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Greetings, and welcome to the AirJoule Technologies first quarter 2026 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 Divine, Vice President of Investor Relations and Finance. Thank you. You may begin.

Thank you and good morning. With me today for our first quarter 2026 earnings call are Matt Jore, Chief Executive Officer, Pat Eilers, Executive Chairman, Bryan Barton, Chief Commercialization Officer, and Stephen Pang, Chief Financial Officer. During this call, we will be referring to a presentation which is available on the webcast platform and on the investor section of our website. I would like to point out that many of the comments made during the prepared remarks and during the Q&A section are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the Risk Factors 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. Now I will turn it over to Matt Jore.

Thanks, Tom. Good morning, everyone, and thank you for joining us for our first quarter 2026 earnings call. On our last earnings call in March, we framed 2025 as the year we built the foundation for commercialization through our initial deployments at our joint venture with GE Vernova, and 2026 as the year we move from those one-off deployments to productized commercial sales. We are executing against that plan. Far in 2026, we've made disciplined progress on the AirJoule Core platform, completed the build of our first AirJoule Prime full-scale system at our Newark, Delaware facility, and continued advancing customer engagements toward commercial pipeline building in 2027 and beyond. Before I describe that progress in more detail, I want to spend a little time on the macro. The water resilience tailwinds we discussed on prior calls have not slowed. They've actually accelerated.

Water scarcity is becoming more central to industrial planning every quarter. In recent weeks, multiple hyperscalers have abandoned multi-billion dollar data center projects in the face of community opposition tied to water access. Institutional investors representing more than $1 trillion in assets have pressed those same companies for site-by-site disclosure of their water use. When the largest cloud operators in the world walk away from projects of that scale over water access, the signal to the rest of the market is unmistakable. At least 12 U.S. states have introduced data center moratorium bills this year. Bloomberg has documented that roughly 2/3 of the data centers built in the U.S. since 2022 sit in areas already under measurable water stress. Drought, regulatory pressure, and the accelerating water demands of compute and infrastructure are all intensifying, not abating. This is exactly the problem AirJoule was built to help solve.

Let's discuss how AirJoule fits into this picture, particularly with respect to data centers. We applaud the work the industry has done to drive water consumption down. Closed loop systems, direct to chip cooling, and continuous improvements in Water Use Effectiveness, or WUE, are real progress. The most efficient WUE levels we see today are on the order of 0.1 L per kilowatt hour at the most advanced hyperscaler facilities. These facilities are hundreds of megawatts or even gigawatts in scale, so the absolute volume of water consumed is still substantial and requires significant water permits. Beyond the initial draw to fill the system, there are continuing requirements for closed loop water replenishment, humidification, and domestic uses. For the millions of gallons of water that even the most efficient data centers still consume, AirJoule can reduce dependence on multiple supply and aquifer access through on-site water generation.

Turning back to our progress so far in 2026. On productization, our AirJoule Core platform improved performance and durability through systematic optimization of airflow, thermal management, and contactor coating process. The core design is essentially locked. On certification, we've advanced our UL and water quality work to ensure our systems are compliant with the most stringent regulatory standards. Bryan will share more on that in just a moment. On our flagship Prime platform, our first full-scale AirJoule Prime system has been built at our Newark, Delaware facility and is now operational. This is a meaningful milestone. The Prime is a system we engineered for scale from day one, and we'll spend more time discussing it shortly. On commercialization, we're seeing strong customer demand across an important range of markets, and Bryan will walk through where we are deepening the most active engagements.

On the balance sheet, our combined cash position supports our operations through 2027 with no debt, and Stephen will provide more detail in a minute. The bottom line is this: We're on course. We've developed our technology and are now a product company. Our internal organization reflects that with strong product engineering leadership and every work stream aligned to a product roadmap. What we're doing this year lays the foundation for scaled commercial pipeline building in 2027 and beyond. I'd like to turn it over to Mr. Pat Eilers, our Executive Chair.

Thanks, Matt, and good morning, everyone. Before Bryan walks through our product and commercial update, I would like to share an update on governance and our progress in the Middle East. As disclosed in our proxy statement filed on April 15th, effective May 28, 2026, Max Baucus will be stepping down from the AirJoule Technologies Board of Directors. On behalf of the entire board, I want to thank Max for his service to the company. Max served six terms in the U.S. Senate representing Montana and served as U.S. ambassador to China. He has been a tremendous director since our formation. He brought a depth of experience in public policy, international affairs, and industrial strategy that has been invaluable as we have built AirJoule into the company it is today. We are grateful for his contributions and wish him well in everything that comes next.

I'm also pleased to announce that Stu Porter has assumed the role of Lead Independent Director of the Board and will also serve as Chair of our Nominating and Governance Committee. Stu has been active and engaged director since the company's formation, and his leadership in these new roles will strengthen our governance and support our path to commercialization. Turning to the Middle East, concern about water security in the region continues to grow given the region's dependence on desalination. AirJoule remains actively engaged with U.A.E. government and regulatory leaders to build awareness of how our technology can bolster water infrastructure resiliency through distributed AirJoule placements. U.A.E. leadership has signaled a clear intent to lead on water security through innovative technology. We believe the AirJoule value proposition is a strong fit.

Our commercialization path in the Middle East region begins with the initial proof of value installations at potential U.A.E. clients. We will plan to scale across the U.A.E., the broader GCC and Global South markets that can benefit from those reference deployments. Through the balance of 2026, we expect to build AirJoule's profile in influential industry and thought leadership gatherings, often in coordination with the Global Climate Finance Centre, Masdar and the UAE Ministry of Foreign Affairs. These efforts will lead up to our participation in the UN Water Conference, which will be co-hosted by the U.A.E. in Senegal, in Abu Dhabi in December 2026. I'll turn it over to Bryan to discuss our product and customer progress.

Thanks, Pat. I want to walk through four areas this morning, our AirJoule Core platform, which will have two product variants, our first AirJoule Prime build and our commercial engagements. Then I will close with a brief look at the rest of 2026. Starting with the AirJoule Core platform, in 2025, we made a deliberate decision to focus our build activity on the AirJoule Core platform because AirJoule Core and AirJoule Prime share a common sorbent chamber architecture, which means every AirJoule Core deployment also de-risks the path to AirJoule Prime. This year, we have improved the performance and durability of the AirJoule Core system through systematic optimization across three areas, airflow distribution, thermal management, and contactor coating. The first generation AirJoule Core design is now locked. We may make minor dimensional adjustments as we finalize manufacturing, but we are at a form factor that we can scale.

We now have updated product spec sheets available on our website at airjouletech.com, and I would encourage anyone interested in the technical specifications to take a look. We're planning to launch the Core platform in two product variants targeting two distinct markets. The first is the AirJoule Core AWG variant with the target commercialization launch of late 2026. The primary customer focus for Core AWG is the U.S. military and small residential deployments. With the U.S. military, we are collaborating through our existing Cooperative Research and Development Agreement, or CRADA, with the U.S. Army Engineer Research and Development Center. The CRADA brings together AirJoule's waste heat to water platform and ERDC's tactical water recovery research to deliver resilient water supply solutions for forward deployed personnel. The second variant is the AirJoule Core DH with the target commercial launch in 2027.

Core DH is materially the same product as Core AWG. The same hardware optimized through process configuration and controls for dehumidification application. This variant targets the global installed base of conventional desiccant wheel dehumidification systems for humidity control between 30% and 50% relative humidity. I want to spend a moment on the dehumidification opportunity because this is the first time we are presenting concrete performance data publicly. AirJoule's metal-organic framework sorbent regenerates at 60 to 70 degrees Celsius compared with 120 to 150 degrees required for conventional desiccant wheels. That difference is fundamental. It enables heat pump-driven regeneration in place of electric reheat or natural gas.

Our initial performance data shows up to approximately 40% energy savings versus incumbent desiccant wheel technology in our target operating ranges, and we expect further improvements over the next few quarters leading up to the product launch. Our initial target markets for Core DH are dry storage and cold storage facilities operating between 30% and 50% relative humidity. Last year, we announced an MOU with a defense contractor to collaborate on this dehumidification application. This engagement has informed our Core DH development, and we expect other markets and applications to follow. Now let me turn it over to AirJoule Prime. As Matt mentioned, we have hit a meaningful milestone with the completion of our first full-scale AirJoule Prime system, which is now operational outdoors at our Newark facility. We will provide a meaningful update on its performance on our next earnings call.

The AirJoule Prime has been engineered for scaled manufacturing from day one. The Prime contains 16 vacuum chambers sourced from established suppliers at low cost, with the balance of the bill of materials made up of off-the-shelf components such as valves and pumps. The only custom component is the sorbent-coated contactor, which we are manufacturing in-house. The overall design of Prime is set. Further refinement will be limited to sorbent level improvements and individual component tuning. All of the work we did across 2025 to optimize Core, particularly the thermal management and the airflow, directly informed the Prime design and is expected to translate it into Prime performance.

The Prime is designated or designed to deliver up to 2,000 L per day or less than 200 Wh per liter when paired with low-grade waste heat, with a maximum power draw of just 12.5 kW and configurability across waste heat sources from 60 degrees Celsius and above. Over the next several months, we will continue to optimize this system in Newark. This first Prime unit is planned for deployment in Europe as part of our Net Zero Innovation Hub collaboration. We are also building another Prime system to serve as our internal showcase unit at our Newark facility, supporting customer demonstrations and proof of value engagements throughout the year.

Regarding product certification, we will pursue UL certification of the AirJoule systems for electrical components, while water quality certification will be addressed on a case-by-case basis, depending on the customer requirements and their location. Importantly, our products already meet FDA bottled water standards and will be compliant with California water quality standards, which are the most stringent regulatory standards in the U.S. We believe that designing for compliance with the most demanding applications positions us well across the rest of our addressable market. Let me turn now to customer engagements that lead to a commercial pipeline in 2027 and beyond. First, hyperscale data centers. As we've talked about previously, AirJoule's value proposition for data centers is that we can utilize low-grade waste heat to produce pure distilled water on-site. On-site water generation delivers operational resilience and supports water stewardship and community license that hyperscale operators increasingly require.

We're currently working with a leading hyperscale operator on a detailed evaluation of AirJoule Prime's economic and technical performance at discrete data center locations. This work has deepened our understanding of the value that AirJoule can deliver when tethered to waste heat. Building from this understanding, we recently published a white paper articulating AirJoule's economic benefits across both water-cooled and air-cooled data center configurations. AirJoule can help address the water permit constraints for new data center construction by generating distilled water on-site from atmospheric humidity. Given that a 100 MW data center can generate $3 million-$5 million per day, [audio distortion] Net Zero Innovation Hub for Data Centers. Waste heat reuse from data centers has emerged as an important regulatory priority in Europe under the EU Energy Efficiency Directive, and we are in close conversations with the consortium's members to address that need.

As referenced earlier, our first Prime unit is planned for deployment in Europe in conjunction with the Net Zero Innovation Hub to demonstrate AirJoule's integration into a data center and its ability to convert waste heat into pure water. Second, residential development. We are deepening a co-development framework with a global partner targeting water-scarce U.S. residential markets in the U.S. Southwest. The Southwest is increasingly an environment in which residential development projects are restricted due to a lack of water security. Our AirJoule platform addresses that constraint directly, and during the first quarter, we completed deployment of an AirJoule Core system at the Red Dot Ranch Foundation site in Pescadero, California. The pilot validated off-grid water generation that supports Red Dot Ranch's climate positive housing development. Third, water delivery and truck distilled water.

The global water distribution market is approximately $50 billion, and in many U.S. markets, distilled water sells for above $1 per gallon, driven not by raw supply, but by the logistics of trucking water from distant wells to the customer. In collaboration with a waste heat partner, AirJoule's waste heat to water economics can result in operating costs below $0.10 per gallon, positioning us favorably in this supply chain. We have early-stage conversations underway with waste heat providers, distributors, and end users about future collaborations. Finally, the Middle East. In January, we announced an exclusive distribution agreement with TenX Investment across six Gulf countries: the U.A.E., Oman, Qatar, Saudi Arabia, Bahrain and Kuwait. We are pacing deployment activity to align with regional conditions and the availability of production-ready hardware later in 2026. Putting it all together, we're excited about the opportunities ahead of us.

We're seeing growing traction for our data center application. Opportunities in the residential development space continue to deepen with our co-development partner, and the launch of our dehumidification product is attracting interest from customers. Through the rest of 2026, we will complete the commissioning of our first Prime system at Newark and prepare for its deployment in Europe via the Net Zero Innovation Hub. We will deliver our first commercial Core systems. We will publish additional dehumidification performance data and build out customer engagements for the Core DH variant. We will continue to build the deployed base and contracted customer relationships that support scaled commercial activity in 2027. With that, I'll turn it over to Stephen for the financial update.

Thank you, Bryan. I will walk through our financial results for the first quarter of 2026, and then provide some color on our outlook and liquidity position. Before turning to operational highlights, I do want to address one item in our results. We recorded a non-cash impairment charge of approximately $55 million flowing through our AirJoule JV equity method investment line. This follows last quarter's adjustment, and like that charge, is accounting related. Our fair value assessment of the JV investment is ordinarily performed annually, but given the decline in our share price last quarter, performed an interim assessment. Because the test is measured as of quarter end and our share price was at a trough on that date, the assessment resulted in a write down for the quarter. I would note that our share price has recovered meaningfully since the close of the period.

I also want to underscore what's unchanged. This charge has no impact on cash, no impact on the operational performance at the JV, and no impact on our broader commercial trajectory. The JV's technology development, customer pipeline, and execution against milestones continues to track in line with our expectations, as you've heard on this call. Turning to our financial results. For the first quarter, AirJoule Technologies reported net operating expenses of $3.6 million. This is inclusive of $0.8 million in administrative and engineering expenses reimbursed to us by the JV under a statement of work. Our net loss for the quarter is $49.8 million. The primary component below the operating line was a loss from investment in AirJoule JV of $63.1 million, driven primarily by the impairment I mentioned. This is partially offset by a $14.7 million tax benefit.

Turning back to the joint venture, the total JV operating expenses for the first quarter was approximately $5.5 million, and the JV received $10 million in capital contributions from AirJoule Technologies during the quarter to support ongoing productization, manufacturing, and commercial deployment activities. AirJoule Technologies ended the first quarter with $31.1 million of cash on the balance sheet. Combined cash across the systems with the JV was $35 million with no debt. Our guidance for the full year 2026 cash spend at the AirJoule Technologies and JV is unchanged from our prior guidance. Our liquidity is sufficient to fund our operations, the JV, and our planned commercial deployments through 2027.

Looking ahead, we expect modest paid deployment revenue at the JV during 2026, with more meaningful commercial revenue beginning in 2027 as our Core product completes our certifications and our first Prime deployments also come online. We maintain strong flexibility in managing our capital position and balance sheet. We'll also remain opportunistic and disciplined in evaluating any financing and strategic opportunities that enhance our balance sheet and also support long-term value creation. With that, I'll pass it back for the Q&A portion of the call.

Thank you. If you'd like to ask a question, please first star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Amit Dayal with H.C. Wainwright. Please proceed with your question.

Thank you. Good morning, everyone. Thanks for taking my questions. You know, congrats on, you know, getting the first fully assembled unit ready. My question, I guess, is just, you know, pretty basic, I guess. What will it take now for the customers to you know, potentially pull the trigger on placing orders for these units? Do they need some type of pilot deployment before they place larger orders? I mean, if you could walk us through the sales process from here to potentially getting these deployed in the field. Thank you.

Thanks, Amit, for the question. We actually see a couple different ways that customers can convert. Some of them do want to see pilots. Some of them are happy seeing the system operational with real-world performance data. Of course, there are also customers that are hungry for water, so to speak, you know, are eager to move forward as well. We're having a range of conversations with various different customers, you know, taking them through that process. Every customer is unique in terms of what they need to see in order to pull the trigger.

Understood. Thank you. As you sort of, you know, make some tweaks and improvements to the assembled unit, like how much more improvement in performance, et cetera, do you think there is that you could extract from these levels?

Yeah, looking forward to being able to answer that question more fully. With the system just now, you know, becoming operational today, you know, we're looking forward to starting the optimization process and what's called a shakedown of that process so we can really see, you know, the initial performance and then how much further we can drive it with various improvements. Improvements can range from individual component optimization, say for example, fans and pumps, you know, optimizing their efficiencies, as well as sorbent level changes, which are things such as like the thickness or the quantity of sorbent that's in each contactor. We can expect to see, you know, tweaks and improvements to performance over the coming months, and we'll provide a more meaningful update, you know, on our next quarterly.

Understood. Just last one, maybe, you know, this fully assembled unit, are you potentially gonna place it in a customer site, you know?

Yeah.

You upgrade, you know?

Yeah, good question. We'll discuss the details of this unit's deployment in, you know, a future call, and we haven't disclosed or communicated the specifics around that, but it will be deployed.

Thank you, guys. That's all I have.

Thank you. Our next question comes from line of Jeffrey Campbell with Seaport Research Partners. Please proceed with your question.

Good morning and congratulations on all the work and the developments. I guess my first question is, now that the Core and the Prime designs are stable, can you provide some color on your roadmap to reduce unit costs?

Yeah, thanks, Jeff. You know, the primary activities on reduction of unit costs are really occurring throughout the remainder of 2026. These are, you know, kind of similar to my previous comment, things like finding the most cost-effective and quality and efficient pumps and fans, as well as some other kind of components that are throughout the system. That work has begun for Core and is beginning for Prime, and we anticipate to be able to move substantially through this process over the coming quarters, you know, leading up to the launch of the Core AWG system at the end of the year and then, you know, fully completing that process obviously before the launch of the Prime and the DH unit. We'll provide a more meaningful update as we move through that.

It will take time to validate, you know, quality and performance of the different components we have inbound, but, that's substantially the bulk of the activity.

As long as we're at it, I would ask, is the sorbent that you want to use now stable as well, or do you still look at other MOFs perhaps maybe from research that's happening at GIF?

Yeah, we're exploring alternative MOFs within the standard research kind of pipeline so that we're aware fully with all sorbents is, you know, MOFs and non-MOFs, that can have an impact on our core performance. I'd like to say we're MOF agnostic, and we want the best technology in our product as possible. Today the sorbent that we've scaled and is available in large quantities at a cost-effective price, it's performing very well. You know, it's setting the benchmark for us in terms of any other material would have to deliver, you know, substantial performance to validate, you know, its position in a, in a variant of the product.

It may be it's a little, you know, a little bit early, but probably not the way you guys look ahead. I'm just wondering if you could tell us what kind of planning or working you're doing towards the contract manufacturing shift in 2028. Are you still targeting that year? When in the year do you expect that to begin to really ramp up?

Yeah, we've had the initial conversations with contract manufacturing assembly houses, so to speak. As we've shared on, you know, previous calls and materials, our system is largely off-the-shelf components. So, you know, there are assembly houses or, you know, contract manufacturing partners that are perfectly positioned to take our assembly instructions and scale to provide the volumes of the Primes and Cores that we need. We've begun those conversations. We're of course not ready to disclose or any details around the full maturity, but we are still planning for, you know, when that will happen so that we can be prepared. 2028 sounds right in terms of like the, you know, the volume scale that we're anticipating and into future years.

We're really, you know, leading with customer pull in terms of, you know, volume and then capability to meet that volume will match.

Okay. Yeah, that's enough for me. I'll take the rest of them offline and give it back to the queue. Thanks.

Thanks, Jeff.

Thank you. Our next question comes from the line of Alex Fuhrman with Lucid Capital Markets. Please proceed with your question.

Hey, guys. Thanks very much for taking my question and congratulations on all the progress that you're making towards commercialization. You know, now that you've got the Core design essentially locked here, can you tell us what still needs to be done here to finalize the design for Prime, it sounds like the underlying technology behind the two systems is essentially the same. Are you hoping to have a better sense of how Core performs in the field and then use some of those insights to tweak the final design for Prime?

Thanks, Alex, for the question. You know, substantially all the engineering was completed through the Core because effectively it's the same sorbent chamber architecture that we just put 16 sorbent chambers into. You know, moving forward with the Prime we'll be, you know, optimizing that core engineering design. We don't see any substantial engineering modifications. There could be things here as we start to shake down the system, moving forward, Core will not really inform Prime. We have Prime now in our hands, we'll start to shake down an optimization and, you know, treat it independently as it moves forward.

Okay. That's really helpful. Thanks. Then you mentioned a number of different, you know, use cases and end markets on the call. Obviously, military is a big one that could be, you know, commercialized pretty soon here. Data centers are of course a big one here as well. You mentioned residential deployment. Where are you kind of seeing the most demand now, and how do you prioritize going after these different end markets? You know, is it fair to assume the AI data center opportunity is for the most part tied to the larger Prime system?

Yeah, that's a fair assumption, Alex Fuhrman. We've talked a lot about data centers and water scarcity and our ability to impact that market segment, and we're having, you know, substantial conversations with that. I think that there's significant, you know, pull into that direction. You know, one other comment on this is that different markets take different time. Like, there's different regulatory frameworks and different route proof points and validations before different markets, you know, will embrace and adopt in a meaningful volume way. You know, for example, data centers are gonna move at a different pace than U.S. residential, than U.S. military, you know, than desiccant dehumidification, you know, AirJoule Core DH products, for example. We're trying to manage all of those different go-to-market timing dynamics here as well.

Okay. That's really helpful. Thank you.

Thank you. Our next question comes from the line of Ryan Pfingst with B. Riley Securities. Please proceed with your question.

Hey, good morning, guys. Thanks for taking the questions. Maybe a follow-up to the last one. For the Core deployments expected in the fourth quarter, which customer do you think is most likely first to place an order? Or is a better way to think about it, multiple customers are ready and just waiting for the required certifications to be completed?

Thanks, Ryan. In a lot of ways, the initial Core deployments are still positioning customers that are principally interested in Prime, although there are Core customers as well for the, for example, Core DH that that product is gonna, you know, go to market through pilot programs and that kind of thing, and convert, you know, customers on Core. We also talked about, you know, U.S. military engagements, and really, you know, providing them with Core AWG products. Hopefully that provides some color here. We'll disclose more in terms of who's actually, you know, engaged in due time with, you know, the disclosures we can provide.

Appreciate that. Could you give us an update on customer interest in the water purchase agreement model and if that's something where we can see an agreement come together in late 2026 or is that more of a 2027 event?

Yeah [crosstalk]

Go ahead. Yeah.

Thanks, Bryan. Bryan has been answering the questions that have come in so far. He's leading our joint venture and he's also our Chief Commercialization Officer. He's answering a lot of these questions. He's also a Ph.D. in chemistry. One of the things that these questions denote are, you guys are asking about the differentiation between Core and Prime. What's really critical to this last question, the water purchase agreements, is the utilization of waste heat.

You get a much, much better opportunity when you're actually recovering that waste heat that's available everywhere and your energetics go down to such a large degree that the levelized cost of water is impacted less than it is when you're out there dehumidifying because we have a standalone heat pump system when we're, you know, for the dehumidification project. I think that's a really important delineator between Core and Prime. I think with respect to the last question, Ryan, on water purchase agreements, I remain most excited about that.

When you use waste heat to drive that cost down, you also, as Bryan talked about in his prepared remarks, you tie that into distribution within a 100 mi radius, there's numbers of sites, whether they're data center or other sites, where waste heat will drive our regeneration costs down and therefore water costs down. I see the water purchase agreements this year, coming, you know, at least planning for the, you know, planning to get to commitments, as opposed to including, in parallel, I should say, with equipment sales for the Prime.

I appreciate that.

Bryan, I cut you off in case yeah, if Bryan, if you were gonna add to that, please.

No, thank you, Matt.

Bryan, anything else? Okay. Thank you, Bryan.

Thank you. Our final question this morning comes from the line of Sean Milligan with Needham & Company. Please proceed with your question.

Hey, guys. Thanks for taking the questions and all the updates today. Just wanted to touch base on the slides. You have a slide that has the CapEx for AirJoule relative to the CapEx for the data centers for a 100 MW siting. I thought that was pretty interesting. Can you kind of talk about, you know, is that sort of the siting density that you're thinking about when you talk about having these discrete conversations with data centers? Like, would initial sitings be lower? Just kind of, like, trying to get a sense for is that gonna be a standard siting for data centers.

Sean, I think you're asking about the capital size of the deployment of AWG sites or?

Yeah. Like the slide that says, you know, 1%-3% of total facility build cost, you know, would represent AirJoule CapEx. I guess that's pretty sizable relative to, like, what I was thinking.

Yeah.

Is that based on, like, siting, like you mentioned talking to a data center customer with discrete siting opportunities? I'm curious, like, what's informing that sizing that you're giving in that slide?

I see. Thank you for that question. This is an important topic to be clarified. On the slide here, we're mentioning the $3 billion-$5 billion total CapEx for 100 MW data center. What we've done is we've looked at the amount of water that data center needs in totality. If you replaced all of the water with AirJoule CapEx, it would be a 1%-3% of that total build. You know, this is kind of like a worst case or maybe a best case scenario in terms of the volume of water that would fit the bill at these types of deployment sizes. As you anticipate, you know, this would be a very sizable project to replace 100% of a data center's water demand.

I don't anticipate that, you know, out of the gates at any, you know, initial projects.

Okay. The customer that you're talking to, is it like, are the conversations being driven more by water issues where they're siting their data centers or just kind of the ability to get more efficient at the data center? It goes back to just I'm curious, you know, how much of this is like where future sites could be opened up versus kinda just getting more efficient at current sites?

Yeah. Most of our conversations are around new data center builds where they have, you know, permitting and pushback in water scarce regions, right? Where they're having, you know, some trouble securing the permits that are necessary. You know, AirJoule comes as a solution to get the project back on track. That's kind of where those conversations live. I mean, you know, you could anticipate if you're building a data center and you have all the water you need, then, you know, you're not our customer. If there's water scarcity or quality or regional pushback, then those are where we, you know, we can come in.

Great. Thank you.

Thank you. Ladies and gentlemen.

If you don't mind, I'll just add one more comment to Bryan's. This is Pat Eilers. These data centers as well, there's a whole sustainability aspect to it as well as an insurance opportunity with distributed water. It does provide resiliency and sustainability, which is not lost on many of the hyperscalers as well, even if it were not the primary source. That's just additional color on the data center opportunity.

Thank you. That concludes today's question-and-answer session. I'll turn the floor back to Mr. Jore for any final comments.

Thanks, Melissa. Thanks everyone for joining us this morning. The first quarter of 2026 was a quarter of disciplined execution against our 2026 objectives that we outlined in March. Our Core platform is maturing. Our first Prime is built and operational. We are seeing strong customer demand across a range of markets. I'm super excited that we are scaling our commercial pipeline for 2027 and beyond. The productization of Core, the Prime development in Europe via the Net Zero Innovation Hub, the launch of our dehumidification platform, and the customer engagements Bryan walked through this morning all support this exciting path. We really thank you.

Thank you. Ladies and gentlemen, this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

Greetings. Welcome to the AirJoule Technologies' Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Tom Divine, Vice President of Investor Relations and Finance. Thank you, you may now begin.

Thank you, and good morning. With me today for our full year earnings call are Matt Jore, Chief Executive Officer; Pat Eilers, Executive Chairman; Bryan 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 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&A section are forward-looking statements that involve risks and uncertainties that could affect our actual results and plans. Many of these risks are beyond our control and are discussed in more detail in the risk factors in the forward-looking 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'll turn it over to Matt Jore.

Thanks, Tom. Good morning, everyone, and thank you for joining us for our full year 2025 earnings call. This is an important call for AirJoule. 2025 was the year we built the foundation for commercialization and 2026 is the year we intend to convert that foundation into a commercial pipeline to revenue. Before I review our accomplishments and outline our plan for the year ahead, I want to take a moment to talk about something that has become impossible to ignore, the growing urgency of water resilience. In Corpus Christi, Texas, home to one of the nation's largest petroleum ports, the main water reservoir has dropped below 10% capacity, its lowest level on record. The city's own projections indicate it could reach a water emergency within months, meaning supply will be unable to meet demand. The Governor of Texas has publicly warned that the state may need to intervene. Industrial operations that produce jet fuel for Texas airports and supports billions of dollars in economic activity, faced the prospect of curtailment due to lack of water. The city's proposed long-term solution is a desalination plant that will cost over $1 billion and is years away from producing any water. Meanwhile, in the Middle East, the unfortunate ongoing conflict has caused immense human suffering. Our thoughts are with the people and the communities affected there. It has also exposed the critical vulnerability for the more than 100 million people who depend on desalination for their water supply. Desalination plants in Bahrain have been damaged by military strikes, facilities in the UAE and Kuwait have been hit by missile debris. As Bloomberg columnist, Javier Blas, recently observed, water is now more strategically important than oil. These desal plants are centralized facilities that represent single points of failure for entire populations. These risks are real, and they are often underappreciated until they become urgent. They stem from the same structural problem, the world's water infrastructure is concentrated, brittle and increasingly vulnerable to disruption. Whether the stress comes from drought, Industrial and population growth or geopolitical conflict, the result is the same. Communities and industries are exposed to water supply risks with very limited alternatives. AirJoule offers a fundamentally different approach. Distributed water generation from the atmosphere that operates independently of pipelines, reservoirs and centralized desalination. AirJoule systems generate water on site behind the meter and at the point of need. They require no municipal water connection. These systems produce pure distilled and potable water from ambient air using waste heat. We've proven this in the field. Over the past year, AirJoule systems have operated in Texas, Arizona, California and Dubai. The macro tailwinds that we discussed on prior calls remain in full force and have been exacerbated and exposed by the current war. Data center expansion and the onshoring of advanced manufacturing is exponentially driving an increase in industrial water and power demand. But the events of recent weeks have elevated the conversation from efficiency and sustainability to resilience and security and even survival. That shift is accelerating interest in exactly what AirJoule can deliver. In our year-end call in March of last year, we laid out a clear set of objectives for 2025, validate our technology in the field, develop products for commercial launch, strengthen our partnerships towards building a commercial pipeline and ensure sufficient capitalization to support commercialization. We delivered on these commitments. On technology validation, we said we would move from laboratory demonstrations to real-world field deployments. In Dubai, we operated an AirJoule system at a government advanced technology facility showcasing our technology to public and private sector customers across the Middle East. In Hubbard, Texas, we deployed the first U.S. field demonstration of AirJoule, showing our ability to produce pure water from air and generating months of operational data across diverse environmental conditions. At Arizona State University, an independent academic evaluation is ongoing in one of the most demanding air environments in the United States. On product development, we said we would advance our products toward commercial readiness. Last year, we made a deliberate engineering decision to focus our initial builds on our so-called A250 platform, which we'll now be referring to as our AirJoule Core product. This is our core 2-chamber system optimized for industrial dehumidification and water generation. This allowed us to build, deploy and learn from multiple systems in the field, and those learnings have directly informed the design of our A1000 which we'll now be referring to as AirJoule Prime. This is our larger water generator for industrial scale applications that we're currently building. Both products share a common sorbent chamber architecture and produce distilled and potable water that meets FDA bottled water standards. On partnerships, we said we would leverage our strategic relationships to accelerate commercialization. GE Vernova invested additional capital and commenced a strategic waste heat integration project with us. We'll also be deploying an AirJoule system at GE Vernova's New York facility to support our waste heat strategic project with them and to be used as a demonstration system for GE Vernova's customers. Additionally, we were selected for the Net Zero Innovation Hub to showcase our AirJoule system for Google, Microsoft, Data4 and other leading data center infrastructure companies. We established defense sector credibility through ACRADA with the U.S. Army and an agreement with a defense contractor for anti-corrosion applications. And we announced an exclusive Middle East distribution agreement with TenX Investment, an Emirati owned company with well-established relationships across government, commercial and industrial sectors throughout the Gulf. On commercial pipeline, we said we would develop strong customer engagements with a path to commercial sales. We are now actively engaged with customers across several industry verticals. We introduced the water purchase agreement business model, and we developed a defined, repeatable customer engagement process that is advancing prospects toward commercial deployment. Bryan will take you through that process in detail shortly. On the balance sheet, we said we would ensure sufficient capitalization to support commercialization. We completed a $15 million private placement anchored by GE Vernova, filed an S-3 shelf registration and completed a $23 million equity offering in January 2026, ensuring that we have the runway to execute on our plans with 0 debt. Let me highlight the key milestones from the fourth quarter and the first several weeks of 2026. Some of these were discussed on our third quarter call in November, but I want to place them in the context of the full year and the momentum we're carrying into 2026. During the fourth quarter, we continued to advance our defense sector relationships. ACRADA with the U.S. Army, which we announced in October, is focused on integrating AirJoule with tactical waste heat recovery systems to deliver resilient water supply for forward-deployed troops. In December, we announced a collaboration with Red Dot Ranch to bring off-grid water solutions to rural residential communities in Pescadero, California, demonstrating AirJoule's value proposition for distributed residential water generation. We deployed an AirJoule Core system in January and completed the first stage pilot in February. In December, we also commissioned an AirJoule Core system at Arizona State University for independent academic evaluation by Dr. Paul Westerhoff and his team of globally recognized experts in atmospheric water harvesting. In January, we announced an exclusive distribution agreement with TenX, providing AirJoule with market access across six Gulf countries, and we commenced our partnership in the Net Zero Innovation Hub program in Denmark that I mentioned earlier. Looking ahead, 2026 is the year when AirJoule transitions to commercial pipeline building. We expect to secure multiple long-term customer commitments across data center, industrial, defense and international markets. Importantly, the customer relationships we build in 2026 are laying the foundation for scaled commercial business in 2027 and beyond. As I mentioned earlier, one of our recent announcements was our exclusive distribution agreement with TenX across the Middle East, a region where water demand has far exceeded natural supply and where recent conflict has further exposed its fragility. I'd like to turn it over to Pat Eilers to discuss the significance of this part of the world in terms of energy, water and the opportunity it represents for an AirJoule solution in that region. Pat?

Yes. Thanks, Matt. I have spent a considerable time in the Middle East region over the past 2 years with AirJoule and the last decade since my BlackRock days and I want to share some perspective on why it is an important region for AirJoule. The Middle East is one of the most water-stressed regions on earth. Gulf nations depend on desalination for 70% to 90% of their drinking water. At the same time, the region is experiencing massive growth in data center development, advanced manufacturing and infrastructure investment. Each of these sectors require substantial quantities of water. Governments and enterprises across the Gulf are actively seeking technologies that can strengthen water security while reducing energy intensity. Matt described the recent attacks on desalination infrastructure in Bahrain and elsewhere in the Gulf. Those events have exposed the vulnerability that has concerned regional leaders for years, with the concentration of critical mineral supply in small number of centralized coastal facilities. Communities have already lost access to drinking water when individual plants have gone off-line. The fragility of this infrastructure is now visible to the entire world. This is exactly why distributed water generation matters. AirJoule systems operate independently of desalination infrastructure and can be located where water is needed rather than relying on pipelines or trucks. It can be deployed on site at industrial facilities, military installations and community water systems to produce pure distilled water from the atmosphere. This capability has significant value in a region where water resilience is now a national security priority. We recognize that the current conflict in the region creates uncertainty around the near-term timeline for deployments. We are monitoring the situation closely and working with TenX, our partner, to ensure we are positioned to move forward when conditions are favorable. At the same time, these events are reinforcing the strategic urgency of water resilience across the Gulf and the conversations we are having with prospective customers reflect that urgency. We are confident that the long-term opportunity in the Middle East is substantial, and we intend to support the increased need for water resiliency. Now I will turn it over to Bryan Barton, our Chief Commercialization Officer, to discuss our product road map and commercialization plans for 2026. Over to you, Bryan.

Thanks, Pat. Let's start with the AirJoule A250, which we're now referring to as AirJoule Core. As Matt mentioned, we made a deliberate decision in 2025 to focus our initial system builds on the Core platform. The Core is a 2-chamber system that shares the same sorbent chamber architecture as our larger AirJoule Prime water generator. By building, deploying and iterating on the Core systems throughout the year, we accomplished two things simultaneously. First, we gained important engineering learnings that helped us improve the overall design of the system. Second and equally important, we used the Core system as a proof-of-value surrogate for the Prime system. Every Core deployment demonstrates to customers the performance, water quality and economics of the AirJoule platform, directly derisking the pathway to Prime commercial deployment. We are finalizing the Core product design and preparing for UL and NSF certification, which are required steps before commercial launch. We expect the Core product to be commercially available in late Q4 2026. For industrial dehumidification applications, there will be an additional Core product that will be optimized for maintaining low humidity environment in a range of approximately 30% to 40% relative humidity with significant energy savings compared to incumbent desiccant wheel technology. For this product, we are targeting commercialization in 2027. On cost reduction, we have made substantial progress. We have sourced lower cost components across multiple subsystems and are evaluating their reliability in our current builds. We are also simplifying the overall system design which reduces both manufacturing complexity and cost. The sorbent chamber remains the only custom manufactured component. The balance of the bill of materials consists of commercially available parts. Turning to the Prime. This is our larger water generator designed for industrial scale water production using waste heat. Prime is the product that the majority of our data center and industrial water customers are ultimately looking for. The learnings from our Core systems have directly informed the Prime design, and we are building our first Prime system now in Newark, Delaware. Once operational, it will serve as a critical outdoor showcase unit, enabling customers to see the full scale system operating in real-world conditions. We will provide updates on Prime deployment timing as the build progresses and we gain operational experience with the full-scale system. Water productivity per chamber continues to improve through ongoing optimization of our sorbent performance and cycle tuning across a range of temperature and humidity conditions. These improvements directly translate to better economics for our customers, and we expect to continue to make gains as we move into commercial production. We are also initiating a direct -- a dedicated optimization of the Core platform for the stand-alone dehumidifier market, focused on system performance optimization for dry storage and anticorrosion applications. This targets a large installed base of approximately 1.3 million industrial dehumidification systems globally and our longer-term HVAC integration work with Carrier continues to benefit from the engineering and productization work underway on both the Core and Prime systems. On manufacturing, our coating line is operational in Newark, producing the sorbent coated contactors central to AirJoule's operation. We are advancing process development to establish a scalable, repeatable manufacturing process. Our Newark facility has sufficient production capacity to address expected sales volume through 2027. As demand increases beyond that, we expect to transition to contract manufacturing for both contactor production and full system assembly. We're initiating those conversations now and preparing for assembly documentation required to support that transition. On Slide 9, I want to walk us through our process for converting strong customer interest that Matt and Pat described into commercial deployments. We have developed a defined repeatable customer engagement process with four stages. Stage 1 is discovery and evaluation, where we assess product market set for a specific customer, benchmark AirJoule's performance against the customers' alternatives and complete a technoeconomic analysis. This stage typically takes 1 to 3 months, and we are actively engaged with customers across several industry verticals. Stage 2 is a proof of value. In some cases, the technoeconomic analysis from Stage 1 or prior deployments are sufficient for customers to move to commercial structuring. In other cases, we deploy a demonstration unit on site and validate performance in the customers' operating environment. The customer validates water quality, observes waste heat integration, economics, and confirms real-world performance and reliability. Our deployments in Hubbard, at ASU, in Dubai and in Pescadero have all served as proof-of-value demonstrations. Today, the Core system is our primary proof-of-value platform because it operates on the same architecture as the Prime and demonstrates the same sorbent performance, water quality and energy economics. As Prime becomes operational, it will serve as an additional proof-of-value asset at full scale. This stage typically takes 6 to 12 months. Stage 3 is commercial structuring. Once performance is validated, we define the commercial model, which could be a water purchase agreement, direct unit sale or a lease. We also align on product configuration, site engineering, deployment scope and pricing. This stage typically takes 3 to 6 months. Stage 4 is deployment and scale. Multiunit commercial deployment, expansion within the customer's portfolio and across geographies and recurring revenue through service, maintenance and WPA contracts. This is the long-term value creation engine. I should note that these stages are not strictly sequential. For customers with strong strategic urgency or established familiarity with our technology, commercial structuring discussions often begin while proof-of-value work is still underway. This parallel progression can compress the overall timeline from initial engagement to commercial deployment. Putting it all together, here's what to expect from us in 2026. The Core system for both industrial dehumidification and smaller scale water production applications will be our first commercial products to launch late Q4 this year following completion of certifications. Our first Prime system is being built now, and once operational, it will serve as our showcase for industrial scale water generation customers. Through our partnerships with the Net Zero Innovation Hub for Data Centers, we expect to deploy an AirJoule system later this year. This deployment will directly demonstrate AirJoule's performance for Google, Microsoft, Data4, Danfoss and other leading data center customer -- companies. Through TenX, initial commercial deployments in the Middle East are planned for late 2026, subject to regional conditions. And across our defense partnerships, we anticipate deployments in 2026 in both water resiliency and anticorrosion applications. And in the residential market, we're planning for additional partnerships and deployments that can unlock new developments in water-scarce regions. Through these various deployments and partnerships, our focus in 2026 is on building the deployed reference base in contracted customer relationships that support scaled commercial activity in 2027 and beyond. Every deployment we execute this year validates AirJoule for an entire category of customers and advances our pipeline toward commercial conversion. The customer engagement cycle we are outlining is the engine that converts interest into commercial deployments. We're advancing customers through this process with the discipline and the pipeline is growing across multiple verticals and geographies. Now I will turn it over to Stephen for the financial update.

Thank you, Bryan. I will now walk through our financial results for the fourth quarter and full year 2025 and also provide some color on our 2026 outlook and liquidity position for the year. We can turn to the financial results slide in the presentation. As a reminder, AirJoule Technologies accounts for its 50% ownership in the JV with GE Vernova using the equity method. The numbers I will discuss are for AirJoule Technologies and the results from the joint venture are reflected in the loss from investment in AirJoule JV line. For the fourth quarter, AirJoule Technologies reported net operating expenses of $3.2 million. This is inclusive of approximately $0.7 million in administrative and engineering expenses reimbursed to us by the joint venture under a statement of work. For the full year, net operating expenses at AirJoule Technologies were $13.6 million, which compares to $11.2 million in 2024. The year-over-year increase was driven primarily by a $4.2 million increase in noncash stock-based compensation expense and is offset by lower professional fees and a shift in the R&D line from AirJoule to the joint venture. Our net loss for the full year is $9 million. The primary components below the operating line were a loss in investment AirJoule JV of $39.3 million offset by a noncash gain of approximately $25 million from changes in the fair value of earn-out liabilities and subject vesting shares. The $39.3 million JV loss compares to $5.3 million for the full year 2024. The primary driver of the variance is the noncash impairment of in-process R&D that reduced net income at the joint venture. This is a noncash accounting adjustment related to a change of valuation of intellectual property contributed to JV at formation. It has no impact on our joint venture's operations cash position or our ability to execute on the commercialization plan. Now let's turn to the joint venture. The total JV cash outflows for the year was approximately $18 million, which is consistent with the guidance provided on our third quarter call. The JV received capital contributions totaling $17.8 million from AirJoule Technologies during the year. $5 million of that came from GE Vernova through the April 2025 equity investment in AirJoule Technologies. The joint venture remains in the development of [indiscernible] as there is nominal revenue of approximately $110,000 during the fourth quarter from the sale of AirJoule Core systems to Arizona State University. AirJoule Technologies ended 2025 with approximately $22 million of cash on the balance sheet. Subsequent to year-end, we completed an equity offering in January 2026 that raised approximately $22 million in net proceeds. Following that offer, our combined pro forma cash position across AirJoule Technologies with the JV was approximately $44 million with no debt. With respect to liquidity, we have sufficient cash to fund our operations, the JV and our planned commercial deployments through 2027. We expect our combined cash spend across the corporate entity and the JV in 2026 to be approximately $25 million. The January offering, combined with our existing cash and liquidity, provides a clear runway to execute on the commercialization plan that Matt and Bryan have both outlined. Looking ahead to 2026 at the joint venture level, we are budgeting approximately $17 million to $19 million in operating expenses to support the productization, manufacturing and commercial deployment activities that Bryan described. This is in line with our 2025 spend level. At AirJoule Technologies, our corporate operating expenses are expected to be approximately $15 million for the full year, of which approximately $8 million is noncash stock-based compensation. With the successful execution of our registered offering in January, along with our effective S-3 registration status, we continue to maintain strong flexibility in managing our capital position and balance sheet. Going forward, we will remain opportunistic in evaluating any financing and strategic opportunities that enhance our balance sheet and support long-term value creation. With that, I will pass it back to Tom for the Q&A portion of the call.

[Operator Instructions] And the first question we have comes from the line of Michael Legg with Ladenburg Thalmann.

Congrats on the quarter. Nice progress here. Wanted to ask a little bit about, you talked about the customer engagement. Can you talk about how you're going about engaging the customer from a feet-on-the-street perspective, from a distributor perspective? And what -- how is the outreach going and talk about that a little bit, please?

Thanks, Mike. This is Bryan. I think if I understand your question correctly, it's really around our process of engaging customers. Is that accurate?

Yes, yes.

Yes. So it's worth noting that there's really, I think, three ways of one in which these conversations are initiated, right? One is through direct engagement from the customer themselves. That's when they reach out to us. And then, of course, there's warm introductions that happen across our network and to the tops of these organizations. And then there's really kind of meeting folks through direct conferences or trade shows or suppliers and that kind of thing. And so there's really a lot of activity in all three kind of categories of how we reach our customers. There's a lot of them that come to us, frankly, because this is an urgent topic for a lot of data center builds in particular, in that market. One thing to note on the data center market is there's a lot of builds that are happening and a lot of builds that end up getting canceled, canceled projects due to permitting on the water side, where everything seems to be moving ahead, but then you can't secure the water permit. And so that's one thing that's really driven a lot of engagement for us in the data center market. And there's other verticals as well where that outreach has been predominantly customer-driven in the industrial sector as well as in the residential sector, which we believe is a significant value for AirJoule to unlock different kind of frozen residential developments. Does that address the question, Mike?

Yes. Great. And then on the supply chain, you mentioned most of the -- almost everything except one is commercially available. As we scale over the coming years, will -- is there anything that's a scarce supply chain or that you don't have redundancy on that we should be thinking about?

I don't think so, Mike. Most of these components that are in the box, so to speak, are kind of already at scale, pumps and motors and valves. The custom part of our sorbent chamber is an aluminum vacuum chamber that is produced at scale through cast aluminum manufacturing, and this is a very commodity industrial process. It's just our form factor is a bit unique, but it's totally available at scale. The thing inside the vacuum chamber is our sorbent coated contactor. The contactor is already at scale commodity, many vendors, millions of parts globally already produced. So that's a standard offering that we then coat with the metal organic framework sorbent material. We do that in-house really to define the process of coating, but coating parts is also a commoditized process. There are many vendors that can do this at scale. AirJoule has taken -- like this is kind of a core aspect of our intellectual property and we need to define and own kind of the optimization of that process and lock it down before we engage with the select partner to take that to scale.

Okay. Great. And then just one last question. You mentioned $10 million cap call on the AirJoule joint venture at year-end. Can you explain that and then also talk if there are any other major CapEx needs for '26?

Yes, Stephen, do you want to take that?

Yes, Mike, you're asking about the 2026 capital call, correct?

Yes.

Yes. So that capital call -- those two capital calls are kind of the normal course funding plan for this year, as we laid out in our prepared remarks, what our anticipated total spend for the joint venture will be and these two capital calls are part of the funding contribution to fund the JV for those prospective expenses. And I'm sorry, the second part of your question?

Any other major CapEx for '26?

No, nothing other than, again, the forecast that we provided in our prepared remarks around our cash needs. CapEx for the joint venture has largely been funded through last year to help support the build-out that Bryan described.

Great. We've got some progress.

Our next question is from the line of Alex Fuhrman with Lucid Capital.

Congratulations on all the milestones you've achieved in 2025. Wanted to ask about gross margins. What kind of gross margins are you expecting initially for your first couple units of sales? And then as you think about longer-term contracting -- transitioning to contract manufacturing, what kind of gross margin do you think you'll be able to achieve at scale?

Yes, maybe I can take that. I think for this year, we're really just focused on the deployments at hand. And so I think the gross margin is less of an emphasis for us in terms of what our long-term objectives are, which are around 30%, 35% at scale as we move into contract manufacturing. So this year, as we're focused on really the customer pipeline build-out and the validation of our technologies, the focus is more on top line and customer engagement execution and as we move into 2027, as I alluded to, as we contract manufacturing that margin is what we're targeting. And so our conversations around both our design and our build materials will ultimately help unlock the gross margin profile that we're pursuing long term.

Okay. That's really helpful. And then nice to see the first obviously, small revenue here for the JV in Q4. Should we expect to see similar small revenue throughout 2026 as we get closer to the full-scale commercial launch at the end of the year?

Yes, we do. We envision these deployments while some of them will be passed in nature will be paid deployments. So we expect some modest revenue that will continue to [indiscernible] at the joint venture level. And given some of the accounting treatment of the JV that will flow through the equity income or loss from the JV line.

That's really helpful. And then you guys mentioned the water crisis in Corpus Christi and kind of the trade-off between AirJoule and desalination. Just curious how close your economics are getting to competing with large-scale desalination progress -- project? And how much of a selling point is the lack of a massive upfront CapEx for these types of projects as you start engaging with communities like that?

Yes. Thanks, Alex. I think it's important to think about how a desalination actually gets built. It's a multiyear permitting and planning process. And typically, desal plants are billions of dollars of infrastructure that goes into the ground, then they clean up the salt water, of course, and then they have to dispose brine, and brine disposal back into the source is a point of concern often. Economically, the comparison desal is definitely cheaper than AirJoule Technologies for water creation. It's about 5 to 10x cheaper in terms of operating costs. The difference is like really the value of when you would deploy AirJoule is when the time to those permits and capital are constraining economic development. We're in a period of time right now where there's immense build-out. And we talk about Corpus Christi, who is right on the gaff as you point out, but the timeline to unlocking those development projects is really constrained. And another thing I'd like to point out in terms of the water that's produced from AirJoule is distilled, very plain, 0 TDS. And this is actually difficult for RO water or desal water infrastructure where there's residual TDS or things that come along. And so water quality is a main value driver. So for the kind of like bucket at large, like where is the value for AirJoule Technologies, it's in terms of speed to market, distributed water, resiliency water where that water is yours, right? And it is your asset that you own. And then it's around water quality.

And Alex, this is Matt. I'll add two things here that Stephen and Bryan said. Regarding your gross margin question, you might recall we've established a water purchase agreement business model, and that has been well received by customers. And to Bryan's point about distributed water. If you envision these AirJoule water plants at the site, wherever there's waste heat and every data center there is waste heat, every industrial operation has waste heat, you can envision an AirJoule water plant. And so the gross margin question, when you take that model is easier to maintain, as long as you're focused on where that water has value, and that distilled water that Bryan brought up has tremendous value. So we're pretty confident because you get this -- we place these AirJoule water plants and sell the water for a 15-, 20-year period. So that gross margin question on sale of equipment also applies to water being sold. So just wanted to add that to your question.

Our next question is from the line of Julian Mitchell with Barclays.

This is Drew on for Julian Mitchell. So I just wanted to get a sense of what commercial opportunities you're expecting to turn into firm orders, I guess, more broadly like on a global scale and then more specifically in the Middle East, I know you guys touched on that a bit during the call, but if there's any additional color you could provide there, that would be great?

Sorry, I'm not exactly -- yes. So the question is around commercial deployments that lead to -- sorry, deployments to lead to commercial activity?

Deployments like leading into orders throughout the year, if there's any color on that?

Yes, sure. So thanks for the question, Drew. As kind of discussed on the call, there's a number of different market verticals that we're engaging into, be it on the residential side of unlocking whole residential build communities that are currently frozen and the development pipeline due to water permitting as well as a number of data center engagements as well as the U.S. military in terms of water resiliency as well as on dehumidification. So there's a number of verticals and customer conversations that are ongoing that are really kind of poised for these deployments and that proof of value conversation with each one of those customers. We will announce these as they happen throughout the year and kind of give updates as to the success of those deployments and proof of values with those customers in different verticals. And then those will cascade into commercial commitments from those customers is our expectation on the overall process. Does that address the question, Drew?

Yes, absolutely.

At this time, there are no more questions in the queue, so I'll turn it back to Matt Jore for some closing comments.

Thanks, everyone, for joining us this morning. 2025 was a year of building for us, building systems, building partnerships and building towards commercial pipeline. In 2026, we expect to see the early results of that work through our first product launches and additional customer deployments. Every deployment we execute this year and every customer relationship we advance is building the foundation for scaled commercial activity in 2027 and beyond. Thank you.

Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.