Birchtech Q1 2026 Earnings Call - Judgment Collection and Water Pivot Drive Revenue Growth

Operator: Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Birchtech’s 1st quarter 2026 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, Wednesday, May 13, 2026, and the earnings press release accompanying this conference call was issued after the market close today. On our call today is Birchtech’s President and CEO, Richard MacPherson, and CFO, Michael Mioska. 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 any other statements relating to its future earnings, activities, events, or conditions. These statements are based on current expectations, estimates, and projections about the company’s business based in part on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. 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 regulators.

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

The company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information, or circumstances that arise after the date of this 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 Corp.: Thank you, operator, and good afternoon, everyone. Welcome to our first quarter 2026 financial results conference call. I want to start with a few milestones that reshaped the company’s trajectory during the first quarter. In February 2026, we completed our uplisting to the NYSE American with a concurrent public offering, raising aggregate gross proceeds of approximately $16.4 million, including the partial exercise of the underwriter’s over-allotment option. That capital raise, combined with a senior exchange listing, materially strengthens our balance sheet and broadened our investor base at a critical time in Birchtech’s growth. Now, on the legal front, during the first quarter, we advanced enforcement of our approximate $78 million final patent infringement judgment entered by the United States District Court for the District of Delaware in December of 2025.

On February 2, 2026, following the lapse of the 30-day automatic stay, we submitted a formal payment request to the cert defendants. Post-judgment interest continues to accrue until the judgment is paid. The defendants filed a notice of appeal but have not posted a bond, and we are actively pursuing our enforcement options, including discovery of assets, seizures, liens, garnishments, and clawbacks as necessary. Since launching our IP enforcement strategy in 2019, approximately $37 million in license fees and settlements have been received, and we have the potential to convert other prior infringers to long-term commercial partners. Now turning to operations, our business delivered first quarter revenues of approximately $4.2 million with an approximate 33% gross margin, driven by our expanding base of licensed utilities and growing product supply relationships.

The U.S. coal market has stabilized. 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. Allow me to provide additional color on our air business. Our SEA platform remains the legacy cornerstone of the company. The quarter’s results underscore the resilience of that franchise. What is evolving is the character of the revenue itself. As incumbent supply arrangements conclude for utilities already licensed under Bergstrom agreements, our focus turns to converting them to ongoing product supply customers as they adopt our sorbent formulations into their day-to-day operations and realize the benefits of our applied expertise. First quarter air revenues totaled approximately $3.5 million, mostly derived from product supply.

Importantly, we continue to see a change in how utilities engage with us, with our goal being that licensees that began as enforcement targets can now transition to purchasing activated carbon directly. We expect the pipeline of supply conversions to continue growing 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 to patent enforcement efforts that we began over 6 years ago. Across the past 12 months, we’ve executed a series of additional license agreements, moving us ever closer to a critical mass of licensed coal-fired utilities. Every new agreement reaffirms the distinctiveness of our SEA process. As licensees fold our sorbent formulations into their day-to-day operations, we anticipate activated carbon sales comprising a progressively larger share of total revenue and a mix shift that will translate into meaningful year-over-year growth.

As referenced earlier, the $78 million final judgment is the payoff of a multi-year patent enforcement campaign. While the defendants have filed an appeal, we remain confident in the rule, in the ruling’s strength and in the rigorous judicial review supporting it. Enforcement and collection activity is now underway in earnest. On the macro side of our air business, U.S. coal-fired generation is holding steady with an energy mix that increasingly prioritizes grid reliability and domestic fuel security. Federal policy continues to favor extending the useful life of coal plants, which in turn underpins ongoing demand for mercury emissions control. Globally recognized as the most effective solution available for capturing mercury emissions, our SEA technology positions us as an indispensable partner for utilities committed to operating cleaner baseload power.

Given that the U.S. mercury emissions per unit of coal-fired generation are the lowest in the world, we take pride in our role in America’s clean coal story, and we intend to continue filling that role for as long as coal-fired power remains on the grid. Now for 2026, the air division’s roadmap centers on three objectives. We’ll continue transitioning unlicensed users of our technology into licensees and long-term supply customers while vigilantly defending our patent portfolio. We’ll expand recurring activated carbon sales across our growing roster of licensed utilities and redeploy the cash flow generated by this mature, high-margin segment into the scale-up of our water business. Put simply, the air segment functions as a self-funding growth engine, producing both the capital and the market credibility that enable us to invest aggressively in water while continuing to deliver value to shareholders.

Speaking of water, let me turn now to the water, where momentum continued to build during the first quarter. We moved from laboratory validation into real commercial activity over the prior year. During Q1, we expanded that activity materially, booking additional revenue, adding new projects, and launching a new product line. Our national footprint was further extended through our collaboration with Civil & Environmental Consultants, Inc., a national engineering firm operating more than 30 offices with approximately 1,600 professionals on staff. Under that arrangement, Rapid Small-Scale Column Test is performed at our analytical design center in Grand Forks, North Dakota, making our testing and analytical capabilities available to the hundreds of water utility clients CEC serves across the country. That single relationship effectively creates a downstream pipeline of future system design and media supply engagements without Birchtech having to stand up a dedicated nationwide sales force.

We’re working to replicate this approach by establishing collaborative relationships with other leading environmental consultants and engineering firms across the country. By way of background, our RSSCT reproduces the performance of a full-scale filter on a compressed timeline, giving utilities a fast and cost-effective means of evaluating alternative carbon media options and PFAS removal strategies. There are very few independent RSSCT labs currently operating in the U.S., yet the market need for this more pilot-scale test is massive to ensure appropriate media selection for containment re-removal. Our key differentiators among the handful of labs offering RSSCT is test timing and expert analysis. Our analytical design center completes RSSCTs much faster than the others due to our continuous sampling technology.

More importantly, our unique experience in activated carbons, coupled with Dr. Nicholas Lentz’s team expertise in PFAS removal allows for thorough expert analysis of RSSCT results that produce highly accurate media recommendations for utilities. In contrast to other labs, our expert analysis and collaborative approach with utilities and engineering firms allows for a more affordable contaminant removal solution. We look forward to gaining traction across the water industry with this new innovative design center and data-driven methodology. From our partner design centers focused on analytics and carbon development, in January of this year, we demonstrated that thoroughly rejuvenated granular activated carbon performs comparably to virgin carbon for PFAS removal, a breakthrough for our carbon rejuvenation program that could dramatically lower life cycle costs for utilities.

Turning to March of 2026, we launched our SEA-IX nuclear grade ion exchange resin product line, targeting an estimated $220 million addressable market spending, nuclear power, coal-fired utilities, and municipal water treatment. We’re off to a very strong start. We’ve already received approximately $1 million in purchase orders to date, including $0.4 million order received in March of this year from a large coal-fired power plant with supply underway. Birchtech’s water platform now covers a broad range of media supply and related services. While our design centers RSSCT testing and analysis, along with the carbon rejuvenation together form a comprehensive offering that did not exist 12 months ago. Our approach to the market is completely different than that of our competitors.

We work closely with 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 will provide water utilities with an affordable, highly effective clean water solution and will secure Birchtech’s strong market position as we continue to build customers and strategic relationships. Our design centers remain the cornerstone of our data-first entry into water treatment, and the pipeline of lab scale engagements with utilities and engineering firms continues to expand. We are leading bench and pilot scale testing of thermal GAC reactivation in a grant-funded research project with a leading national engineering firm focused on PFOS-laden drinking water residuals and have recently completed the opening phase of a multi-phase program with a second major engineering firm and a large utility centered on carbon reactivation and multi-contaminant media selection.

In parallel, we are running water analyses, spent carbon evaluations, and RSSCT testing for a range of additional utilities. Each of these engagements lays the groundwork for substantial reactivation partnerships and feeds directly into our water treatment services funnel. The story from here is conversion and scale, turning these early engagements into recurring service and product revenues, advancing the build-out of our first dedicated GAC rejuvenation facility, and continuing to broaden our water pipeline. With PFOS regulatory pressure intensifying and utilities actively shopping for cost-effective answers, Birchtech’s well-positioned to meet that demand with a complete set of water purification technologies that complement our established air business and open a second substantial revenue stream. Before we proceed in handing the call off, I’d like to introduce our new CFO, Michael Mioska, who joined us full-time last week.

Mike is a chartered professional accountant with over 20 years of accounting, audit, M&A, and financial reporting experience across the U.S. and Canada, and has worked closely with the Birchtech finance function as an independent consultant since 2023. That deep familiarity with our business has enabled an exceptionally smooth transition, and he brings the technical expertise, capital markets, and especially the M&A discipline and reporting experience needed to support our next phase of growth. I’d like also to take this time to thank Fiona Fitzmaurice for her dedicated service as our fractional CFO, including her contributions through our uplist to the New York Stock Exchange American. With that, I’d now like to turn the call over to Mike to walk through some key financial details from the first quarter of 2026. Mike?

Michael Mioska, Chief Financial Officer, Birchtech Corp.: Thank you, Rick. Good afternoon, everyone. It is my pleasure to join my first Birchtech Corp. earnings call as CFO. I will constrain my section to a concise review of the financial results for the first quarter of 2026. For a full breakdown of our financial results, please view our regulatory filings. In Q1 of 2026, revenues increased 32% to $4.2 million, as compared to $3.2 million in the same year-ago quarter. The increase in revenues from the prior period was primarily due to growth in the water treatment area, along with increased revenue from our air business.

This growth was partially offset by a decrease in licensing revenue as the company had entered into a licensing agreement in the first quarter of 2025 with a one-time upfront license fee, for which there was no comparable revenues in the first quarter of 2026. Gross profit totaled $1.4 million as compared to $1.2 million in the same year-ago quarter. The increase in gross margin was primarily attributable to the increase in revenue, partially offset by the decrease in high margin licensing revenue. Selling, general, and administrative expenses decreased to $2 million in the first quarter of 2026 as compared to $2.2 million in the same year-ago quarter. The decrease in expenses was primarily due to lower legal fees in the period.

R&D expenses totaled $0.6 million in the first quarter of 2026 as compared to $0.4 million 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 first quarter of 2026 totaled $1.3 million or $0.06 per basic and diluted share as compared to $1.7 million or $0.09 per basic and diluted share in the comparative period. adjusted EBITDA loss, a non-GAAP measure, totaled $1 million in the first quarter of 2026 compared to $1.2 million for the first quarter of 2025. Cash as of March thirty-first, 2026 totaled $14.7 million with no debt as compared to $2.2 million as of December thirty-first, 2025.

The increase in cash reflects the $16.4 million capital raise completed in February 2026, concurrent with the company’s uplisting to the NYSE American. This completes my prepared comments. 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 Corp.: Thank you, Michael Mioska. To sum up, the first quarter built directly on our 2025 foundation. We completed our NYSE American up-listing with a $16.4 million raise, initiated collection of our approximate $78 million judgment, launched our new SEA-IX technology with approximately $1 million in initial orders, and added new water solutions awards. Subsequent to quarter end, we welcome Michael Mioska as our new CFO. Our plan for the rest of 2026 is straightforward: collect on the judgment, convert more licensed utilities into recurring product supply, and advance offtake agreements for our first plant carbon rejuvenation facility. I’m very much looking forward to bringing news on that front to the market in the near future. We enter the rest of 2026 from a position of strength, and I’m confident in this team’s ability to capture the opportunity ahead.

With that, operator, please open the line for questions.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 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 would 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 will come from Rob Brown with Lake Street Capital Markets.

Rob Brown, Analyst, Lake Street Capital Markets: Good afternoon, and congratulations on all the progress and welcome, Mike, to the new role. First question’s on the air side business. You’re working on converting customers. What’s sort of the pipeline of the supply agreements, kind of customers that have yet to come on and how you see that ramping on the air business side?

Richard MacPherson, President and Chief Executive Officer, Birchtech Corp.: Well, Rob, thanks for the question, and thanks for being here today. The air side is actually moving along nicely. There was a $1 million-plus license agreement in the first quarter last year, and we ended up $1 million ahead of last year’s first quarter. We actually had a significant growth in the product supply on our air side, and I expect to see that kind of growth going forward. I think it will ramp through 2026. The only qualitative factor on that is we don’t know when the contracts are coming up for renewal with the new licensees. We don’t find out until they issue the RFP.

It’s hard to predict it for sure, but the first quarter was very sound, and I expect the rest of the year will bring in additional revenues as well.

Rob Brown, Analyst, Lake Street Capital Markets: Okay. Thank you. On the collection efforts of the judgment, I think, you know, time’s gone on now. I think you said, yeah, a 30-day period passed, and those efforts ramp. How do you kinda see the cadence of those collection efforts taking place, and does that, you know, how does that spur maybe the ability to collect on the judgment?

Richard MacPherson, President and Chief Executive Officer, Birchtech Corp.: Sure. It’s not something I can comment about specifically, but I can say that we have hired extra specialists in the collection field, and they are now doing their thing in engaging with the defendants. I expect that we will see some movement in that side of the case as we go forward. We feel very confident in our position, and I think the strategy and efforts of the new team will benefit nicely as we go through the year.

Rob Brown, Analyst, Lake Street Capital Markets: Okay. Switching to the water side, great to see continued revenue activity there. I think you talked about the rejuvenation facility offtake agreements as something that’s in process, could you give us a sense of where you’re at in that pipeline and sort of the potential for getting those facilities kicked off during 2026?

Richard MacPherson, President and Chief Executive Officer, Birchtech Corp.: Yeah. We’ll be bringing more news to the market over the next month or so regarding that. There’s at least 3 significant utility opportunities that we’re in the midst of working on now. I’ll start sharing some of that information as it becomes more standardized and reportable. We’re also 1 of the benefits of having Mike on board is for acquisition purposes. He’s got a lot of experience in that area. We’re looking at a couple of opportunities there that we’re engaged in and I hope to bring some news to market on that in the coming month or 2 as well.

We’re very pleased with where we are with that side of it, and very much expect that we will be soundly materially involved in our rejuvenation business this year.

Rob Brown, Analyst, Lake Street Capital Markets: Well, great. Great. Last question just on the overall activated carbon market. As you kinda head into 2027, I think there’s a PFAS reporting requirement coming. Just sort of what’s the demand environment that you see, and how is it changing here as you get into the back part of 2026?

Richard MacPherson, President and Chief Executive Officer, Birchtech Corp.: Mostly what we’re seeing, which is what we expected, is a significant ramp up in testing and analysis and trying to figure out what they need to do in order to get ahead of the PFAS regulations. You know, that’s really benefiting us now. Our lab work and our design center are working much harder now than they were six months ago, and I expect that growth to continue. I very much expect that our research and development side of the company will be a profit center this year on its own. I think we made the right decision by getting into a data-first approach to entering the water business. We will continue. We’ve made notice that we’re gonna be attending a number of different water conferences coming up.

Every time we attend one, we come away with a number of new prospective clients and actual clients. That part of the business is building nicely, and it, and it opens the door and lets us in to be a part of the final solution as well, which is where, you know, the real commercial value is long term, especially on our rejuvenation side, which is part of the solution that we bring to bear on the strategies that we deploy with and through the engineering firms that we’re working with.

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

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

Operator: This now concludes our question and answer session. I would like to turn the floor back over to Richard MacPherson for closing comments.

Richard MacPherson, President and Chief Executive Officer, Birchtech Corp.: Thanks, once again, everybody, for joining us on today’s earnings call. Our investor relations firm, MZ Group, remains available to assist with any follow-up questions you might have. We look forward to sharing future updates as we work to create value for our fellow shareholders and advance our vision of leading the specialty activated carbon space, delivering cleaner air and water more affordably, especially for those utilities in smaller communities, and ensuring the more efficient removal of many harmful toxins from our environment. Thank you.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines and have a wonderful day.