AirJoule Technologies Corporation

Greetings. Welcome to the Air Jewel Technologies first quarter 2025 earnings call. At this time, all participants are in 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.

Thank you and good morning with me today for our first quarter earnings call our Matt drawer, 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 and 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 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 drawer.

Thanks, Tom. And thanks everyone for joining us this morning. We have some very exciting developments to share in addition to our first quarter financial results. Before we get into that, I'd like to take a moment to reflect on the topic of water security, which we believe is one of the defining challenges of our time. Around the globe, communities, industries and governments are grappling with growing water scarcity driven by population growth, climate change and increasing industrial demand. Nowhere is this more evident than in sectors like advanced manufacturing and data centers, which together account for a significant and rising share of global water consumption. Data centers alone consume millions of gallons of water per day to keep their operations cool, adding pressure on local water resources that are already under strain. At the same time, the world is generating an enormous and largely untapped resource waste heat. From industrial processes to server racks in data centers, vast amounts of low grade waste heat are being expelled into the environment every second. This represents a staggering opportunity by harnessing that waste heat. We can not only reduce thermal pollution, but also turn it into something of lasting value, pure distilled water. Harvested directly from the air. Our transformational air dual system sits at the intersection of these global imperatives. By using waste heat as an energy source to produce distilled water, we are redefining what's possible in both water generation and sustainability. The size of the waste heat resource worldwide is immense and we see this as a tremendous opportunity. With air dual, we aim to transform that wasted energy into a secure and reliable water supply that supports critical infrastructure, reduces environmental impact and strengthens resilience for the future. With that backdrop, we're excited by the progress we've made so far this year. We recently announced the sale of an air dual system to Arizona State University, which is home to the world's foremost research facility devoted to atmospheric water harvesting. We expect to deploy this system in the third quarter and it will be operating in the field in Arizona and proving validation of performance. As we mentioned on our last call, we also have an air dual system deployed and operating in Dubai at a government research facility. We are continuing to make progress on our pre-production system that we plan to deploy for multiple pilot projects at industrial operations, including data centers in the second half of this year. Our customers are eager to get their hands on an air dual and see its operational capabilities in field deployments. Some customers are excited about the ability to generate on-site water for their operations and others are intrigued by the idea of using their heat byproduct, which would otherwise be wasted, to produce something as valuable as distilled water. We're learning from our customers that there's a huge market for distilled water. And even water as a service could be another possible application for air dual systems down the road. On the engineering front, we are refining and optimizing the design of our commercial air dual product, which we expect to begin delivering to customers in 2026. We've also further expanded our new art Delaware facility to better support our manufacturing operations. GE, Vernova and Carrier continue to be great collaborators on the engineering and development side. We work with engineers and researchers at the GE, Vernova Advanced Research Center on a weekly basis, as well as with Carrier in the realm of data center cooling, which is one of their fastest growing markets. In April, we strengthened our balance sheet and expanded our shareholder base by completing a $15 million common equity pipe, which was anchored by GE, Vernova. Now I'd like to turn it over to our executive chairman, Pat Eilers, to talk about GE, Vernova's recent decision to double their investment into our air dual joint venture.

Thanks, Matt. It's great to be here this morning to update our shareholders on the progress we've made so far this year. As Matt mentioned, we recently raised $15 million of gross proceeds through a pipe transaction, which was anchored by GE, Vernova, who owns 50% of our air dual joint venture. As many people know, I've been involved with air dual technologies for several years, and I led the SPAC that merged the company and took it public just over a year ago. As part of that process, we had the opportunity to get to know the folks at GE, Vernova, both in their Ventures Group and at the Advanced Research Center. In March of 2023, I was with Matt in Ronan, Montana, when the team from GE, Vernova, led by Dr. David Moore, the head of their air to water project in their carbon capture research group, came out to see the air dual system produce water from air with their very own eyes. When they witnessed firsthand air dual's ability to produce pure distilled water in dehumidified air, they recognized the synergies that we could achieve by collaborating on this transformational technology through a joint venture. Over the last year, it's been a tremendous experience to work together with GE, Vernova, to establish the air dual joint venture and put in place a strong foundation to commercialize the air dual technology. The more we work together with GE, Vernova, the more opportunities we identify for collaborating. GE, Vernova is a global leader in energy technologies with deep expertise spanning power generation, electrification, and industrial decarbonization. Consider gas turbines, which are used in power plants around the world to generate electricity. They also release massive amounts of low grade heat. We have a vision in which air dual can eventually be integrated into power plants to turn that waste heat into a productive asset and generate pure distilled water at scale. This dovetails with our goal of optimizing energy use in advancing sustainability in industrial operations. It's a great vote of confidence that GE, Vernova has chosen to increase their investment in the air dual joint venture and we're excited to be collaborating with them on this transformational technology. As we were thinking about GE, Vernova's investment, we were fielding additional inquiries from existing investors who wanted to increase their investment in air dual technologies. We've also been spending a lot of time and effort to engage new institutional investors and educate them on air duals massive market opportunity. That effort bore fruit as evidenced by our ability to bring several institutional investors into the shareholder base is part of this race. As Stephen will talk about later, this capital raise strengthens our balance sheet and fully funds our operations. Now I'll turn it over to Brian Barton, Chief Commercialization Officer and President of the Air Dual Joint Venture for a commercial and operations update.

Thanks, Pat. Because we gave our last commercial update on our prior earnings call at the end of March, I won't spend too much time on the subject. But I did want to talk about the collaboration that we recently announced with Arizona State University in which they'll be purchasing one of our air dual A250 systems for research and evaluation purposes. Arizona State University is home to the Global Center for Water Technology, whose mission is to address water concerns in Arizona. One of their four primary activities is operating demonstration sites in Arizona that enable evaluation of cutting edge solutions in the field. While we're certainly excited that this represents the beginning of our air dual sales revenue, we're even more excited about the independent testing and validation that the researchers at ASU will perform with air dual. The climate in Arizona is a challenging one for atmospheric water harvesting because of the low relative humidity. Most conventional technologies that rely on refrigerant systems don't work very well in those conditions, but we're eager to demonstrate air duals capabilities. We view this as a major step forward in proving that air dual can be a solution to water scarcity in arid environments around the world. In regards to timing, we expect to deliver this air dual product to ASU in the fall of this year, and we look forward to providing more updates once it is operational. We continue to make progress on developing our larger A1000 pre-production system. We've successfully scaled to a larger chamber with a new design which holds more sorbent and produces more water. We're also continuing to improve our energetics as we do this, even below the 160 watt hours per liter that we announced on our last earnings call. The A250 system that will be delivering to Arizona State University is the core module of the A1000 system that we've been discussing over the last few quarters. When thinking about our demonstrations, in some cases, it will make more sense to deploy A250s, which can be manufactured faster and are optimal for demonstrating the technological capabilities of air dual. The full A1000 could be deployed in cases where customers are eager to assess the full scaled up operation of air dual. We're on track to deliver up to three air dual pilot projects in the second half of 2025. From a supply chain perspective, we're working to finalize the design for our commercial system with a focus on DFM or design for manufacturing. DFM is the process of designing a cost effective and reliable product. Our focus is to design an air dual product that is profitable and yields an attractive levelized cost of water for our customers. We've also expanded our new arc manufacturing facility, which includes manufacturing and assembly areas, along with our environmental test chambers, which can operate various air dual configurations in different environmental conditions, as well as integrate waste heat. We also completed our coating line where we can now coat our own sorbent coated contactors that are being used in the A250 and A1000 systems. In conjunction with productization, we're working through various certification processes, including, for example, achieving a portable water standards with the Texas Commission on Environmental Quality for data center applications. GE Vernova and Carrier have been working closely with us through this process. With GE Vernova, we recently announced a strategic project to further explore air dual integration into GE Vernova's products. At the end of April, several members from one of GE Vernova's business units came to Newark to discuss air dual and share best practices. With Carrier, data center cooling is one of their fastest growing markets, and we're working directly with our engineering team to optimize the air dual system design for data center cooling applications. The cross pollination with the teams at GE Vernova and Carrier has been very productive, and it should help with our commercialization efforts and expand our market opportunities. As you can see, we're at a very exciting stage, and there are many developments on all fronts. Stephen, I'll let you take it from here for the financial update.

Thank you, Brian. We can turn to slide 8 of the presentation to see our financial results for the first quarter. As a reminder, air dual technologies accounts for its 50% ownership in the joint venture using the equity method. The numbers in the table are only for air dual technologies. The results from the joint venture reflected in the loss from investment in air dual JV line, which was 2.2 million for the first quarter. During the first quarter, air dual's net operating expenses were 3.2 million. This is inclusive of the approximately $500,000 in administrative and engineering expenses reimbursed to us by the joint venture under a statement of work. Our net income for the first quarter was 14.9 million, which was driven by certain non-cash gains associated with the change in the fair value of our earn-out liabilities and subject investing shares that relate to the specific provisions from our business combination agreement last year. These items only impact our net income by their non-cash nature. During the quarter, we also made a capital contribution of $5 million to the air dual JV to support the ongoing commercialization efforts. We ended the quarter with approximately 24 million of cash sitting on the balance sheet of the two entities. Subsequently, at the end of the quarter, we raised $15 million through the Pipe investment, which increases our Q1 ending cash balance to $38 million on a pro forma basis. As mentioned, the Pipe was anchored by GE-Vernova, which chose to match the $5 million capital contribution we recently contributed into the JV. And this matching capital contribution was structured as an equity investment into air dual technologies, which mirrors their initial $5 million capital contribution when the joint venture was formed in March of 2024. We also gave our existing investors the opportunity to invest alongside of GE-V, and we brought in additional new institutional investors to further expand our shareholder base. Looking ahead, we have sufficient cash and liquidity to support both our operations and those of the joint venture to fully commercialize this technology. On the last call, I indicated that the JV budget for 2025 was approximately $13 million to $15 million. With the incremental capital that we were able to raise here, we expect to be at the high end of that range, which could increase modestly to further accelerate the product development of our initial air dual systems. With our current balance sheet position, we are well positioned with our business plan in 2025 and 2026 fully funded to support the anticipated customer deployments in the coming quarters ahead. Now I'll pass it back to the Q&A portion of the call.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, 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 would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Jeffrey Campbell with Seaport Research Partners. Please proceed.

Good morning and congratulations for the strong progression of the business. I really just have one question from today's discussion. You highlighted the ASU as a research source. I just wonder, is there any expectation that the data from ASU might differ from that being collected by GE or if there's a similar data collection in Dubai or maybe to put it another way? Do you see some particular value in data collected from an academic versus a commercial source? Brian.

Yeah, thanks, Jeff. It's a great question. Really, I think we want to see several strategic deployments of our technology globally for not only data at different environmental, humidity and temperatures, but really just getting more operational hours of systems in different locations with different people running them. So there's a variety of benefits to having multiple systems regarding your specific question around academic labs versus maybe an institutional government deployment or partnership. We anticipate that an academic lab may be able to further do more detailed water testing, for example, or more types of ways that they run the system. But really, the ASU deployment is going to be that as well as the validation of aerodual performance and conduits to the regional customers in the US Southwest, which are interested in water scarcity as well as improving their operations.

Okay, no, that makes sense. And I guess I will ask one other a little bit wonky when you talked about how the A250 might be appropriate for certain customers and the A1000 has more throughput. Can you just elaborate a little bit about what's the difference in the cost, the specific cost if you have disclosed that and also the time to build one system or another, which I think you referred to this morning?

Yeah, we haven't disclosed the specific costs of the A250 versus the A1000. The A250 is the core module of the A1000. So it has two of our water harvesting kind of chambers, the chambers that run the system, whereas the A1000 will have eight. And so a lot of times it makes more sense to deploy a smaller form factor to a given site to, you know, to collect the critical data because the data, you know, is effectively the same. It's just with an A1000, you would have, you know, a larger operational system.

Do you, I mean, if things evolve, do you believe that the 250 is going to kind of go the way of the dodo after enough data has been selected because there's better economics with the 1000 or is there going to be a place for both to coexist?

Well, there might be some places for them to coexist. That's not my expectation. I expect that the A1000 will become the better product from a levelized cost of water perspective. You know, more suitable from the capex side of how much water is produced. But, you know, there may be some examples where, you know, someone wants an A250 for whatever reason, but A1000, I think, is going to be the more economical product.

I would only add two, I'd only add two quick comments. One is on ASU. It is an independent scientific analysis that will be utilized by all our customers to point to GE and Carrier are both investors and great partners, but they're not quote unquote independent. So our hope is that ASU will produce peer reviewed published independent research that will be able to be utilized by all our potential customers as an example of why it's delivering what it's delivering with high scientific integrity is one point. And then just the only other thing I'd add between the A250 and the A1000, obviously at the end market usage, you know, there may be customers that just don't need as much production as the A1000 can produce. And despite it probably delivering a better TCO, they may just not need it. And the A250 is more fit for purpose. Thank you.

Right. And I appreciate that that follow up on the independent science organization, because that was kind of where I was going. So I appreciate that.

Thanks. Hey, Jeff. This is Matt. I can tell you this. Please be sure that our presentation is about the proof of concept that the ASU team will be delivering data for out to the world. But we, we in no way mean to minimize the opportunity for water, as we've learned over the course of the last six to nine months. They, they, they're, it, it, it, some project that water scarcity will be a larger problem than even cooling. And we address both. And I think in this presentation, we're trying to update you on and everyone else on, on the, the huge water opportunity that is in front of us. And so these proof points and these, these data center deployments that we discussed in this presentation are simply that they are the stepping stone to a massive market in water. And the other thing that we're trying to convey here is waste heat. 70% of the energy produced on this planet is lost to waste heat. So we have a, because we can use this low grade waste heat, which eliminates the need for our important compressor that we talked about in our last calls. That that compressors on its way, by the way, but the, but the nice thing about waste heat is we eliminate the compressor. So the reliability goes up and the harvesting of pure distilled water has a huge value. That's why we're kind of emphasizing it. So we just want to make sure that along the way we get those points of validation that Pat talked about, you know, our, our friends at Carrier and our friends at GE, Vernova understand the big picture. So, you know, we, we hope that the message is coming across that in the long run, this is a massive opportunity for not just cooling, but for addressing water scarcity.

Yeah, I think that message is coming through loud and clear. Good. Yeah. And I agree. And she asked

you a question.

Sorry, Jeff. No, I just said, I agree with you. It's an important issue. There's no question that water scarcity is a growing global problem.

Yeah, and in the A1000 versus the A250, in the long run, it's going to be A10,000s and A100,000s in modular form. That's how we're going to, you know, you got to scale and that's what our long term goal is.

Okay.

Thank you. Thank you.

Thank you. Our next question comes from the line of Shamir Joshi with H.U. Rain White. Please proceed.

Hey, good morning and thanks for taking my questions. The investment, the 15 million investment that is going to accelerate your commercialization efforts, will it mostly be used for sort of advancing the technology to get to lower than 160 watt-hour per liter or even sub-hundred watt-hour per liter levels, or is it going to be mostly used for expanding the demand for water? So, it's going to be used for the administration and evaluation efforts.

Brian, if you

have

a... Yeah, sure. Thank you, Shamir. It's largely used to accelerate the engineering of the actual product. We talked about design for manufacturing and kind of, you know, going through all the certifications that are required for an official product launch. So, we're trying to speed up those efforts and at the same time, right, deploy systems that can demonstrate, you know, the performance. Along the way, we will continue to make progress on the energetics and, you know, the productivity of the core product. But, you know, those three kind of pillars are really where the use of funds will be directed.

Understood. So, should we look at the Dubai demonstration also as an evaluation? Are there other third parties that are coming in, taking a look at how the Dubai demonstration or showcase is performing, which can help you in those markets, or should we not look at it as a sort of ASU in the Middle East?

Yeah, absolutely. That is the primary purpose of all of our deployments is to demonstrate the technology and to share with as many that we can on, you know, how the system works and how it can deliver value to the specific customers, right? So, there's a number of different, you know, lenses that our customers have with respect to how they see value and how it can play into their operations. And in both the main deployment in Dubai as well as the one at ASU are conduits for that conversation, as well as collecting data and, you know, showing the performance and operability.

And Samir, this is Matt. I'll add that the location of that particular unit is in a very strategic location. There are many, many executives who come through that particular spot. We haven't disclosed exactly where that is. But there is an amazing amount of traffic from VIPs around the region. So, we have a great exposure for the technology there.

Understood, got it. And sort of in the same vein about demonstration and proving certification, you mentioned something happening in Texas, and I didn't catch it completely or at least did not grasp what it entails. Will you elaborate that a little bit? Yeah,

the, you know, unlike a lot of locations, you know, in the United States, in particular, some regions of Texas do not have a very well established water infrastructure network. And so there's, you know, real examples in Texas where water scarcity is, is, you know, rearing its ugly head, right? The Ogallala Reservoir is basically going to depletion and a lot of operations and, you know, even new constructions that are being considered in Texas need to, you know, build new infrastructure for water when there's no groundwater, right? So, you have to maybe consider trucking it in from a long distance away or piping it in from a long distance away. And so in this type of environment, Aerojoule can actually provide really meaningful, you know, levelized cost of water, be really attractive water solution at scale. And so, you know, one of the comments that was made there was around our pursuit for water certification with the Texas Environmental Agency there to achieve portable water certification.

And then maybe last one, the investment that came in, I think, just wanted to understand, was the 5 million investment sent to the JV which came from GE Vernova or does it sit on your balance sheet while GE Vernova retains their equitable ownership of the JV?

Yeah, this is Steve and I can take that, Samir. The investment came in upstairs at the Aerojoule Technologies corporate level, but similar to how the initial capital contribution was treated as a match to the joint venture, which was completed at the time of the JV's formation last year. We treated that 5 million investment the same here. So, up there investment, but obviously some of the capital is going downstairs from an operating expense standpoint and funding for that. And that 5 million dollars would mirror our initial contribution here that was made this year. Understood.

So, from an equity contribution point of view, the proportion stays the same pre and post this transaction.

Yeah, I

would just remind you just from an economic interest standpoint, it's 50-50, but there will be a capital charge incurred at the joint venture level to the extent that future capital contributions are matched by GE Vernova.

Got it. Understood. Thanks for that clarification and thanks for taking my questions.

Thank you. There are no further questions at this time. I'd like to pass the call back over to Matt for any closing remarks.

Thanks everyone for tuning in today. I want to thank our employees, partners and shareholders for their continued commitment and support. Our mission is very clear. The world has cooling and water challenges and we are addressing both with our transformational Aerojoule technology and our world class partners and world class team. We appreciate your ongoing confidence and look forward to keeping you updated in the quarters to come.

This concludes today's teleconference. We disconnect your lines at this time. Thank you for your participation.