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Aug 18, 2026, 4:05 PM ETIndustrials

374Water — Second Quarter 2026 Earnings Summary

SCWO374WATER INC
Source

Financial Performance

  • Q2 2026 revenue was $2.26 million, a 280% increase from $0.6 million in Q2 2025; revenue for the first six months of 2026 was $2.8 million compared to $1.1 million in the same period in 2025.
  • Gross profit for Q2 2026 was $1.98 million with an 87% gross margin, compared to a gross deficit of approximately $0.3 million and a negative gross margin in Q2 2025.
  • Operating expenses were $3.6 million in Q2 2026, down from $4.3 million in Q2 2025.
  • Operating loss was $1.6 million in Q2 2026, compared to $4.6 million in Q2 2025.
  • Net loss was $2.7 million ($0.15 per share) in Q2 2026, compared to $4.6 million ($0.32 per share) in Q2 2025.
  • Cash used in operations was $(2.3) million for the six months ended June 30, 2026, compared to $(7.6) million in the comparable 2025 period.
  • Cash and cash equivalents totaled $1.8 million as of June 30, 2026.

Guidance and Future Outlook

  • The company is transitioning from project milestones to recurring Waste Destruction Services (WDS) revenue, with the ability to invoice an additional $2.6 million from the OC San contract as further milestones are achieved.
  • The company has reduced operating costs by approximately $3.2 million on an annualized basis to prioritize capital toward commercial deployments.
  • Future growth is supported by the completion of the OC San Factory Acceptance Test, with delivery scheduled for October 2026, unlocking anticipated follow-on installations.
  • Management aims to scale the AirSCWO technology and services to address the biosolids challenge across the United States, starting with California.

Business Segments and Product Lines

  • The Orange County Sanitation District (OC San) project drove significant Q2 revenue through the completion of the Factory Acceptance Test.
  • The St. Cloud, Minnesota deployment, valued at approximately $600,000, is nearing completion with the demonstration program expected to conclude in September 2026.
  • The Olathe, Kansas deployment, a contracted $4.8 million project, is advancing toward launch.
  • The Orlando WDS facility has been secured via a long-term agreement with the City of Orlando, establishing a regional waste destruction hub with expanded machine shop, fabrication, R&D, and engineering capabilities.
  • The company is executing a strategic collaboration with Arcadis to jointly pursue commercial and government opportunities.

Market and Competitive Landscape

  • AirSCWO technology received >99.9% PFAS destruction validation from U.S. Department of Defense testing.
  • The company earned a DIU Success Memo ("Golden Ticket") through its partnership with Arcadis, creating a contracting pathway to access AFFF stockpiles across all Department of Defense branches and the Federal Government.
  • Additional validation for destroying PFAS and recalcitrant compounds was received from the U.S. Army Corps of Engineers.
  • The company is expanding its municipal footprint and addressing a growing demand for biosolids destruction.

Risks and Challenges

  • The press release references risks and uncertainties associated with forward-looking statements, including factors beyond the company's control, as detailed in the Form 10-K for the year ended December 31, 2025.
  • Specific operational risks, such as project execution timelines or regulatory changes, are not explicitly detailed in the text beyond the general forward-looking statement disclaimer.

Management Commentary and Tone

  • CEO Danny Bogar described the quarter as an important achievement, highlighting the successful completion of the OC San Factory Acceptance Test and the ability to recognize approximately $2.0 million in revenue.
  • Management stated that the milestone demonstrates AirSCWO can reliably destroy biosolids at the source and at scale.
  • Bogar noted that the company is simultaneously delivering on existing commitments, expanding the WDS business, creating durable partnerships, and building infrastructure to scale.

Other Key Points

  • The company secured a long-term agreement with the City of Orlando for its WDS facility, expanding the relationship to include processing additional difficult waste streams.
  • The company executed a strategic collaboration agreement with Arcadis, combining 374Water's destruction technology with Arcadis's environmental engineering and consulting expertise.
  • The company continues to focus on strengthening its financial position while advancing the commercialization of AirSCWO and the WDS business model.