AirJoule Technologies (NASDAQ:AIRJ) Q2 2026 Earnings Call

0:00 Greetings, and welcome to the AirJoule Technologies Second Quarter twenty twenty six Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. It's now my pleasure to turn the call 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 second quarter twenty twenty six earnings call are Matt Jorr, Founder and Chief Executive Officer Pat Eilers, Executive Chairman Brian Barton, Chief Commercialization Officer and Stephen Peng, Chief Financial Officer.

0:49 During this call, we will be referring to a presentation, which is available on the webcast platform and on the Investors 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 statements 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 will turn it over to Matt Joule.

1:33 Thanks, Tom. Good morning, everyone, and thanks for joining us today for our second quarter twenty twenty six earnings call. We've had some exciting developments over the last few months, and we're pleased to be discussing those today. On our last call in May, we talked about the growing public opposition to data center development. This was driven in large part by the power and water demands these facilities place on their communities. While it started as local opposition in mostly rural areas where data center development was occurring, public perception has shifted and that opposition has gone mainstream. Even cultural icons like Willie Nelson and Erin Brockovich are weighing in, issuing statements and launching campaigns to oppose data center development in The United States.

2:21 The political winds are shifting as well. New York recently enacted a moratorium on data center permits for facilities over 50 megawatts, making it the first state to explicitly pause data center development. When signing the executive order, Governor Kathy Hochul specifically said that existing regulatory frameworks are not yet prepared to address the large scale water use and treatment from data centers, which could strain aquifers, surface waters and public infrastructure. In Texas, which has been welcoming data centers and thus has seen massive development in recent years, Governor Greg Abbott announced a pause on grid connected data centers until a full and complete audit of all proposed development can be completed.

3:11 He urged regulators to determine how much water proposed data centers will use and what their water supply is as well as information about their cooling technology. These policy actions are unfolding against backdrop of growing water scarcity across The U. S. A few weeks ago, the Washington Post profiled Kearny, Arizona, a town of 2,000 people whose annual water allocation was cut by 75% after the reservoir that supplies that town fell to 1% of capacity. The town has prohibited lawn watering, car washing and even Little League. The article concluded that other towns across the West could face the same fate. Communities are already running short on water and the demands of new development are colliding with a shrinking water supply.

4:04 These are the problems that AirJoule helps solve. Our systems produce pure distilled water on-site from the humidity in the air powered by low grade waste heat without drawing on municipal supply or local aquifers. For data center operators, AirJoule offers a path to water access that does not put them in competition with the communities around them. It also helps solve a permitting problem. Water use is increasingly the factor that delays approval of new data centers because communities worry about long term water usage. By using AirJoule systems, data center operators can show local officials and residents that it has a long term solution to securing water.

4:52 And over time, excess water produced by AirJoule can flow back into the community, which eases local water stress rather than adding to it. For water stressed regions, AirJoule provides a distributed source of clean water that does not depend on a distant reservoir. The same advantage applies well beyond data centers. In many water scarce markets, water availability is constraining residential development. To that end, we recently announced an exclusive partnership with Kubota Corporation to deploy AirJoule systems for residential development in water scarce regions of Texas and California. Brian is going to talk about that in greater detail, but it's a huge milestone for us on the path to commercialization.

5:38 By partnering with Kubota, who has a one hundred and thirty six year legacy of environmental and water engineering expertise, we'll be able to deploy AirJoule systems at scale and unlock residential development across The Southern U. S. Partnerships like the one we just announced with Kubota have been critical to our success. So far, GE Vernova, our joint venture partner, delivered a powerful validation of our technology this summer. In July, GE Vernova held a grand opening for its new advanced research center frontier campus in Niskiuna, New York. They specifically highlighted AirJoule as one of the innovative technologies that GE Vernova is helping to develop. And they have an AirJoule core system operating there as a showcase unit for customers and partners who visit that facility.

6:31 You can see it also on their website in their recent posts on LinkedIn.

6:35 This reflects the strength of our joint venture with GE Vernova, and we are grateful for their continued support through engineering and R and D initiatives. We've also got some very exciting technology in the hopper at AirJay that we'll be sharing in upcoming communications. Before Brian provides an update on our customer engagements and productization, I'll turn it over to Pat for an update on our international growth initiatives in The UAE. Pat? Yes. Thanks, Matt. Good morning, everybody. Since the end of the quarter, we've achieved two important milestones related to our ongoing commercialization efforts in The UAE. First, we shipped an AirJoule core system to The UAE for a series of deployments to demonstrate the technology and validate performance for customers across the country.

7:25 The first showcase of this core unit will take place in Dubai at one of Expo City Dubai's landmark destinations. We intend to leverage Expo City's sandbox test environment for the sustainable urban deployment, including technologies addressing challenges like water security. This deployment puts AirJoule in front of the visitors and industry leaders who visit the iconic location. Following the deployment at Expo City, the AirJoule system will be used for on-site customer demonstrations and exhibitions across various emirates of The UAE. Second, AirJoule was awarded one of UAE's first Expo City green licenses.

8:17 The green license is the first of its kind in The UAE and it is the key enabler of the Green Innovation District, the country's first location dedicated to sustainable innovation.

8:32 It admits only companies that can demonstrate our commitment to sustainability and we were in the first cohort. It provides us with access to business missions throughout the Ministry of Economy and Tourism and a seat in the Green Modulus Leadership Forum. In a region where government engagement is paramount, this is a meaningful milestone for us. Our progress in The UAE is taking place as the region is increasingly focused on water security. The Gulf supplies roughly 40% of the world's desalinated water and more than 90% of that comes from about 56 plants. Several countries in the region draw 70% to 99% of their drinking water from the concentrated base.

9:25 That was always an efficiency story. Events in the region over the past several months have made it a resilient story as well. AirJoule produces pure distilled water on-site across a range of climate conditions without drawing on municipal supplies, local aquifers or a connection to centralized infrastructure. That is what we are demonstrating with this latest AirJoule core deployment. With that, I'll hand it over to Brian for the commercial update. Thanks, Pat. I want to walk through three areas this morning. Our commercial progress headlined by our recently announced partnership with Kubota, an update on our two product platforms, Prime and Core and our productization efforts.

10:19 Let's start with commercialization. In July, we signed an exclusive sales agreement with Kubota Corporation covering residential developments in Texas and California. Kubota will serve as the exclusive sales channel for AirJoule systems in that segment. As a part of the collaboration, we're also deploying two AirJoule core systems with Kubota, one near Corpus Christi, Texas and the other in Irvine, California. These will start later this quarter. Kubota, was founded in 1890, operates in more than 150 countries and brings wastewater treatment, water reclamation, pipe systems and operations and maintenance capabilities to our partnership. They also have tremendous experience in supporting residential development in water constrained regions.

11:09 The opportunity here is clear. In California and Texas, as well as other water constrained areas, water is now a primary gating item for residential development. Under California law, a residential development of more than 500 units cannot obtain approval without written verification that the water supply is sufficient over a twenty year horizon. That requirement is getting more and more difficult to meet. The state's own water supply strategy projects that California could lose up to 10% of its water supply by 2040 due to hotter and drier weather conditions. When a developer cannot verify sufficient water supply, the projects stall. In Texas, the population is expected to grow by 53% by 2080.

11:59 However, the state's recently adopted water plan projects that water supplies will be declining by 10% in the same timeframe. Water supply is decreasing while the population is booming. This is the market we are addressing with Kubota. AirJoule unlocks residential projects by generating pure water on-site independent of municipal allocations and groundwater rights. Importantly, produced by AirJoule is pure and distilled, meeting not only FDA bottled water standards but also meeting California's drinking water standards, which are the most stringent in the nation. Designing our system for the most demanding standard in The U. S. Positions us well for the rest of our addressable markets.

12:46 When it comes to performance, our systems produce water across a wide range of temperature and humidity conditions. This is what enables a single AirJoule product to serve both The U. S. Gulf Coast and Southern California. Also on the topic of customer engagement, our work with the NetZero Innovation Hub for data centers will soon move from preparation to deployment. After being selected from more than 70 applicants in the fall of twenty twenty five, we successfully completed the Hub's Technology Acceleration Program back in June. And throughout this program, we worked closely with the Hub's members, including Google, Microsoft, DataFor, Danfoss, Schneider Electric and Vertiv.

13:31 We worked with them to align AirJoule's waste heat to water capabilities with the real world operation of data centers. We'll soon be shipping our first Prime unit to Europe for a deployment to show how AirJoule can convert low grade data center waste heat into pure distilled water. Now let's talk about our products. I'll start with Prime. We commissioned our first full scale Prime system at our Newark Delaware facility back in May and has been operating ever since. After the initial startup, we focused our engineering work on optimizing the run conditions for specific operating cycles. The learnings we gained from our fields deployments of the core systems have transferred directly to Prime.

14:17 This includes the timing of fans, the sequencing of our vacuum pumps and the thermal management of our sorbent chambers. Our decision last year to concentrate our build and development activity on the core platform is paying off now by compressing the PRIME optimization timeline. We are very pleased with the initial performance of the system and we're tracking toward our expectation of 2,000 liters per day for this system.

14:48 In late June, we held an unveiling ceremony of the prime system and we hosted both Delaware Governor Matt Meyer and U. S. Senator Chris Coombs, as well This will allow us to continue optimizing the system at Newark as well as provide showcase systems for customer demonstrations. Turning to the Core System, as a reminder, we've been using the Core System to demonstrate the technology for customers, but there is significant market demand for the Core product as a dehumidifier that also generates pure water and we refer to this product as CORE DH.

15:44 Our head to head testing of CORE DH against the incumbent desiccant wheel standard continues to demonstrate significant energy savings across our target humidity range. With this product, we're targeting the estimated 1,200,000 unit installed base of conventional desiccant wheel systems. And more specifically applications where facilities operate between 3050% relative humidity.

16:12 We've already begun to deploy these systems, these dehumidifier systems with strategic customers for demonstrations and technology validation.

16:23 The third area I want to cover is productization. In 2025 and 2026, we deployed several AirJoule systems for pilot projects and customer demonstrations, and these units have been critical improving the technology in the field. We're continuing that work with a limited number of strategic customers this year. And in parallel, we're advancing the engineering that turns AirJoule into a commercial product.

16:47 Designed for manufacturing, cost reduction, reliability testing and product certification. Running these efforts together rather than in sequence is deliberate and lets commercial deployment and product development proceed at the same time and accelerates market adoption. Reliability has been a huge factor for us this year, huge focus for us this year. Since it's one of the most important factors that customers look for when evaluating a new product, we built a component reliability program that evaluates every major component in the AirJoule system and we operate dedicated test rigs through accelerated duty cycles, allowing us to identify problems and mitigate them early.

17:34 In parallel with reliability and component testing, we're completing design for manufacturing work to prepare both platforms for scaled production. We're continuing to reduce and simplify the build materials and we're working through a clear sequence to get us ready for contract manufacturing. Putting it all together, we're executing the commercialization plan that we've laid out for several quarters and I look forward to providing more updates on our next call. Now, I'll pass it over to Stephen for the financial updates. Thank you, Brian. I'll walk through our financial results for the second quarter of twenty twenty six and then provide an update on our 2026 outlook and liquidity position.

18:16 For the second quarter, AirJoule Technologies reported net operating expenses of 4,100,000 This is inclusive of $800,000 in administrative and engineering expenses reimbursed to us by the joint venture under a statement of work. Our net loss for the quarter was $8,500,000 The primary components below the operating line was $5,100,000 of non cash losses due to the increase in the fair value of our earn out shares liability and subject vesting shares liability.

18:43 Now turning to the joint venture. Total JV operating expenses for the second quarter were approximately $5,000,000 The joint venture received $2,500,000 in additional capital contributions from AirJoule Technologies during the quarter to support ongoing privatization, manufacturing and commercial deployment activities. AirJoule Technologies ended the second quarter with $41,400,000 of cash on the balance sheet. This includes $14,200,000 of net proceeds from a registered direct offering we completed in early June. Combined cash across AirJoule Technologies and the JV was $43,000,000 with no debt. Our guidance for the full year 2026 cash spend at AirJoule Technologies and the JV is now slightly higher at approximately $27,000,000 to $28,000,000 This reflects increased commercialization activities as we pursue multiple projects and deployments across different market applications.

19:33 Our liquidity is sufficient to fund our operations, the JV and our planned commercial deployments into 2028.

19:40 Looking ahead, we still expect modest pay deployment revenue at the JV during 2026, but more meaningful commercial revenue beginning in 2027 as our core and prime deployments come online. We continue to maintain strong flexibility in managing our capital position and balance sheet, And we'll remain opportunistic and disciplined in evaluating any financing and strategic opportunities that enhance our balance sheet and support long term value creation. With that, I'll pass it back for the Q and A portion of the call.

20:09 Thank

20:30 Our first question comes from the line of Jeffrey Campbell with Seaport Research Partners. Please proceed with your question. Good morning and congratulations on all the progress that you're making. You said that AirJoule is deploying the core DH to strategic customers beginning in the third quarter of twenty twenty. Just curious, provide some color maybe areas that you're targeting or maybe just some specific types of businesses?

21:01 I'm sorry, Jeff, you were breaking up a little bit. We thought that this is about the core DH deployments. Can you repeat?

21:09 Sure. It's the core DH. I was wondering if you could give us a little color on maybe where these initial strategic applications are being located geographically or and maybe specific types of businesses that you're targeting if that's relevant? Yes. Thank you for the question. And as we said, we are deploying core DH systems to strategic customers for industrial dehumidification and really this segment where spaces need to be kept dry. And I would maybe just elaborate that this is as strategic deployments, these are

21:50 seeking to validate the performance and the efficacy of the core operating system. And we're focusing on both deployments that can enhance our commercial product adoption with strategic customers in that sense, as well as some industrial focused customers that see the value of both the dehumidification and the water that's generated.

22:19 Okay. And Brian, you discussed preparations for contract manufacturing, specifically highlighting cost reduction and simplifying materials. I wondered if you could add any color with regard to, A, are both models in optimization?

22:36 Is the effort on time? And when do you expect to be ready to present enhanced designs to manufacturing partners?

22:46 Yes, thanks. I think both DFM activities and kind of cost simplification activities are on track for prime and core. The prime engineering is effectively going through, right, those cost component changes and some simplifications for manufacturing. And it's on time for this twenty twenty seven contract manufacturing conversations, and we're preparing

23:14 on schedule for that. For the core product, it's a little bit even though we've had core for a while, getting that product to be really ready for prime time. I'm very excited about the dehumidification market opportunity in front of us with this product and we are pushing to we're on time, but we're also pushing to accelerate that effort. In the past, we've clearly communicated a twenty twenty seven products there for core DH and we're on track for that.

23:46 Okay. I'll ask if I can, I'll ask. Matt. Sorry, Jeff. Just Matt wanted to add on the first topic. Keep in mind, Brian mentioned the 1,200,000 installed base for that dehumidification market. I'm pretty excited about That gives you a little bit of color on where we're heading with it. On contract manufacturing, it's important to recognize that the vast majority of the components that go into a core or prime system are built around the heart of the system,

24:16 the coated contactor, the metal organic framework coated contactor. So there are many manufacturers who already have ERP systems, supply chain all set up for all the rest of the relatively commodity components. So it's not a heavy lift is my point. Thank you. Right. Understood. Yes, understood. If I can ask one last one. With regard to Kubota and the development work that's going on there, Can you just give us a little color on what the thought is?

24:44 I'm wondering, are the installations going to be more centralized maybe for a planned development?

24:49 Or will each home have an AirJoule? And would one core enough water supply for each home? Just anything you can tell us there so we can start to visualize it a little bit. Thanks. Yes, Jeff, thanks. I think we have a rendering that was I believe released, But the idea is a planned residential community. This is a multi home community where there are several houses and there would be a centralized water generation system and recycling system. So AirJoule brings the pure distilled portable water

25:23 for the drinking water for the community. And then there's water recycling system as well for the community. So it's kind of that centralized community picture. Great. Thank you.

25:37 Thanks. Thank you. Our next question comes from the line of Alex Fuhrman with Lucid Capital Markets. Please proceed with your question. Up to 2,000 liters per day, it sounds like you're very happy with the progress that you're making and that you're confident you're going to be able to hit that target. Can you give us an update on where you've

26:09 been performing lately and just what that arc has looked like over the past six months and just give us a sense of what other kinds of tweaks and optimizations we're talking about It's important that you recognize long term these communities are looking and regulators are looking at permitting where companies, data centers or residential developers can show twenty or one hundred years in the case of Arizona water supply. So that's really what we're pointing to. Long term,

26:47 2,000 liters a day is just the start. Long term, we want to do 10,020 liters, and that's what we're focusing on. But for now, I'll let Brian answer the current state of prime. Thanks. Brian? Yes. Thanks, Matt. Thank you for the question, Alex. Commissioned this system in May. It's been operating outdoors ever since. And we've been really impressed with the speed upon which it's come online and operated. It's running 20 fourseven with high uptime. And there's a lot of water and data that's being generated through a lot of different environmental conditions. And I guess as a reminder to everyone, right, the system operates depending on the humidity levels in the air. So when we talk about 2,000 liters per day, up to 2,000 liters per day, that's at on the higher side of the humidity levels. And what makes AirJoule unique is the ability to not only run on waste heat, but to generate humidity under a wide range of environmental conditions. And thankfully, we've been blessed with hot, warm days that are humid as well as dry days. And so we've been getting really great data across the gamut.

28:00 Are really I'm very pleased with its performance coming online. And yes, we are on track to hitting the 2,000 liters per day and we have specific measures now identified to close the gap and to have the system really operating at spec.

28:21 Okay. That's really helpful. Thank you. And then if I could ask one on capital, it sounds like a very high class problem that you're going to be burning a little bit more cash than expected at the JV given the accelerated commercialization. How much capital do you envision committing to the JV this year and next? Yes, Alex, is Steven here. We haven't provided 2027 guidance, but as we think about the slightly higher 27,000,000 to $28,000,000 guidance that we provided for this year, the incremental capital above the $25,000,000 is geared towards the JV. The additional capital has really helped steer some incremental units that we have earmarked for additional customer interest that we're seeing.

29:09 So from a G and A standpoint, certainly nothing higher at the corporate entity, but all of this is earmarked toward enhanced deployments. I would think about next year as similar to kind of what we're thinking about right now. I think from a CapEx standpoint, certainly we're evaluating the contract manufacturing partners to help eliminate some of the incremental CapEx we'll likely need if we were to scale up production on our own. But from R and D and current G and A spend perspective, expect next year right now to kind of trend similarly from what we're seeing. Okay. That's really helpful. Thank you very much. Thank you. Thanks Alex.

29:55 Our next question comes from the line of Ryan Finks with B. Riley Securities. Please proceed with your Maybe starting with the collaboration with Kubota. I think residential is the main opportunity, but are you exploring broader commercialization efforts with those guys in other verticals? Yes. Thanks, Ryan, for the question. Today, our partnership and conversations with Kiboda are focused on the residential multi home communities. Appreciate that. And then maybe turning to Europe. With the prime expected to ship near term for the net zero innovation hub for data centers, I'm curious what you envision resulting from that program, whether it be technology partnerships, commercial deployment opportunities or anything else that you're looking for?

30:57 Yes, thanks. I think this is a really great opportunity for us to highlight our product and how it's integrated for data center waste heat operation. And as shared on the call, the hub includes major key members in the sector, so Microsoft, Google, Datafor, Danfoss and then Schneider and Vertiv to round it out. But highlighting the system and integration into data centers is really a key showcase for these guys. And I think the expected success is really the carry on from there into how AirJoule can specifically enable data center operations for those players.

31:46 Great. I appreciate the time guys. Yes. Hey, Ryan, I would add to Brian's comment. This whole theme of permitting, unlocking the opportunity, if these data centers look at the air for their next source of water and demonstrate that, that's all it takes. They need to demonstrate a long term solution to not deplete aquifers. And so that's what I view the Net Zero Innovation Hub is all about that, demonstrate the efficacy of the water from air system. The alternative is aquifers that are going to deplete. And so that's what it offers data centers. That's what I get excited about because it's a long term initiative that they can point to now just entering into a contract with us. So thank you for your question.

32:37 Thanks, Matt. Thank you. Our next question comes from the line of Amit Dayal with H. C. Wainwright. Please proceed with your question. Thank you. Good morning, everyone. Just trying to confirm if Carrier did invest in AirJoule and where that relationship stands in terms of commercialization efforts? Amit, are you asking as it relates to the most recently completed offering or just more broadly speaking? No, just in relation to this deal with Kubota. Yes, Amit, thanks. I think Carrie was very interested in a couple of things. One, obviously, the HVAC market sectors.

33:32 HVAC being over $300,000,000,000 market and Carrier being a key leader in that sector. And also, they're a great strategic partner as it comes to data centers, Carrier providing some it's called a heat recovery system for to keep data centers cold while also providing warm water for example, for AirJoule to be used on location. So those are two really important strategic initiatives under Carrier, and they're engaged in both of those efforts. So thinking about the dehumidification and where that technology is going at large in terms of our longer term product roadmap in the HVAC sector as well as, yes, the data center engagement.

34:23 Okay, understood. Thank you. And then are there any regulatory incentives that could be brewing at a state or federal level that could support the commercialized efforts for these types of offerings? Amit, that's a great sorry, Brian. That's a great question, and we're definitely exploring those. We're as in my remarks, I talked about the attention that's being paid on water. We aim to do our best to inform Congress and all government regulatory bodies that water is a real issue. And Brian hosted Senator Chris Coons as he made in his remarks, as he referenced.

35:10 And part of that is to make sure that everyone at the policymaking level understands how serious this issue is and what a fantastic solution AirJoule is. So we're active in terms of communication there. Thank you. And then the two just last one for me, guys. The two units that are deployed, I guess, in relation to this Kubota development, is this just to continue sort of benchmarking performance, etcetera, or to start showcasing these offerings to developers? Any clarity on that would be helpful. Yes, Amit, it's really the latter showcasing the technology development sorry, the technology opportunity to the developers and how we can actually unlock residential communities.

36:05 So two of the areas that are of key focus, right, are the Irvine, California and Corpus Christi, Texas, both locations that are facing difficulty expanding development in general, but specifically on residential communities. So Kubota selected these two locations really as a focus for them to highlight the technology to the developers. Got it. Thank you, guys. That's all I have. Thanks, Amit. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Dror for any final comments. Thanks, Melissa. Thanks everyone for joining us this morning. The second quarter moved AirJoule from validating the technology to building defined commercial channels.

36:55 Our exclusive sales agreement with Kubota gives us a channel into residential development in two states where water decides whether projects get built. Our first PRIME system is operating at Newark and ships to Europe this quarter. We have a core system operating at GE Vernova's Frontier Campus and another in The UAE supporting customer demonstrations. Every deployment we execute over the balance of this year builds towards scaled commercial activity in 2027. Thank you very much. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.