Birchtech Fourth Quarter 2025 Earnings Call - $78M Patent Judgment and $16.6M Raise Recast the Risk/Reward

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Birchtech Fourth Quarter 2025 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions for dial-in participants. This conference is being recorded today, Tuesday, March 31, 2026, and the earnings press release accompanying this conference call was issued after market close today. On our call today is Birchtech President and CEO, Richard MacPherson, and CFO, Fiona Fitzmaurice. Before we get started, I’ll read a disclaimer about forward-looking statements. This conference call may contain, in addition to historical information, forward-looking statements that are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 or forward-looking information under applicable Canadian securities laws regarding Birchtech.

Forward-looking statements include, but are not limited to, statements that express the company’s intentions, beliefs, expectations, strategies, predictions, or other statements relating to its future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company’s business, based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual outcomes and results may and are likely to differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in Birchtech’s periodic filings with the U.S. Securities and Exchange Commission or Canadian Securities Administrators. In addition, such statements could be affected by risks and uncertainties related to factors beyond the company’s control that may cause actual results to differ materially from those in forward-looking statements.

During today’s call, the company will discuss adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is presented as a supplemental measure of a company’s performance and exclusive of certain items that the company believes do not reflect the core operations of the company. Such non-GAAP measures should not be considered in isolation or as a substitute for GAAP financial information. Additionally, the company’s definition of these measures may differ from those used by other companies, making comparisons across organizations difficult. Finally, this conference call contains time-sensitive information that reflects management’s best analysis only as of the date and time of this conference call. The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arrive after the date of this conference call.

At this time, I’d like to turn the call over to President and CEO, Richard MacPherson. Richard, the floor is yours.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Thank you, operator, and good afternoon, everyone. Welcome to our fourth quarter and full year 2025 financial results conference call. I want to start with a few milestones that reshaped the company’s trajectory over the past several months. In February of 2026, we completed our uplisting to the NYSE American with a concurrent public offering, raising a gross amount of proceeds of approximately $16.6 million, including the partial exercise of the underwriter’s over-allotment option. That capital raise, combined with a senior exchange listing, materially strengthened our balance sheet and broadened our investor base at a critical time in Birchtech’s growth. Now on the legal front, the U.S. District Court for the District of Delaware entered our patent infringement judgment in December of 2025, which increased our judgment amount to approximately $78 million, up from the original $57 million unanimous jury verdict.

Post-judgment interest will continue to accrue until this judgment is paid. Although defendants have filed an appeal, they have not posted a bond. Therefore, we have initiated collection proceedings, are pursuing enforcement of our judgment now. Since launching our IP enforcement strategy in 2019, approximately $37 million in license fees and settlements have been received, and we expect to convert other prior infringers into long-term commercial partners. Now turning to operations. Our business delivered fourth quarter revenues of $3.8 million, with a 31% gross margin driven by our expanding base of licensed utilities and growing product supply relationships. The U.S. coal market has stabilized and recent federal support for continued coal plant operation reinforces demand for proven emissions control solutions like our patented SEA platform. We believe this creates a longer operational runway for our core air quality business.

Now let me go deeper now into our air business. The SEA platform continues to anchor the company, and this quarter’s results reflect the durability of that franchise. What has changed is the nature of the revenue. As existing supply contracts expire for those utilities now under Birchtech’s license agreements, we will actively work toward gaining their recurring product supply as utilities embed our sorbent formulations into the processes and directly benefit from our operational expertise and know-how. Fourth quarter air revenues totaled over $3 million, close to $4 million, and mostly derived from product supply. Importantly, we expect to see a change in how utilities engage with us, with our goal being that licenses that began as enforcement targets can transition to purchasing activated carbon directly. We expect the pipeline of supply conversions to continue to grow as power demand increases in the coming years.

That transition from legal resolution to commercial partnership was our core objective in our business-first approach patent enforcement efforts that began over six years ago. Now, over the past year, we’ve signed several new license agreements, bringing us closer to a critical mass of licensed coal-fired utilities. Each agreement not only validates the uniqueness of our SEA process but extends revenue visibility through multi-year procurement cycles. As licensees incorporate our sorbent formulations into their ongoing operations, we expect activated carbon sales to become an increasingly significant portion of our revenue, a shift that should drive meaningful year-over-year growth. As I noted earlier, our $78 million final judgment represents the culmination of years of patent enforcement. The defendants have appealed, but we are confident in the strength of our ruling and the thorough judicial review behind it. Collection efforts, as I mentioned, are actively underway.

Now, related to our business, U.S. coal power generation is holding steady within a diversified energy mix that values grid reliability as well as domestic fuel supply. Federal policy continues to support the operational longevity of coal-fired plants, which in turn sustains demand for mercury emissions control. Our SEA technology remains the most effective solution globally recognized, and that positions us as an essential partner for utilities committed to running cleaner baseload power. With U.S. mercury emissions the lowest in the world relative to coal power generation, we’re pleased to play a significant role in America’s clean coal and will continue to do so as long as coal power is produced. For 2026, the Air Division’s roadmap centers on three objectives. Continue converting unlicensed users to our technology into licensees and long-term supply customers while protecting our patent.

Second, grow reoccurring activated carbon sales to our expanding base of licensed utilities. Thirdly, channel the cash flow from this mature, high-margin segment into our scaling of our water purification business. Now, taken together, the Air Division is a self-funded growth engine generating the cash and credibility that allow us to invest aggressively in water while continuing to deliver for shareholders. Now let me turn to water, where the story shifted meaningfully since last year. We moved from laboratory validation to real commercial activity, booking our first revenues, signing our first strategic partnership, and launching new products. The commercialization of our water treatment solutions began with approximately $0.9 million in purchase orders from a large Mid-Atlantic power utility for filtration system media replacement at 2 locations, removing contaminants from wastewater using our proprietary sorbent media.

That engagement validated our technology in a real utility environment and gave us a reference account to build from. We expanded our reach through a collaboration with Civil & Environmental Consultants, a national engineering firm with over 30 offices and 1,600 team members. Under this arrangement, we provide rapid small-scale column testing through our analytical design center in Grand Forks, North Dakota, giving CEC’s hundreds of water utility clients nationwide access to our testing and analysis capabilities. This effectively creates a pipeline of future system design and media supply opportunities without Birchtech having to build a direct sales force from scratch. For those less familiar, our RSSCT replicates full-scale filter performance in a compressed time frame, enabling utilities to evaluate carbon media options and PFAS removal strategies quickly and cost-effectively.

Our center is one of the few independent RSCT labs in the country with the capacity to serve the national market at this level. Beyond those two anchors, we hit several additional milestones. In January of 2026, we demonstrated that thermally rejuvenated granular activated carbon performs comparably to virgin carbon for PFAS removal. It was a breakthrough for our carbon rejuvenation program that could dramatically lower lifecycle costs for utilities. This week, we just announced our SEA-IX nuclear-grade ion exchange resin product line targeted at an approximate $220 million addressable market, spanning nuclear power, coal-fired utilities, and municipal water treatment. Birchtech’s water platform covers a broad range of media supply, filtration services, our design centers, our RSCT testing and analysis. Along with carbon rejuvenation and now ion exchange resin. We have a comprehensive offering that didn’t exist twelve months ago.

Our approach to the market is completely different than our competitors. We work closely with and through engineering firms such as CEC and others, alongside utilities to fully integrate the procurement of appropriate equipment, media, and other ancillary services. This collaborative approach to the market will ensure water utilities have an affordable, highly effective clean water solution. Will secure Birchtech’s strong market position as we continue to build customers and strategic relationships. Now, speaking of our design centers that launched our presence into the water treatment market with our data-first approach, we are now generating a growing pipeline of lab-scale engagements with water utilities and engineering firms.

We are currently participating in a grant-funded research project with a leading national engineering firm, evaluating strategies for managing PFAS contaminated drinking water waste, where Birchtech is leading advanced bench and pilot scale testing of thermal GAC reactivation using our proprietary rotary kiln system that we established in Pennsylvania. Other key projects include our role in the initial phase of a multi-phase project, where we are collaborating with another major national engineering firm and a large utility focused on carbon reactivation to identify the most appropriate media solutions for the removal of multiple contaminants. Our expertise in activated carbons provides our competitive edge and our ability to support both the engineering firm and the large water utility.

Additionally, we’re conducting water quality analysis, spent carbon evaluations, and RSSCT testing for numerous other utilities to optimize media selection, reactivation protocols, and overall treatment performance for PFAS and other contaminants. Each of these engagements is building relationships that have the potential to convert into long-term thermal reactivation partnerships or feed directly into our water treatment services pipeline. This data-first approach ensures that these utilities and engineering firms gain highly accurate and more effective media recommendations and receive full benefit from our unique industry expertise. We look forward to this area of our business becoming a key market differentiator and growth driver. The next chapter is about conversion and scale, turning these early engagements into recurring service and product revenue, progressing the development of our first GAC rejuvenation facility, and expanding our water treatment solution offerings.

Regulatory pressure around PFAS is only intensifying, and utilities are actively seeking affordable solutions. Birchtech is now in position to meet that demand with a full suite of water purification technologies that complement our established air business and open a second significant revenue stream for the company. With that, I’d now like to turn the call over to Fiona Fitzmaurice, our Chief Financial Officer, to walk through some key financial details from the fourth quarter of 2025. Fiona.

Fiona Fitzmaurice, Chief Financial Officer, Birchtech: Thank you, Rick. I will constrain my section to a concise review of the financial results for the fourth quarter. For a full breakdown of our financial results, please view our regulatory filings. Revenues totaled $3.8 million in the fourth quarter as compared to $5.6 million in the same year-ago quarter. Product revenues increased 19.8% to $3.6 million, as compared to $3 million in the same year-ago quarter. The change in revenues was primarily due to a one-time $2.5 million licensing payment from a large Southwest utility in Q4 2024. Gross profit totaled $1.2 million or 31% of total revenues in the fourth quarter of 2025, as compared to $3.3 million or 60% of total revenues in the same year-ago quarter.

The change in gross profit was a result of the one-time license fee recognized in Q4 of 2024. This change was partially offset by an increase in product revenue during the fourth quarter of 2025 compared to the fourth quarter of 2024. The decrease in gross profit as a percentage of revenues was a result of the one-time license revenue generated in the fourth quarter of 2024 having higher margins. SG&A expenses decreased 42% to $2 million in the fourth quarter of 2025, as compared to $3.4 million in the same year-ago quarter. The decrease in expenses was primarily due to lower legal fees in connection with patent litigation. R&D expenses totaled $0.5 million in the fourth quarter of 2025 compared to nil in the same year-ago quarter.

R&D expenses relate to research conducted to develop water treatment products utilizing new sorbent technologies. Net loss for the fourth quarter of 2025 totaled $0.6 million or $0.03 per basic and diluted share, as compared to $1.3 million or $0.07 per basic and diluted share. Adjusted EBITDA, a non-GAAP measure, totaled -$1.1 million in the fourth quarter of 2025 compared to -$0.5 million in the fourth quarter of 2024. Cash as of December 31, 2025 totaled $2.2 million with no debt as compared to $3.5 million with no debt as of December 31, 2024. Subsequent to the quarter end, the company completed a $16.6 million capital raise concurrent with its up listing to the NYSE American in February 2026, significantly strengthening our balance sheet.

I’d also like to briefly discuss the classification of our profit share liability in the amount of $7.9 million as a current liability on our balance sheet. This is a non-recourse liability that will not be repaid from cash on hand and is only to be paid from litigation proceeds, including the proceeds of our $78 million final judgment in our patent infringement case. Interest on the judgment amount continues to accrue during this appeal period. Under GAAP accounting rules, the profit share liability is classified as a current liability as the company expects the proceeds from this judgment are likely to be received and the profit share from those proceeds repaid within the next 12 months.

Ironically, the positive news of us believing receipt of these funds is likely within the next 12 months causes the profit share to be classified as a current liability, while at the same time not allowing us to reflect in our current financial statements the expected revenue from the judgment. This completes my prepared comments. Now, before we begin our question and answer session, I’d like to turn the call back to Rick for some closing remarks. Rick.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Thank you, Fiona. Folks, to sum up, 2025 was the year Birchtech proved out its next chapter. We have since fortified our balance sheet with a $16.6 million raise in new capital, earned a senior exchange listing on the New York Stock Exchange, secured a $78 million judgment validating our IP, and turned our water business from a development stage initiative into a revenue-generating platform with real customers and real orders. The execution plan for 2026 is focused. Collect on our judgment, expand our roster of licensed utilities into recurring supply customers, and obtain offtake agreements to support our first carbon rejuvenation facility. We entered the year from a position of strength, well-capitalized, listed on a senior exchange and operating two complementary business lines that reinforce each other.

The opportunity ahead is substantial and I’m confident that this team that we have will deliver on it. I look forward to reporting on our continued progress throughout the year. With that, operator, please open the line for questions.

Operator: Our first question is from Rob Brown with Lake Street Capital Markets.

Rob Brown, Analyst, Lake Street Capital Markets: Good afternoon, Rick, and congratulations on all the progress.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Thank you, Rob.

Rob Brown, Analyst, Lake Street Capital Markets: First question’s on the air business product revenue. Could you give a sense of what the sort of run rate is on that business as you see it and maybe how it ramps throughout 2026 with the customers that you’ve licensed to this point?

Richard MacPherson, President and Chief Executive Officer, Birchtech: Sure. On the product supply side, we had an increase, as you can see, in the last quarter of 2025. I expect to see increases as we go through 2026. The only unknown on that is when the actual contracts that are held by the companies that we just licensed will come up for renewal. As they come up for renewal, we’re in a preferred position to vie for that business through RFPs. I’ll be advising the industry as we go along, but I do expect to see growth in that side of the business. I just at this point can’t put a number on it, but I will expect to be able to do so in the coming month or two.

I do figure that we will be in excess of $20 million on the air side for 2026.

Rob Brown, Analyst, Lake Street Capital Markets: Okay, great. On the remaining customers, I guess that or utilities, I should say, that are you know potentially infringing or are infringing, how many are left to settle that you haven’t either gone to trial on or settled with yet? What’s sort of the remaining amount of potential there?

Richard MacPherson, President and Chief Executive Officer, Birchtech: Sure. There, Rob, there are a couple of very large defendants in the Iowa case that have significant product supply potential. We are now, you know, as you know, working through that case. I would expect that we can get to some decision with those in the first half of 2026. They have a significant amount of opportunity should we be able to convert them to clients rather than have them remain as defendants. You know, they, as far as a specific number, I would expect that the outstanding infringers at this point hold somewhere in the $10 million a year range of supply side business should we secure it.

Rob Brown, Analyst, Lake Street Capital Markets: Okay, great. Just maybe moving to the water side business. Good progress there. Maybe just a sense of the pipeline of the rejuvenation customers and maybe can you walk through how that pipeline develops and what are the sort of steps that it goes through to turn into offtake agreements?

Richard MacPherson, President and Chief Executive Officer, Birchtech: Yeah. Where we are right now is working through the collaborations with engineering firms. We’ve been doing a lot of testing and analytical work and with their clients. We’ve been in discussions with a number of different end users, water utilities that would be interested in us either building a rejuvenation center for them on site or in a regional location nearby where we would be able to provide our rejuvenation services to them. We’re still in the negotiation side of that. We have yet to sign any actual offtake agreements. We’re in some great discussions right now and continuing to move forward to present that option to a number of different new utilities as well.

What’s significant is we’ve basically become the you know the tip of the spear for a lot of these engineering firms with regards to the analytical work that’s necessary to be able to go back to their clients and provide some real tight assessment as to what their situation is and what can be done to get ahead of the PFAS problem. We’re a very firm part of the solution of the process. We think that will lead to longer term work for us, not just the analytical work. What we’re shooting for, of course, is to have the offtake agreements signed where we can do a collaborative effort of building out the regional facilities that we feel they’re going to need.

The offtake agreements are the next step, to answer your question, in the rejuvenation side of our business. Now that we’ve proved that we can do it and we’re doing the analytical work on a one-on-one basis, the next step will be to get the offtake agreements in place that will allow us to move forward with the construction of these facilities.

Rob Brown, Analyst, Lake Street Capital Markets: Okay. The last question’s on the new ion exchange product line. You gave some color on the market opportunity. Is that market sort of the similar customer base or would this be a utility kinda customer base? Or just maybe help me understand the customer base that you’re going after there.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Yeah. Actually it’s a totally different market. We’re very excited about it. We’ve had great results with this new product that we’ve helped to bring to market. It is a, you know, multi-hundred million dollar opportunity. We’re focused on the power plant side of it at this point. We expect to be able to expand as well. You know, we’ve yet to talk about the water treatment services side of our business. I think that will show substantial growth this year, in real revenues, adding to that first $1 million+ of business that we’ve booked to date. I really think that, and we’re now looking to hire specialists to represent us in the field, on that particular product line.

I’ve also been looking at and adding others to our team to move our general water treatment materials into the market. I really think that that’s one of our faster growing aspects in 2026 in terms of adding real revenue to the company.

Rob Brown, Analyst, Lake Street Capital Markets: Okay, great. Thank you. I’ll turn it over.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Thank you.

Operator: Thank you. This does conclude our question and answer session. I will now hand the call back over to Chairman and CEO, Rick McPherson, for his closing remarks.

Richard MacPherson, President and Chief Executive Officer, Birchtech: Well, folks, thank you again to each of you for joining us on today’s earnings conference call. Our IR firm, MZ Group, will be available to assist with any questions that you might have. We look forward to continuing to update you on our progress as we strive to deliver value to my fellow shareholders and execute upon our vision of becoming a leader in the specialty activated carbon space, delivering cleaner air and water to improve our environment.