Innventure, Inc.

Good day and thank you for standing by. Welcome to the Adventure Fourth Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please revise that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Lucas Harper, Chief Investment Officer. Please go ahead.

Thanks, operator, and thank you all for joining us for InVenture's fourth quarter 2025 earnings call. My name is Lucas Harper, InVenture's chief investment officer, and joining me from the company are Roland Ostrup, chief growth officer, Bill Haskell, chief executive officer, and Dave Yavlunovsky, chief financial officer. Earlier today, we issued a press release announcing our financial results, which are available on our investor relations website, along with a supplemental slide presentation. As referenced on slide six, we will be discussing non-GAAP financial measures during this call. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non-GAAP financial measures are available in our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward-looking statements that are based on management's current assumptions, beliefs, and expectations concerning future events impacting the company. These forward-looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release form 10-K for the period ending December 31, 2025, and other filings with the SEC. The actual results of operations and financial condition of the company could differ materially for those expressed or implied in our forward-looking statements. And now, I'd like to turn the call over to Roland Ostrup. Thank you, Lucas, and thank you to everyone joining us today.

I'm Roland Ostrup. Chief Growth Officer. Before I begin, I want to note that this April, we will host an InVenture CEO call featuring deep dive commentary from Excelsior CEO Josh Clayman, Aeroflex CEO Andy Meyer, and Refinity CEO Bill Glico. There will be more details to follow, and I strongly encourage our shareholders to tune in. Now, let me start by saying something plainly. This is the earnings call we have been building toward. Not because of a single milestone, not because of a single announcement, but because for the first time in InVentures history, every part of this platform is firing at the same time, and the results are undeniable. There is a difference between a company that tells you it is going to do something and a company that has done it. There's a difference between a thesis and a proof. And what we are presenting to you today is proof. This is not one milestone. It is not one announcement we are dressing up for you. Let me give you the headline, and then I'll give you the proof. The headline is this. Inventors crossed the threshold from potential to performance. And the proof is in third-party validation, commercial bookings at scale, operational expansion. Execution milestones delivered across our family of operating companies simultaneously. What you are seeing in the fourth quarter of 2025 and the opening months of 2026 is not incremental progress. It is a decisive across the board inflection in the trajectory of this company. This is what an industrial growth platform looks like when it starts to run. And it is what differentiates in venture from single asset or venture style stories. Since inception, We have deployed approximately $160 million of balance sheet capital into our operating companies. That capital has generated roughly $860 million in net asset value, including approximately $460 million distributed directly to shareholders through PureCycle. That track record matters, but what matters more is what is happening now. The platform is beginning its transition from being capital funded to being commercially self-funding. And the evidence is clear. In the first quarter of 2026 alone, our operating companies generated more than $50 million in new bookings in a single quarter. That is a commercial inflection point by any measure and a powerful leading indicator of forward revenue and enterprise value creation. Across our operating companies, the momentum is unmistakable. Excelsius is scaling with the speed and urgency the AI infrastructure build-out demands, backed by institutional validation from Johnson Controls and Legrand and a growing pipeline of commercial deployments. Aeroflex has entered prestige beauty, one of the most demanding markets in the world, and expanded global manufacturing capacity to meet accelerating demand. Raffinity moved from formation to pilot-scale validation in just over a year, demonstrating the speed, repeatability, and discipline of the InVenture model. Three companies, three proof points all at once. This is not a coincidence. This is architecture. The architecture of a platform business delivering on its promise. And this momentum underpins our expectation of reaching consolidated cash flow positivity in 2028, driven by Excelsis expecting to achieve cash flow positivity this year. Each operating company is now directly raising capital, reducing the need for inventors balance sheet and fundamentally changing the financial character of his business. Exactly on schedule. Our model has always been well defined. I know there are investors on this call who have been patient. I know there are investors who have been waiting for us to stop talking about what we are going to do and start showing what we have done. We appreciate your patience. I want you to hear me clearly now. The waiting is over. The results are here. They are accelerating. And the best chapters of the InVenture story are the ones we are writing right now. With that, let me pass the call to Bill Haskell to walk through each operating company and provide the specifics behind this acceleration. Thanks, Roland. I want to start with Excelsius, and I want to start with something I think people in this market are still underappreciating. The world has decided it wants artificial intelligence, not eventually, now. Every major technology company, every sovereign wealth fund, every hydroscale on the planet is in a race to build compute infrastructure at a scale that has no historical precedent. And here's the part that most people have not yet fully internalized. You cannot run that infrastructure without solving the thermal problem. You cannot. The chips that power AI generate heat at densities that make traditional air cooling physically insufficient. This is not an engineering preference. It is simply thermodynamics. That is the market Excelsior is scaling into. And Excelsis is not scaling into it theoretically. It is scaling into it with over 50 million in contracted backlog secured in the first quarter of 2026 alone, all tied with Greenfield, next generation data center development, anchored by an initial order for the first deployment by Dark NX, a vertically integrated and funded AI data center developer with a healthy tenant pipeline and the ability to deliver liquid cooling, ready capacity, and accelerated timing. Now I want to be honest with you about something, because I think honesty on earnings calls is more valuable than cheerleading. Data center construction is experiencing real global supply chain constraints. Power distribution equipment, switch gear, memory, and long-lead mechanical systems. These constraints can affect the timing of delivery and revenue recognition, even when customer and purchase orders are firmly in hand. So while we expect to recognize the majority of the contracted backlog as revenue this year, the exact cadence is difficult to forecast with precision. Our expectation today is that revenue will be heavily back-end weighted in 2026. But I want to be very clear about what that means and what it does not mean. It does not mean demand is uncertain. It does not mean our technology is unproven. It means the physical world has supply chains, and supply chains have constraints. The important signal is not the quarter-to-quarter timing. It is the bookings. It is the customer commitments. It is the scale of demand we are now seeing. Those are the leading indicators of long-term value creation, and those indicators are unambiguous. Based on our current trajectory, Excelsis is on a path to exit 2026 Cash flow breakeven defined by cash from operations. This implies a December 2026 annual revenue run rate of approximately $100 million. And importantly, we believe Excelsis' cash on hand is sufficient for the company to reach this cash flow positive threshold. Think about what that means. A company that just a short time ago was still in the early field of employment is now approaching self-funded commercial scale. Let me contextualize this further because the market is telling you something important that you should be paying attention to. The recent acquisitions of Cool IT and Void at roughly eight to nine times revenue and nearly 30 times forward EBITDA make it unmistakable that the industry is moving decisively toward direct-to-chip liquid cooling. And here is the critical distinction. Both Cool IT and Void remain single-faced today. Excelsis is already commercially deployed in the two-phase architecture that the market is converging toward. Two-phase cooling is not an incremental improvement over single-phase. It is a fundamental architectural advantage. Because of the phase change that occurs, it removes far more heat with far less energy, enabling rack densities and thermal performance that single-phase water systems simply cannot reach. Industry analyses consistently show that direct-to-chip cooling is one of the fastest-growing segments of the data center thermal market, with forecasts ranging from low double digits to mid-30% compound annual growth rates over the next decade. The earliest adopters are exactly where we are seeing our strongest traction today. Greenfield high-performance computing and AI-focused data centers where air cooling cannot keep up with the heat flux of modern GPUs and accelerators. But here's what I want investors to understand about the size of the opportunity. The first wave is already here. New builds, HPC, AI infrastructure. But the second wave, and this is potentially even larger, is legacy data centers. Even in facilities where air cooling is technically adequate today, operators are recognizing that two-phase cooling unlocks higher rack densities, greater compute per square foot, and significant energy savings. It allows them to densify instead of expand, to deploy more compute power without new construction, to reduce the energy overhead of air-based cooling. We believe that the necessity of two-phase cooling for HPC and AI workloads combined with the compelling economics for non-HPC environments, will cause direct-to-chip two-phase cooling to become the dominant architecture for both new and retrofit data centers over the next three to five years. Excelsis is now widely recognized as a leader in direct-to-chip two-phase cooling, a position reinforced by our strategic investors, John Smith Rolls and LeGrand. Their involvement is not passive. It is a strong validation of both our technology and our commercial readiness, like two of the most respected names in global building systems and data center infrastructure. In December 2025, Excelsior closed the second tranche of a $65 million Series B investment led by Johnson Control of Le Grand, valuing the company at approximately $665 million post-monthly. I want to emphasize this. That valuation was set by two global industrial companies deploying their own capital, not by a venture, not by internal Excelsior's financial models, but by external institutional investors with deep domain expertise writing real checks. That is the kind of validation that is very difficult to dismiss. Let me turn to Aeroflex, which operates in a completely different market, but demonstrates the invention model just as clearly. There is a problem in packaging that almost everyone acknowledges, but almost no one has solved. The world produces an enormous amount of single-use rigid plastic packaging. Everyone agrees it is wasteful. Everyone agrees the supply chains are inefficient. And yet, the alternatives have historically forced a tradeoff. You could have sustainability, or you could have performance and consumer appeal, but you cannot have both. Aeroflux changed that equation. Founded in 2018 around liquid packaging technology sourced from Procter & Gamble, Aeroflex is an integrated packaging and filling platform that improves the consumer experience, simplifies supply chains, reduces virgin plastic usage, and enhances e-commerce economics. Its differentiation comes from delivering all of its values simultaneously. a curbside recyclable package that uses up to 85% less virgin plastic than rigid bottles, a flat pack format that enables up to 10 times greater shipping efficiency, lower total cost of ownership by consolidating the supply chain, and consumer testing that consistently shows a clear preference versus traditional packaging. This is not a trade-off. This is a better product. As of the fourth quarter, Aeroflex has delivered baby care, personal care, household products, and industrial applications. And what is notable today is that Aeroflex is transitioning from early market validation to large-scale adoption and volume production of units. During the first quarter of 2026, Aeroflex announced a global partnership with Aveda, part of the Estee Lauder companies. Aveda is the first global prestige brand to adopt Aeroflex's refill packaging format with select products expected to debut in early 2027. Let me tell you why that matters beyond the headline. Prestige beauty is one of the most demanding markets in the world. the brand standards, the performance requirements, the aesthetic expectations, these are extraordinarily high. When Aveda, backed by Estee Lauder, chooses our platform, that is a statement about the maturity and credibility of our technology. Aveda is one of four anchor customer relationships that now underpin Aeromflex's commercial momentum across distinct end markets. The other anchors include a multinational consumer packaged goods company, with a signed multi-brand, multi-million unit agreement. A major producer of industrial fluids and packaging services, where commercialization is advancing through both equipment and pack sales, with the first purchase order already received and production beginning next month. A large beverage and food service partnership that would make Aeroplex's entry into food and beverage the largest portion of its addressable market. Taken together, these four anchor customers valet the platform across premium beauty, household and personal care, industrial applications, and food and beverage. And each has the potential to support line extensions, geographic expansion, and follow-on programs as AeroFlex becomes more deeply integrated into long-term packaging strategies. Aeroflex's near-term commercial pipeline stands at just under $30 million, including in approximately one-third in final negotiations. We are not providing guidance on the timing of revenue conversion, but the realization of these opportunities is incorporated into our assumptions for Aeroflex to reach cash flow positivity in 2028. The company's opportunity set is broader and more diversified than at any point in its history. Teraflex is also in the process of launching a direct capital raise at the operating company level, targeting strategic investors that also serve as commercial partners. As our operating companies mature, they are increasingly able to raise capital independently, reducing the need for parent-level funding. That is the model we're working exactly as designed. Let me turn to Refinity. And I'll tell you candidly, this may be the most compelling industrial opportunity we have ever launched. Here is the problem. The world produces hundreds of millions of tons of plastic waste every year. A meaningful portion of that waste has no viable recycling pathway today. It goes to landfills, it goes to incinerators, it goes into the environment. At the same time, petrochemical companies are spending enormous sums buying fossil feedstocks, ethylene and naphtha, to produce ethylene and propylene, two hydrocarbons that represent a $350 billion global market and are essential to producing polyethylene, polypropylene, and a wide range of specialty materials. Affinity connects those two problems. It takes the portion of plastic waste stream that today has no viable recycling pathway and converts it into high-value chemical building blocks, ethylene and propylene, that petrochemical companies are already buying. The substitution alone creates a compelling economic incentive and ability to hedge against fossil price swings while meeting circularity commitments. Across the value chain, circular materials come in at 30 to 50 percent price premium with the highest premiums closest to the consumer. This is not a sustainability story that requires you to ignore economics. This is a sustainability story where the economics are the reason it works. Raffinity's primary commercialization strategy is built around integration, co-locating plants directly at petrochemical sites, such as a Dow Steam Cracker. This eliminates transportation costs, feeds directly into existing infrastructure, reduces capex for both Raffinity and its customers, and accelerates adoption by fitting seamlessly into the way these companies already run their assets. Beyond its core ethylene and propylene focus, opportunities in producing customized circular hydrocarbon products, including specialty high-value lubricants and sustainable aviation fuel, or SAF. One of our independent directors is a C-SQUID executive in the aviation industry, and we have come to appreciate that SAF has become one of the most critical pathways for aviation to meet its net-zero commitments, with demand going far faster than supply, and U.S. production expected to scale dramatically over the next decade. Refinery recently licensed technology from a U.S. national lab for catalytic conversion of its mixed ethylene and propylene product to SAF and SAF precursor liquids and intends to demonstrate this conversion process later this year. The SAF market alone is growing at 30 to 50 percent annually and is anticipated to reach $40 billion by 2034. The ability to disrupt a $350 billion commodity market while also accessing high growth specialty sectors like lubricants and SAF underscores just how significant the total addressable market is for Affinity. Now, here's the part that should get your attention. Affinity was formed in December of 2024. less than one year later the team produced its first metric ton of circular product from real world mixed plastic waste yields typically above 60 to 70 percent with minimal char that compares to about 25 percent conversion for competing technologies for a technology of this complexity that speed is exceptional Since then, Raffinity has filed multiple patents on its duto zone reactor design, expanded its IP portfolio with licenses from a U.S. university and a national lab, and advanced engineering toward a 10 kiloton per year demonstration plant targeted for completion in 2028. A commercial-scale plant of around 150 kilotons per year is planned for early next decade, aligned with the chemical industry's expected return to growth. Refinity is hitting KPIs ahead of schedule. It is solving a real cost problem for petrochemical customers, and it is positioning itself to scale just as the industry reenters the growth phase. This is the InVenture model, rapid formation, accelerated validation, and a disciplined progression toward commercialization in a massive market with structural economic drivers. Before Dave gets into the financials, I want to leave investors with three clear takeaways. First, the InVenture model works. PureCycle proved it, and Excelsis is validating it again at a faster pace. This is not theoretical. It has been demonstrated twice. Second, we are not dependent on a single operating company. We now have three businesses executing simultaneously, each with independent third-party validation. That is diversification with conviction, not diversification as a hedge. And third, I think this is the one the market has been slow to absorb. a platform is transitioning structurally from capital consuming to increasingly self-funding. Operating companies are raising their own capital. They are converting commercial traction into revenue. The architecture of this business is changing, and it is changing exactly the way we expected it would. I want to say something about valuation because I think it needs to be said plainly. We believe our current share price does not fully reflect the value of inventor shares. The $665 million third-party valuation of Excelsis was set by institutional investors deploying their own capital, adding two strategic investors to the cap table, and securing more than $50 million in contracted backlog. We believe the value of Excelsis alone has materially increased, and that does not include the value of Aeroflex or Affinity. We're not going to complain about the market, but we are going to state facts. And the facts suggest there is a significant gap between where our shares trade and what this platform is worth. Our focus remains on execution. We believe that if we continue to execute, value will ultimately be recognized, and we intend to continue executing. When we look across our family of operating companies today, our confidence in the index's path to consolidate cash flow positivity in 2028 is grounded in execution, not aspiration. Excelsior is scaling into production deployments in a market where liquid cooling is becoming mandatory with third-party institutional validation and a clear line of sight towards self-funded growth. Aeroflex has moved beyond pilot programs into repeat revenue, anchor customers, and global manufacturing scale while transitioning to direct capital formation at the operating company level, And Raffinity has rapidly validated its core technology, established a clear commercialization roadmap, and has begun the process of funding its next phase independently. Taken together, these developments reflect a platform that is structurally maturing, with operating companies increasingly funding their own growth, corporate capital requirements declining, and commercial activity translating into revenue. This is exactly how the invention model is designed to work, and it underpins our confidence in the enterprise's long-term financial trajectory. With that, I'll turn the call over to Dave to walk through the financials. Thanks, Bill, and good afternoon, everyone. I'll walk through our fourth quarter and full-year results, but let me begin with the most important thing I can tell you. The financial profile of this company is changing, not gradually, structurally. And the numbers I'm about to give you are evidence of that change. 2025 was an important proof point year for Ascelsius. Revenue increased from $0.3 million in 2024 to $1.6 million in 2025, driven by successful proof of concept deployments with early customers. At the consolidated level, InVenture's 2025 revenue was $2.1 million, up from $1.2 million in 2024. Fees from our management of the Adventus ESG fund, along with intercompany eliminations, were $0.5 million compared to $0.9 million in 2024. But the real step change happened in the first quarter of 2026. Ascelsius generated more than $50 million in contracted backlog. These are production volume orders, not pilots, not trials. This provides strong visibility into meaningful revenue scaling in 2026. And as Bill mentioned, we expect the Celsius to exit December 2026 with positive operating cash flow, implying an annual revenue run rate of approximately $100 million. We also expect revenue to be heavily weighted to the back end of this year. general and administrative expense. Before I get into the specifics, I want to explain something about how our cost structure has evolved because it gives important context. We have included a slide in our earnings presentation that illustrates this in granular detail. Historically, prior to the operating companies reaching commercialization, InVenture funded essentially all G&A costs from the top goal level, personnel expense, professional services, operating expenses, all centralized, all flowing through InVenture's consolidated P&L. That's now changing. While cost at Ascelsis and Raffinity will continue to flow through the consolidated financials, a growing portion of the total operating expenses will be funded directly within those businesses rather than by InVenture. At the top code level, Our focus is increasingly on a lean corporate cost structure, funding only what's required to operate InVenture Topco. Now let me give you the numbers because they're significant. G&A has decreased sequentially every quarter since InVenture went public. Consolidated G&A declined from 29.7 million in the fourth quarter of 24 to 11.5 million in the fourth quarter of 25. a 61% reduction. That reflects disciplined cost management across InVenture, Ascelsius, and Refinity, as well as the tapering of non-cash expenses associated with our public listing. Professional service fees shows the same trajectory, $3.5 million in the fourth quarter of 25, down 42% from their peak of $6.1 million in the first quarter of 25. as we brought key functions in-house at lower cost. At the parent company level, Inventor's fourth quarter 25 cash G&A expenses were $5.7 million, down over 55% from $12.9 million in the fourth quarter of last year. That's not noise. That's a structural change in how this business operates. Looking ahead to 2026, we expect the Venture Top Code GNA to follow a trend similar to the last three quarters of 2025. A few income statement highlights. Excluding the $347 million non-cash goodwill adjustment and other minor non-cash items, adjusted EBITDA for 2025 was a loss of $78.8 million. As we look forward, the combination of a significant contracted backlog Our expectation that Ascelsius will reach a revenue run rate of approximately $100 million and exit 2026 cash flow positive gives us confidence that there will be a substantial improvement in the reported adjusted EBITDA in 2026. Moving to cash and liquidity. On a consolidated basis, we ended 2025 with $65.4 million of cash. restricted cash, and cash equivalents, up from $11.1 million at the end of 2024. Additionally, in January 2026, we strengthened our balance sheet with a $40 million registered direct offering as InVenture became shelf eligible. Shelf eligibility is an important milestone. It gives us efficient access to public market capital on substantially better terms than what was available previously. Just as importantly, we repaid the entire remaining $5.6 million balance on our convertible ventures, which simplifies our capital structure. Let me walk through why we believe our cost of capital will improve significantly going forward. One, we believe Ascelsius is now effectively fully funded and entering rapid commercial scaling with the over 50 million in contracted backlog. Two, fourth quarter 25 G&A is down 61% from fourth quarter 24, with further efficiencies expected as we take advantage of productivity improvements. Three, shelf eligibility, which reduces reliance on higher cost financing alternatives. As our operating companies, particularly Ascelsia, begin generating cash, we expect this to further extend our cash runway and move InVenture towards a self-funding evergreen model. While it is too early to discuss the details of the ongoing capital needs for Affinity and Aeroflux, the disciplined cost actions I discussed earlier gives us visibility into InVenture's needs. At the InVenture level, we estimate 2026 capital needs to be materially less as our operating companies become self-funded. This reflects a leaner parent company structure as expenses continue to shift to the operating companies. On the balance sheet, by way of explanation, our $28.7 million in investments represents our $19.5 million equity method investment in Aeroflux and $9.2 million in Aeroflux debt security. And following the Goodwill write-downs earlier this year, $323 million of Goodwill still remains on our balance sheet. On the cash flow statement, you can see many of the non-cash items that appear in our income statement. The cash used in investing activities primarily reflects funding to Aeroflex and capital expenditures at the Celsius. Let me close with this. There are companies that talk about inflection points. And then there are companies that cross them. InVenture is crossing one right now. Rapid commercialization, a dramatically improved cost structure, efficient access to capital, operating companies that are beginning to fund their own growth. These are not just aspirations we are sharing with you. They are facts supported by every number I just walked you through. We believe this combination positions us to scale with far greater capital efficiency and to create meaningful long-term value for our shareholders. And I want every investor on this call to understand we are not slowing down. We are accelerating. With that, we'll open the call for questions.