Aqua Metals, Inc. Q1 FY2026 earnings call

Core Technology Development and Commercialization Progress

• The company surpassed 5,000 cumulative operating hours across extended multi-feedstock campaigns at its Reno innovation center and demonstration plant, validating its AquaRefining platform. The company achieved multiple key technical milestones during the quarter, including successfully producing independently validated battery-grade lithium carbonate from both NMC (nickel manganese cobalt) and LFP (lithium iron phosphate) recycled feedstocks.
• The company achieved 99.8% purity manganese sulfate production, demonstrating the broad applicability of AquaRefining to additional critical minerals and battery precursor markets, and continues advancing iron phosphate recovery from LFP materials, which strengthens its competitive position as LFP adoption accelerates in electric vehicles and stationary energy storage.

First Commercial Facility Development

• Site selection and engineering work for the first commercial lithium battery recycling facility is ongoing, with a shortlist of U.S. locations under evaluation. The selection process prioritizes feedstock access, logistics, strategic relationships, long-term operating economics, infrastructure availability, utility costs, permitting conditions, workforce access, and proximity to ecosystem partners.
• Refinement of plant configuration, operating parameters, and capital planning is ongoing to position the company to move quickly toward commercialization.

Strategic Activity

• The company will not proceed with the planned acquisition of Lion Energy under the original structure outlined in the previously announced non-binding term sheet, following completion of due diligence. The company continues to see long-term strategic value in integrating energy storage solutions with domestic battery materials infrastructure, and is evaluating alternative, more capital-efficient strategic structures to pursue this opportunity.
• The company maintains active commercial relationships with multiple industry partners including 6K Energy, West Wind Elements, Impossible Metals, Moby Robotics, and American Battery Factory, with discussions progressing alongside commercialization timelines.

Capital Discipline

• Aqua Metals maintained discipline through the 2024-2025 battery materials industry downturn, preserving capital, protecting shareholder value, retaining core technical capabilities, and continuing operations at its Reno innovation center, leaving it well-positioned relative to peers that paused or scaled back development. The company continues to carefully manage spending while advancing core technical, engineering, and strategic work.

Aqua Metals is pre-commercial for its core lithium battery recycling business and does not report separate product segment revenue in this earnings call. Overall company financial results for Q1 2026: reported a net loss of ~$4 million, or $1.22 per basic/diluted share, compared to a net loss of ~$8.3 million, or $10.27 per basic/diluted share, in Q1 2025. Total operating expenses were ~$4.1 million for the quarter, versus ~$8.7 million in the year-ago quarter. The year-over-year loss improvement is driven by the absence of non-cash impairment charges recorded in Q1 2025 that did not repeat in 2026. End-of-quarter cash and cash equivalents totaled ~$6.8 million, with working capital of ~$7.5 million. Cash used in operating activities was ~$3.8 million during the quarter. The company raised ~$1.3 million in net proceeds via its ATM program during the quarter, leaving ~$48.6 million available under the program. A $437,000 provision for credit losses was recorded on the company's $4.1 million total exposure to Lion Energy financing activities.

The company did not provide formal quantified financial or operational guidance in this call. Key forward-looking priorities and milestones for the remainder of 2026 include:

• Finalizing site selection for the first commercial AquaRefining facility, which is far along and expected to proceed in the near term; walking away from the original Lion Energy acquisition structure increased the company's flexibility to optimize site selection for core business goals
• Advancing engineering work, technical validation, and commercial engagement for the core lithium recycling business
• Evaluating capital-efficient strategic opportunities, including alternative structures for energy storage participation, to accelerate long-term value creation
• The company expects to provide updated material information to the market in the near term as milestones are completed

• The company has $4.1 million in total exposure to Lion Energy, with uncertainty around full recovery of the investment; the company recorded a partial $437,000 credit loss provision during the quarter based on current assumptions, and actual recovery may differ from expectations
• Battery material pricing volatility: after falling below $10,000 per metric ton in portions of 2024-2025, lithium prices have recovered, but future price swings could impact project economics and commercial demand
• Commercialization of the AquaRefining platform is still in progress, and technical, permitting, financing, or supply chain delays could prevent or slow the launch of the first commercial facility
• The company is currently operating with negative cash flow, and will require additional financing to fund full commercial development; access to affordable financing on acceptable terms is not guaranteed

Q: What factors led to Aqua Metals walking away from the original Lion Energy acquisition, what is the status of alternative discussions, and what is the expected recovery of the company's existing exposure to Lion Energy? / A: Due diligence found the original acquisition structure did not align with Aqua Metals' capital discipline, risk profile, or shareholder value objectives. The broader strategic thesis for integrating energy storage and domestic battery materials remains intact, but the company is evaluating alternative, more capital-efficient structures to pursue this opportunity, while remaining disciplined against pursuing growth at any cost. Total exposure to Lion Energy is $4.1 million, and a partial $437,000 credit loss provision was recorded per GAAP accounting requirements. Aqua Metals holds a senior secured position (second to Lion's primary ABL lender) and is actively monitoring developments and evaluating potential recovery outcomes tied to existing collateral.

Q: What key milestones should investors watch for from Aqua Metals over the next 12-18 months, particularly related to energy storage? / A: The primary milestone to watch is final site selection for the first commercial AquaRefining lithium recycling facility, which is far along with site visits recently completed for the shortlisted locations. Walking away from the original Lion acquisition structure increased flexibility to optimize site selection around core business priorities. The company continues working on potential capital-efficient alternative structures to participate in energy storage for earlier revenue generation, and will update the market as progress is made on that initiative.

Q: What remaining technical and commercial milestones need to be completed before committing to a site and starting FEL2 engineering for the first commercial facility? / A: Core chemistry and process flows have already been validated via demonstration plant operations, so current work focuses on process optimization, integration, throughput validation, and design for full commercial scale. Ongoing work includes refining impurity management, improving reagent efficiency, increasing operational stability, and validating overall process economics. On the commercial side, milestones include finalizing site selection, aligning feedstock access, advancing customer qualification, and progressing project financing discussions, all moving forward in parallel per the company's phased disciplined development approach.

Q: Have any of Aqua Metals' existing strategic partnerships moved from non-binding MOU/LOI status to binding agreements, and what is the commercial conversion timeline? / A: Discussions with all named partners and other industry participants are continuing to deepen both technically and commercially. Conversion to binding agreements naturally follows site selection and commercialization progress, as final agreement terms require a confirmed site to be locked in first. Industry demand for domestic recycled low-carbon battery materials remains strong, and the recent recovery in lithium prices from the 2024-2025 downturn has positioned Aqua Metals well to fulfill future commercial contracts as a leading remaining North American project.