbard would be similar to the sort of data that you've gathered and the UAE with the demonstration with the pilot facilities you've had there. In other words, you know, a unit that's primary reason for being there is to create a water source, a potable water source. Matt Jor | Chief Executive Officer: Yeah, that unit is a standalone system, Jeff. It doesn't use waste heat. It doesn't have to. So it's sitting in a nice location just pumping out water. You saw Marwa with a picture of that water. That unit will be – an A250 will be placed in that same location here in the coming months. Jeffrey Campbell | Analyst, Seaport Research Partners: And then – Yeah, Jeff, how long – Oh, yeah, go ahead. I'm sorry. Pat Eilers | Executive Chairman: No, no, please keep going, Jeff. I'll come in at the end. I apologize. Jeffrey Campbell | Analyst, Seaport Research Partners: No, here's – well, here's my last one. I just wondered how long is the unit – me and Sal, Hubbard going to remain there, and is there any indication of where it might go next? Brian Barton | Chief Commercialization Officer: Yeah, so the unit will remain in Hubbard as long as we need to remain in Hubbard to achieve some of the certifications that we're pursuing. And then we'll be using that deployment to go to the next customer, which is we'll provide more specific guidance in future calls. Matt Jor | Chief Executive Officer: I found it interesting, Brian, to listen to Christian talk about the thermal energy coming out of that well. It's enough to support, Jeff, 80 A1000 systems. So, you know, long term, we believe we'll make a great impact for the city of town of Hubbard as a demonstration unit for other areas in Texas where water stress and drought is incumbent there. Pat Eilers | Executive Chairman: Yeah, Jeff, I was just going to offer, I apologize to continue to battle here with you, is that this is Pat Eilers. When you think about the progression of the commercialization of this technology, you know, Matt and team started in Montana with Pacific Northwest National Lab. We partnered with General Electric, and we're fortunate to, at their global research center in Schenectady, New York, I see the evolution going to ASU as a furtherance of an independent researcher who's an expert in the field, then being able to do this validated scientific analysis and publish research on an independent basis, and then as you step forward into what we've accomplished in Dubai and now will accomplish in Hubbard, Those are actually systems now put out beyond the scientific approach in specific applications that I think will demonstrate to the research community and our investors of the opportunity set that we have in front of us. And hopefully that progression helps you kind of, you know, put that progression logically in place. Jeffrey Campbell | Analyst, Seaport Research Partners: Well, yeah, I'll just follow. The thing I've always kind of wondered with this is if the more academic stuff is ultimately going to surround verifying the potability of the water or the quality of the water, because obviously a data center, if they're going to put up a lot of money and put a bunch of A1000s in there, they've already arrived at some level of belief in the system to make those investments. And then In the UAE, we saw the picture of water there. We know that it's working. If they've had a pilot and they want to come back with a more permanent system, that's another point of verification that they're satisfied that the system's behavior is advertised. Never want to knock having additional data and additional credibility, but just wondering if With Hubbard, we know that there's a specific endpoint that's being pursued, which is to get certified as a potable water utility. So that's really why I asked about ASU in regard to that, because it seems like it's more open-ended, although I think there was a reference to trying to take heat off of a smokestack or something, or they were doing that with another system, and maybe AirJewel will be compared to that as well. Cooling gas, thanks. Brian Barton | Chief Commercialization Officer: You know just one other thing on asu deployment right phoenix area is a very different humidity and temperature profile than Texas or really maybe anywhere in the world and. Partly the engagement with Paul is going to be looking as well at lower humidity sorbents and so you know Paul is going to be providing. This academic validation of the quality of water, you know when you're pulling air from. different humidity, temperature, locations, what is the quality of water. And they've done a lot of work in that field. They're the leading researchers in, you know, assessing both efficacy of water generation systems, like how productive they are, as well as the quality of water. And then, you know, with looking at novel sorbents kind of going in there as well, provides that additional kind of research validation, you know, with pulse. Jeffrey Campbell | Analyst, Seaport Research Partners: Yeah, that's a great last point. Matt Jor | Chief Executive Officer: The other thing about ASU, Jeff, is not only validation of the technology, but there is a huge need. I think it's pretty well known for housing projects that are stymied by the fact that the groundwater isn't available to support them. It's funny that humans are going to locations and building in locations like that, but that's a fact. And so... we think that this ASU validation will be a great contribution to the solution we believe is to help those, not just data centers, but housing projects. Jeffrey Campbell | Analyst, Seaport Research Partners: Right, and I think the point about further research on different sorbents is a good point as well, because if we're not careful, we sort of think of this as a static project or a static product that's just looking for different ways to be utilized, but You're continuing to evolve it and trying to perhaps widen the range of use cases in terms of how extreme the location is, how little humidity, how much humidity, and so forth. Brian Barton | Chief Commercialization Officer: Yeah, we haven't really talked about some of the technology things that we're working on with respect to sorbent. But you think about our product and you realize that the sorbent is the thing doing all of the work. how much water we get out per hour, it's all about the sorbent's capability to take up that water and take it up quickly. And so really the main differentiator and the thing that will allow Aerojoule to continue to have the best products into the future is maximizing the sorbent and the capability of that coated contactor to provide a lot of water in a small footprint. All right. Matt Jor | Chief Executive Officer: yeah and all i can add to that jeff is the is the fact that ge renova we we've got the ongoing uh daily and weekly routine with the the ge renova experts on sorbent development it's one of the reasons we pulled together and then brian of course has chemists and chemical engineers in the facility in newark that are contributing to that effort oh thanks i think that's really great color Pat Eilers | Executive Chairman: Yeah, Jeff, we've been very deliberate on how we're putting our units into the market. Some is for scientific validation, which we already know the answer to, but it has to be independent. That's ASU. And then getting the product to Dubai and getting the product to Hubbard is now a further advancement of seeing it in actual use in the end market applications that we're very excited about. And hopefully it excites you as well. Certainly. Thanks. Operator | Conference Moderator: Thanks, Jeff. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to Matt for any further closing comments. Thanks, Kevin. Matt Jor | Chief Executive Officer: Thanks, everybody, for joining us today and your continued belief in AirJewel. We're making exciting progress, moving from innovation to product and from product to commercialization. Every step brings us closer to our vision of unleashing the power of water from air. and fulfilling our purpose of freeing the world from its water and energy constraints. The road ahead is full of opportunity, and with the momentum and our global partners we have today, we're ready to seize it. We look forward to updating you on our continued progress in the quarters ahead. Thank you. Operator | Conference Moderator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today. jsPDF 3.0.3 D:20260609232351-00'00'