Birchtech Corp.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Birch Tech fourth quarter 2024 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions for dial-in participants. This conference is being recorded today, March 31st, 2025. And the earnings press release accompanying this conference call was issued after the market closed today. On our call today is Birch Tech President and CEO Richard McPherson and CFO Fiona Fitzmaurice. Before we get started, I'll read the disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements that are made pursuant to safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities laws regarding Birch Tech. Forward-looking statements include, but are not limited to, statements that express the company's intentions, beliefs, expectations, strategies, predictions, or any other statements relating to its future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company's business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risk, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in BIRSTEC's periodic filings with the U.S. Securities and Exchange Commission or Canadian securities regulators. In addition, such statements could be affected by risk and uncertainties related to factors beyond the company's control, that may cause actual results to differ materially from those in the forward-looking statements. During today's call, the company will discuss adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is presented as a supplemental measure of the company's performance and exclusive of certain items that the company believes do not reflect the corporations of the company. Such non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial information. Additionally, the company's Definition of these measures may differ from those used by other companies, making comparisons across organizations difficult. Finally, this conference call contains time-sensitive information that reflects management's best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this call. At this time, I'd like to turn the call over to the President and CEO, Richard McPherson.

Richard, the floor is yours. Thank you, Operator, and thank you, everyone, for joining us today.

I'd like to welcome you to our fourth quarter 2024 Financial Results Conference call. 2024 was a pivotal year for the company, highlighted by strong momentum in our core air business and the launch of our new water purification business in the fourth quarter. Before diving into our financials for the quarter, it's important to reflect on Birch Tech's journey and our mission. Established in 2008 as Midwest Energy Emissions Corp., our initial focus was on developing and commercializing the Sorbent Enhancement Additive, or SEA, technology. This innovative approach has been instrumental in assisting coal-fired power plants across North America to effectively reduce mercury emissions, ensuring compliance with quality, attainable environmental regulations for the country. Birch Tech's air business built around our patented SEA sorbit technology that utilizes activated carbon and various halides was widely adopted across the coal-fired power industry due to its proven effectiveness in capturing mercury emissions. The success of this technology led to widespread adoption, but also, unfortunately, infringement, as numerous industry players began using our patented process without proper licensing or business supply from us. In response, since 2019, the company has aggressively defended its patents through legal action, and we've secured significant settlements, and the landmark $57 million unanimous jury award has been continued to confer infringing users into long-term licensing and supply partners. Inclusive of enhancements, interest, and legal fees, our patent attorneys, Caldwell, Cassidy, Curry, have requested a final judgment in the case of $160 million, which is currently pending a final decision from the court. Recognizing new and evolving environmental challenges, we expanded our activated carbon expertise into the water purification business. with the launch of our new patent-pending water treatment technologies. Potable water utilities are a growing market and in need of more effective and affordable solutions. BERTSEC's new water business is dedicated to developing those solutions. Our strategic and highly complementary technology expansion leverages our industry-leading expertise in activated carbons and underscores our commitment to addressing critical environmental issues through affordable and sustainable innovation. In essence, we aim to do for water purification what we did for air purification. Last year, to better reflect our diversified technology portfolio mission, we rebranded as Birch Tech Corp with a new ticker, BCHT. This rebrand aligns with our dedication to providing sustainable and effective solutions for both air and water purification and reinforces our role as a leader in environmental technologies. We are fast becoming America's clean coal and clean water company. During our fourth quarter last year, we also graduated to the main board in Canada with a move on to the Toronto Stock Exchange, one of the most prominent exchanges in North America. We were also privileged to elect Mitzi H. Kugler, CPA, to the Board of Directors. Mitzi's vast experience in finance and accounting makes her a strong addition to our board that will serve us well as we enter an exciting new phase of growth and development, including the expectation to pursue a listing on a major U.S. exchange during 2025. Now, turning to the fourth quarter results, Birch Tech's Air Business drove robust revenues of $5.6 million with a strong 60% gross margin profile. While this saw a slight year-over-year supply-side revenue decrease, we believe the U.S. coal industry has stabilized, and based on the news we're hearing out of Washington, could even be poised to grow, as there is a growing movement to bring shuttered plants back online by bringing regulations back in line with the original math historical standards. We fully support this effort by the current administration as empowering American clean coal and keeping America's power plants online. Our technologies continue to offer coal plants the best, most economical process to produce maximum power while maintaining a true clean coal approach to power generation. The strong validation of our patent rights from major industry leaders which included significant settlements in late 23 and the unanimous federal court jury verdict in early 24, with a final judgment expected in the near term, has supported our steadfast protection of our innovative core technologies. We have continued these efforts in support of our company's growth and to the benefit of our shareholders. Most recently, we filed a number of patent infringement lawsuits in the U.S. District Court. Since our litigation efforts commenced in 2019, our primary objective has been to enter into positive, mutually beneficial business relationships across the industry, and we've been successful with many of our previous defendants reaching license and or supply agreements for the continued use of our highly efficient technologies for mercury emissions capture instead of having to go to trial. And to that end, in February, we secured a non-exclusive agreement with a second coal-fired utility named as a defendant in the company's lawsuit filed in Arizona, which was previously announced on July 30, 2024. Due to confidentiality agreements and ongoing litigation, the specific terms and cash infusion of this agreement cannot be publicly disclosed. We're happy to have reached a positive business outcome with this utility which has and will continue to benefit from our patented technologies for years to come. Our outreach across the industry to secure similar business agreements continues through ongoing discussions with present defendants named in our recent lawsuits. We expect significant upside potential from our successful post-trial outreach program, converting adopters of our core technology to licensees and or product supply customers. Since 2020, we've obtained 10 new license agreements with coal-fired power utilities, with several who've converted to direct supply customers. Looking ahead, given these tailwinds and the current administration support of coal power generation, we believe that we're well positioned to grow our air business revenue to $23 million in 2025 and achieve an annual revenue run rate potential of 40 million by the end of 2026. During the quarter, we announced the launch of our water business with the opening of two new testing and consulting laboratory design centers, one located in Grand Forks, North Dakota, and the other in St. College, Pennsylvania. In these centers, led by nationally recognized experts, we offer a full service solution for water utilities to deploy smarter, more affordable activated carbon technologies in support of the U.S.' 's upcoming EPA's PFAS regulations and helping water utilities meet their day-to-day purification needs today. In 2024, the EPA released an estimated $1 billion annual cost over five years for USA potable water utilities to meet the recent PFAS regulations. Now, while it's possible that there may be certain changes related to these EPA regulations, we expect the Trump administration to remain steadfast in the fight for clean drinking water. Regardless of any changes to these regulations, water utilities are currently facing high expense in remediation costs, underlined by what we feel is a lack of supplier alternatives and the rising raw material costs, which we aim to fix. The launch of our two new design centers are a significant component in our go-to-market strategy and in addressing the critical concern of affordability and contaminant removal faced by water utilities. These centers and the industry-leading capabilities they will provide are the culmination of a significant investment of both our time and resources that form the foundation of our water division's entrance into clean water technologies. specifically in the area of removing forever chemicals from drinking water. We are evaluating both M&A and Greenfield opportunities to obtain a large-scale production facility for virgin and reactivated carbons at this time. Given the stronger expected gross margin profile of the water business, we believe that these plants will have an extremely quick payoff time and could be creatively financed in any number of ways. including several of which will be non-dilutive to our shareholders. In October, we marked our entry as a supplier to the water treatment market with an agreement to purchase up to 2,000 tons of feedstock to be used for the treatment of drinking water. This feedstock purchase has the potential to generate an estimate 7 to 8 million or more in product for sales for Birch Tech. And this feedstock is to be offered to multiple markets across the U.S., including water treatment plants and solution companies, which would include engineering firms. We'll be starting to do that in the second half of 2025. So, taken together, our collective technologies are expected to provide significant revenue streams and opportunities going forward. Utilizing our team's strong expertise and world-class knowledge of activated carbons, Merge Tech will continue to produce innovative industry-leading solutions addressing critical environment concerns in both areas of air and water purification. Now looking ahead for our air business, we expect an accelerated pace of revenue, strong positive momentum from our current customers under contract, and multiple opportunities to scale. Growth is further supported by the stable U.S. coal power market with increased energy demands for coal power from increased AI and general industry demands. Supported by these tailwinds, as noted earlier, our air business alone has the potential to achieve an analyzed run rate of at least 40 million by the end of 26, just by signing on as supplied to the users of our technologies today. For our water business, alongside the sale of traditional version and eventually reactivated carbons, we'll focus on developing a superior technology expected to be completed and introduced in the second half of 2025. Looking ahead to this year, we expect revenues of at least $23 million in 2025, and that excludes any potential cash from legal claims in the defense of our IP, as well as potential revenues from our water business, as I have stated. I'm incredibly proud of our team's accomplishments and believe there is significant value-add potential to come for our shareholders as we expand into the water business. And with that, I'd now like to turn the call over to Fiona Fitzmaurice, our Chief Financial Officer, to walk through some key financial details from the fourth quarter.