Innventure Q4 2024 Earnings Report

Innventure EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.11
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Innventure Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $0.45 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Innventure Announcement Details

• Quarter: Q4 2024
• Date: 4/11/2025
• Time: Before Market Opens
• Conference Call Date: Friday, April 11, 2025
• Conference Call Time: 11:00AM ET

Innventure (NASDAQ:INV) Inc. founds, funds and operates companies with a focus on transformative, sustainable technology solutions acquired or licensed from multinational corporations. Innventure Inc., formerly known as Learn CW Investment Corporation, is based in ORLANDO, Fla.

Innventure Q4 2024 Earnings Call Transcript

Key Takeaways

• Both Aeroflex and Excelsius delivered their first commercial products in Q3/Q4 2024 and are building momentum heading into 2025.
• In October 2024, nVenture completed its business combination with LearnCW, launched InVenture on Nasdaq, and positioned itself as a public platform for future operating companies.
• nVenture launched its fourth operating company, Refinitiv, in collaboration with Dow to pilot an advanced recycling process converting mixed plastic waste into sustainable chemicals.
• nVenture reported Q4 2024 revenues of $1.2 million, driven by early sales at Excelsius and Aeroflex, and an adjusted EBITDA loss of $27.9 million, though management expects stronger revenue growth in H2 2025.
• The company strengthened its balance sheet by raising approximately $28.9 million through a Series C preferred stock private placement and up to $30 million in convertible debentures.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the nVenture Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press 11 on your telephone.

[Operator]

You will then hear automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Lucas Harper, Chief Investment Officer. Please go ahead.

[Lucas Harper, Chief Investment Officer at Innventure]

Thank you, operator, and thank you all for joining us for nVenture's fourth quarter and full year twenty twenty four earnings call. My name is Lucas Harper, nVenture's Chief Investment Officer. And joining me on the call today are Bill Haskell, Chief Executive Officer and Dave Yablonovsky, Chief Financial Officer. Earlier today, we issued a press release announcing our financial results, which is available on our Investor Relations website along with a supplemental slide presentation. As referenced on slide five, we will be discussing non GAAP financial measures during the call.

[Lucas Harper, Chief Investment Officer at Innventure]

The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP and non GAAP financial measures are available in our earnings release and supplemental slide presentation on our website. In addition, certain statements being made today are forward looking statements that are based on management's current assumptions, beliefs and expectations concerning future events impacting the company. These forward looking statements involve a number of uncertainties and risks, including but not limited to those described in our earnings release, Form 10 ks for the period ended 12/31/2024 and other filings with the SEC. The actual results of operations and financial conditions of the company could differ materially from those expressed or implied in our forward looking statements. And now I'd like to hand the call over to our CEO, Bill Haskell.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Thanks, Lucas, and thanks to everyone listening today. NVenture was happy to report on our fourth quarter and full year 2024, which proved to be a similar year in the company's history and our evolution as a growing differentiated technology commercialization platform. We accomplished several key milestones throughout the year, which I'd like to recap. First, both Aeroflex and Excelsius started delivering commercial product to the marketplace, marking a significant milestone in their commercialization journeys. Both have continued the momentum into this year, and I'll touch on 2025 strategic priorities for each later in my commentary.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Second, in October, InVenture closed its business combination with LearnCW and started trading on the NASDAQ as a public company. As we said in the past, we believe InVenture represents a differentiated opportunity for investors to participate in the expected growth trajectory of our current and future operating companies. We remain committed to our goal of driving long term value for our shareholders and believe we are only in the very early stages of capturing that value. Third and finally, in December, we announced our collaboration with the Dow Chemical Company and launch of our fourth operating company, Refinitiv. In addition to Procter and Gamble and Nokia, Dow is the third active multinational corporation we've collaborated with in connection with the launch of a new operating company.

[Bill Haskell, CEO, Director & Board Member at Innventure]

There are various collaborative opportunities we plan to explore with Dow within the waste to value ecosystem and we are very much look forward to the future. As you can see, 2024 was a watershed year at nVenture. We executed well against our 2024 strategic priorities and believe we have positioned the company well for success in 2025. Now let's dive into updates for each of our operating companies starting with Excelsius. As a reminder, nVenture owns a majority of the company and we consolidate Excelsius' financials.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Compared to single phase water, Excelsius' new cool systems offer a differentiated cooling solution that can handle higher heat fluxes, lower overall operating expense, and have superior redundancy and servicing flexibility, all while using a dielectric fluid that our testing indicates will not damage the GPUs in the event of a leak. All of this can lead to a lower total cost of ownership to the data center operators compared to single phase cooling systems. As I mentioned, Excelsius started delivering product to the marketplace during Q3 twenty twenty four and gained momentum during the fourth quarter. While revenues have yet to scale, the traction Excelsius is generating within the data center ecosystem is impressive. I'd like to start by reviewing the strategic goals that Excelsius set out to accomplish.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Our strategy has always been to lever the reach of global partners to both validate our model and to reach scale. To that end, we have targeted establishing relationships with one or more entities in each of the following four separate groups. Number one, large global OEMs number two, hyperscalers number three, colocation operators and number four, AI as a service providers. To date, we have made meaningful progress with companies in all four groups. As communicated in our recent press release, Excelsior signed a three year master purchasing agreement to white label its product for a leading global thermal management OEM for sale to its end user customers and resale to its channel partners.

[Bill Haskell, CEO, Director & Board Member at Innventure]

We have also been engaging in discussions with multiple hyperscalers. To get a sense for the potential for these large global companies, the top hyperscalers collectively have estimated spending over $250,000,000,000 for data center development for 2025, and each typically orders equipment at a rate of about 1,000 racks per week. Excelsius has also announced deals with large colocation players, TeleHouse and I'm data centers, both of which have established innovation centers that will display Xcelsys' NuCool solution. We have announced a collaboration with AI as a service provider, Nordic as well. Importantly, we believe each of these agreements has the potential for expansion as we expect additional orders will follow as the customers validate the technology.

[Bill Haskell, CEO, Director & Board Member at Innventure]

We believe that the economics of the Excelsius solution are compelling, the expected benefits for data centers are clear and market adoption of the technology is starting to gain momentum. We are also excited about Excelsius' recent announced product line expansion, which can help serve the needs of large players in the data center market. This includes the launch of a two fifty kilowatt multi rack cooling system, helping Excelsius serve the ever increasing need for higher rack power densities across a broadening set of end market use cases. We believe the design of this product can scale even higher, and we are excited about the company's sophisticated product roadmap. We expect these innovations will help the company maintain a leading position in the two phase direct to chip liquid cooling market.

[Bill Haskell, CEO, Director & Board Member at Innventure]

We look forward to sharing more as we progress through 2025, but needless to say, we are proud of what Excelsius has accomplished today and expect many additional achievements from Excelsius in the quarters and years ahead. Now shifting to Aeroflex, which as a reminder is carried on our balance sheet as an equity method company. Similar to Excelsius, Aeroflex started delivering product to the marketplace during 2024 and is gaining momentum that we believe sets the company up for a pivotal 2025. Earlier this month, Aeroflex announced a partnership with Spectrum Brands for their Furminator deshedding ultra premium pet shampoo product. The Aeroflex design should help improve the overall customer experience with a sustainable solution that uses up to 66% less plastic than rigid bottle alternatives.

[Bill Haskell, CEO, Director & Board Member at Innventure]

This is a significant development for Aeroflex and one that is indicative of the broader conversations Andy and his team are having with potential customers. Packaging companies are not solely focused on volume and price. Sustainability, performance and total cost of ownership all play a large role in the decision making process, and potential customers need to audit the packaging facilities to ensure the products meet all of their criteria. This makes two other recent announcements critically important. First, as we mentioned on our last call, Aeroflex received the highest standard and rating under the brand reputation through compliance global standard or VRCGS and is certified as AA grade.

[Bill Haskell, CEO, Director & Board Member at Innventure]

This represents the fourth consecutive year the Westchester manufacturing site has achieved the highest rating, which is an important credential MNCs look for in a packaging supplier. Second, Aeroflex recently achieved two important international organization for standardization or ISO certifications. These ISO certifications hold significant value for organizations and brand owners with clear policies surrounding product quality and performance. These credentials provide verification that Aeroflex's production process meet ISO standards and coupled with the BRCGS certification exemplify Aeroflex's exceptional quality and consistent approach to manufacturing. These certifications open up the aperture of potential customers that Aeroflex can target to further establish itself within the $400,000,000,000 packaging market.

[Bill Haskell, CEO, Director & Board Member at Innventure]

In addition, Aeroflex launched its partnership with ChemiPak in Europe, which was originally announced back in June of twenty twenty four. Aeroflex deployed its proprietary filling machine directly at ChemiPak's production site to facilitate adoption of the technology across Europe. This strategic partnership positions Aeroflex to help address growing demand for sustainable liquid packaging solutions in the broader European region. Our product deliveries have yet to start, this milestone establishes a global footprint, localizing the ability for European customers to do business with us. We are proud of this momentum and look forward to seeing what Andy and his team do next.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Now let's move to our latest operating company, Refinitiv, which is focusing on opportunities in the waste of value space. In mid December, we launched Refinitiv and announced its collaboration with Dow. In January, we hosted a call where Bill Greco, Refinitiv's CEO did a deep dive into the Dow collaboration and the technology that Refinitiv intends to commercialize. We'd encourage everyone to give that a listen as it provides valuable detail around the plastic waste to value market opportunity, incumbent technologies and Refinitiv differentiators. To quickly frame why we're so excited about the opportunity, less than 9% of global plastic waste generated each year is recycled.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Refinitiv is focused on the two forty million tons of plastic waste that are typically landfilled or incinerated annually. The scope of this unmet market need is a key reason that we're focused on commercializing what we believe will be an economically viable recycling solution. Our solution to that problem uses a proprietary advanced recycling process licensed from VTT, Technical Research Center of Finland, to convert minimally sorted, low cost, mixed plastic waste to dropping chemicals. Refinitiv plans to take waste from food trays, plastic wrap, storage bins, detergent containers, and other household plastics and convert them to sustainable chemicals that today come from barrels of oil, in turn reducing the overall net need for oil production. The process targets conversion of abundant low cost plastic waste to valuable chemicals at an expected high yield.

[Bill Haskell, CEO, Director & Board Member at Innventure]

The company is only a few months old, but Refinitiv has hit the ground running. First, they are building an impressive team. In addition to Bill Grieco and Adam Javan, Refinitiv hired Doctor. Ignacio Paolo Rivera as Chief Technology Officer, who brings over 25 of experience in the chemicals and fuels industries. Second, the team established plans with VTT for bench and pilot scale experiments for optimization of olefin gas production from plastic waste.

[Bill Haskell, CEO, Director & Board Member at Innventure]

These experiments are currently being conducted using plastic waste that are potential feedstocks for the initial production plants that Refinitiv plans to build. PTT also started experiments on Refinitiv's behalf for liquid production that have been promising. Additionally, the Refinitiv and Dow teams are beginning to develop project plans for defining product quality, site selection and integrating the conversion process with steam cracker operations. Looking ahead, while we don't expect the company to generate revenue for a few years, we thought it would be helpful to discuss three key strategic priorities for Affinity over the next several quarters. Number one, engage an engineering procurement and construction partner for the first plant design and delivery two, demonstrate viability of fluid bed conversion of mixed plastic waste to liquid product at VTT pilot scale and three, finalize initial site selection and feedstock sourcing for the first plant.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Executing on these priorities will set the company up for future success and we are excited to watch the company develop. Now I'll provide an update on the pipeline of multinational corporation relationships in our funnel. We started 2024 with two ongoing MNC partners, Procter and Gamble and Nokia. We ended the year with three, adding Dow in collaboration with our launch of Affinity. Beyond that, there is a diverse and evolving set of MNCs that continually share opportunities with the venture for us to evaluate.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Given this, we don't plan to disclose MNC numbers on a quarterly basis moving forward. Instead, we will communicate relevant developments to the market as they happen. Rather than focusing on quantity, the quality of the opportunities has always been paramount, and we continue to see quality increase as our relationships evolve. Based on relationships with just three MNCs, InVenture has launched four companies since inception. Pure Cycle Technologies was the first InVenture operating company, and it is now a public company with an enterprise value of approximately $1,500,000,000 As previously communicated, nVenture took the company public in 2021 and we no longer have an economic interest in Pure Cycle.

[Bill Haskell, CEO, Director & Board Member at Innventure]

As we evaluate opportunities, we look to create companies that we believe have the potential to reach similar target enterprise values above $1,000,000,000 To close, 2024 was a milestone year for nVenture and marked the beginning of our journey as a public company. I am incredibly proud of all the hard work exhibited by the entire nVenture team and the teams across our family of operating companies. The momentum we've seen early in 2025 is invigorating, and we expect this year to be an inflection point for revenue growth. With that, I'd like to turn the call over to our Chief Financial Officer, Dave Yaldonovsky, to review our financials. Dave?

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Thanks, Bill, and thanks to all joining today. NVenture ended 2024 with total revenue of $1,200,000 representing the first commercial sales at Acelsius. As Bill mentioned, both Acelsius and Aeroflex began generating revenue in 2024, and we expect revenues to continue to grow in 2025, with most of the growth occurring in the second half of the year. Adjusted EBITDA was a loss of $27,900,000 in 2024, driven by cost of sales and R and D expense at Acelsius, marketing expense as Acelsius grows, nonrecurring professional services, legal fees and consulting fees related to the business combination and higher G and A at both the Celsius and InVenture resulting from our transition from a private company to a public company. A reconciliation of adjusted EBITDA to net loss is shown in the appendix of the earnings presentation.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Now a brief discussion on tariffs. Like most companies across many different industries, we're still evaluating the impact tariffs may have on our business. At this point, we don't expect tariffs to have a material impact on our ability to grow revenue and scale our operating companies. While Acelsius is a buyer of materials like aluminum and copper and other electrical components, the company's Tier one supply chain is largely North American based, so Acelsius is relatively protected from any direct impact tariffs may have. For AEROflex, the company continues to pursue U.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

S.-based raw material suppliers and all production is currently done in The U. S. The impact of tariffs on the ChemoPac partnership is also not expected to be material as Chemo Pak distribution will be focused within the broader European region. And for REFINITY, we also don't expect tariffs to have a significant impact on the business. The company's plan is to build plants in The U.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

S, source plastic waste feedstock domestically and sell both the liquid and gas products to domestic off takers. It's important to say, we remain committed to our goal of creating long term shareholder value and are confident in how the company is positioned as we move through 2025. Moving now to our recently announced transactions, all of which strengthen our capital position. First, on 03/24/2025, InVenture completed a private placement of Series C preferred stock in the aggregate amount of approximately $28,900,000 The Series C offering was designed to accommodate certain persons interested in investing in the company on terms similar to those of the Series B preferred round that closed on October 2024, as well as strengthen the InVenture balance sheet by converting Founder and other related party debt into Series C preferred shares. Specifically, we issued 275,000 preferred shares for cash proceeds of $2,750,000 and issued 300,000 Series C preferred shares pursuant to an agreement with one of our advisers.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

In addition, Executive Chairman, Mike Atworth, Chief Strategy Officer, John Scott, and other related parties terminated approximately $18,000,000 worth of InVenture and Aeroflex debt in exchange for approximately 2,300,000.0 Series C preferred shares, resulting in an annual interest expense savings of approximately $3,000,000 We believe this demonstrates a strong commitment from our founders and reiterates their belief in goal to drive long term value creation for our shareholders. Second, on March 25, InVenture entered into a securities purchase agreement with Yorkville for convertible debenture issuances in an aggregate principal amount of up to $30,000,000 We expect to issue $20,000,000 of debentures in a closing scheduled to occur within the next few days and to issue an additional $10,000,000 of debentures later in the second quarter, subject to satisfaction of certain closing conditions. I'd like to close by reiterating our previously stated capital allocation priorities. We've said it before, discipline and risk mitigation is part of our DNA, and we'll take that approach as we look to scale our operating companies. We will aim to pace capital investments with revenue visibility and be highly focused on cost management to minimize early stage operating expense.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Again, this is a key benefit of our closed loop model as our collaborations with multinational corporations are designed to help reduce operating risk. We will also focus on supporting our operating companies with the ultimate goal of funding growth off of our own balance sheet. We believe that our operating companies have strong growth potential and by maintaining long term control, we'll have the opportunity to unlock significant shareholder value over the long term. Finally, as we continue to scale and launch new companies, we plan to consolidate their cash flows at the in venture level. Because of this, we may ultimately look to return a portion of the excess capital to our shareholders.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

That concludes our prepared remarks. We believe there are many exciting things on the horizon for nVenture, and we look forward to executing our strategy and delivering value to our shareholders. Now we'll open up the call for Q and A.

[Operator]

Thank you. At this time, we'll conduct a question and answer session. And our first question comes from the line of Chip Moore of Roth Capital Partners. Your line is now open.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Good morning. Hey, everybody. Thanks for taking the question. I wanted to maybe ask on Excelsius, if you could expand a bit on those four groups you mentioned, and I guess particularly the global OEMs and hyperscalers. Just maybe give us a sense of how those discussions have been evolving here in recent months.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Hey Chad, this is Bill. And thanks for the question. So first I would say that on the OEM agreement that is a contract that we have and it does have some conditions in it that include effectively hard contracts for take or pay and then some benchmarks to obtain certain exclusivity provisions in the agreement. So that's a deal that we were under contract for. So it's for a white label product as we've described in information.

[Bill Haskell, CEO, Director & Board Member at Innventure]

So we're quite excited about it. It's the scale of this, so the scale of both the OEM who has asked us not to name them at this stage. But the scale of OEM and their demands in the marketplace are quite substantial. The agreements that we've drafted, I mean, I can imagine that they would have entered into something that they didn't believe was going to result in at least sort of thousands of racks of equipments or larger, which is very significant to us from a revenue standpoint. Hyperscalers, we've had literally dozens of meetings with various hyperscalers.

[Bill Haskell, CEO, Director & Board Member at Innventure]

So we're quite optimistic that going forward, we will end up with some firm commitments from those groups. As you may know, Chip, the competition in this space is principally, I would say, the old way of doing things. Are, of course, most people are using air today. We've got some that are using single phase water and there are dozens and dozens of contractors in that space. But there are only two to our knowledge, ourselves and one other in the two phase direct to chip.

[Bill Haskell, CEO, Director & Board Member at Innventure]

And most of the large players have already indicated that it's inevitable that we'll get there and have a requirement for that, some now, some later. So I think we're well positioned with both the hyperscalers, the OEMs, and then the AI as a service providers. As I mentioned, we've had contract that we announced and we're in discussions with others that have fairly substantial kind of chipsets that they need cooling for. So overall, quite bullish. Feel like this business is really at an inflection point and I'm more optimistic than I've been, than ever with respect to that work. CSS.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Great. Thanks.

[Bill Haskell, CEO, Director & Board Member at Innventure]

With that, guess everything you go ahead. I was gonna say to your point answered.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Yeah, yeah, was gonna ask about that inflection point. And then, particularly as it relates to, you know, sort of back half of this year, you gave some commentary there, maybe just, you know, dovetail that with some of some of those conversations you're having.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Well, in the case of the OEM, we expect that ramp to begin in the second half when the white label product would be available in the marketplace. They obviously can't sell it until it's finalized. And that's really more on their side than ours. I think we have a product that we've already developed for them. We need to go through UL and a few other certifications.

[Bill Haskell, CEO, Director & Board Member at Innventure]

But by and large, we have a product that we could put in the marketplace pretty readily. So sometime in the second half of the year, that will be available for sale. And that would begin the ramp there, which again, I would expect to be relatively steep. Timing is always challenging to predict, particularly right now as the market is very volatile and there's a lot of uncertainty and nervousness kind of across the board. Overall, quite bullish on what the second half of the year looks like, not only for Excelsius, but also for Aeroflux.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Got it. That's helpful. And yeah, I haven't noticed any volatility. Guess as a follow-up here. I notice on Excelsius on their website. There is I think a major contract manufacturer and a pretty large global thermal management OEM listed on there. Just wondering if that is new or something I just hadn't noticed in the past.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah, well the OEM is what we discussed. That is the global OEM. I'm not aware that they've named the contract manufacturer. Was there a name of one on the website or?

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

I thought I saw maybe Celestica on there.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Okay. That's certainly a possibility. I'll defer to them to answer the question. We are certainly engaged with various contract manufacturers to be able to accommodate the scale, particularly in the hyperscalers that they sell through to. Kind of orders that we would anticipate there are very substantial.

[Bill Haskell, CEO, Director & Board Member at Innventure]

And so we need a content manufacturer by aside to be able to accommodate the type of volumes that we would expect.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Understood. If I could sneak one more in maybe on Aeroflex, announced that pet shampoo product, just have a think about that. Is that sort of an early stage, testing on the shelf limited markets or what's the and then what's the potential opportunity with that customer?

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah, look, I think it's smaller so far to your point that you can go buy them on Amazon today if you want to. Out there and available. So it has both kind of an online element to it as well as kind of a meaningful commercial skill contract for us, is not the first, but it's the largest to date. We would expect larger ones, not just from them, follow on orders, but quite a queue of folks that are interested in it. And all of these various certifications that we've been announcing and continue to announce are really critical particularly to the large CPG companies.

[Bill Haskell, CEO, Director & Board Member at Innventure]

They all require not only ISO certifications, but various certifications along the way in order for them to be able to place an order. It's just kind of one of the hurdles you have to go through. So there's one yet to be achieved. I think it's fairly close in time, a month or two away. And we expect that to kind of unlock some various orders that are pending that certification.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Gotcha. Perfect. Thanks, Bill. And maybe just one last housekeeping question. It looks like Aeroflex stake went up to 38%.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Did that increase? Would you be looking to take that majority at some point? And then is it Celsius? Is that still the same ownership position? Thanks.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah, Celsius is what it was before. We did increase our ownership taken in our flex, we converted some debt into equity to increase our stake. And we do have a mechanism potentially to be able to get to a majority ownership in Aeroflex down the road. So that remains to be seen. But there is a pathway, I would say, to achieving that at some point in the future if we decide to do it.

[Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC]

Very good. Okay. Thanks very much.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Thank you.

[Operator]

Thank you. One moment for our next question. Our next question comes from the line of Neha Jakshi of Northland Capital Markets. Your line is now open.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Yeah, thank you. Got a few questions myself. First of all, I don't believe I see a 10 ks filed yet. When do you guys actually expect that to be filed? Or if I missed it, just let me know I missed it.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah. No. Hi. This is

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Yeah. Ahead, Bill. Or you want me to take it?

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Sure. You know, we expect the 10 ks to be filed in the next few days. It's routine. No significant issue there.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Okay, great. And then product revenue for the quarter, I don't see an actual explicit disclosure on the product revenue, but I think you did have it on the September. Can you give us a sense as far as what was actually product revenue for the December?

[Bill Haskell, CEO, Director & Board Member at Innventure]

That's you again, Dave.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Well, I mean, if you'd repeat the question, please, to make sure I got it.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Yeah, I'm looking for product revenue for the December. And I'm thinking that's something you can disclose because I believe it was disclosed for the September.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Right. I think we'll disclose that in our 10 ks filing with the details. But primarily, we have a Celsius consolidated and the revenue represents a Celsius, a little bit of management fees for managing the ESG fund. But in general, the revenue number you'll see in our financial statements at this point in time will represent a Celsius.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Okay, got it. And COGS was up about 3.8x Q over Q. So would it be fair to believe that that's a pretty good proxy for how much product revenue was up Q over Q as well?

[Bill Haskell, CEO, Director & Board Member at Innventure]

We're building some of the inventory in anticipation of sales. So we want to have we have the ability internally to manufacture you know, a decent a decent number of reps equipment per month. But we wanted to build some inventory so we can be responsive to customer contracts as they rep represent themselves. So I wouldn't draw too much correlation between the cost of materials at this stage and the revenue. But they'll obviously reconcile each other at some point.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

That's right.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

And just to add to Bill's comments, I mean, there's some period costs in there that get amortized over certain numbers of units. And also the amortization of the intangible asset that we had to book as a result of the business combination agreement, that's through purchase price allocation, some of that hits cost of goods sold as well.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Got it. Okay. That's super helpful. So in the September, you basically had one sort of like a proof of concept delivery. Could you help quantify how many proof of concepts did you deliver during the December?

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah, we're not wanting to provide that information to how principally for competitive reasons. What we don't want people to do is be able to sort of kind of back into the cost per system and margins and those sorts of things. Again, principally for competitive reasons. And we have certain customers that don't want us to disclose many contract details. But I think you want to look at overall will be the trend over the next few quarters and just look at the kind of trajectory of the revenue growth.

[Bill Haskell, CEO, Director & Board Member at Innventure]

But again, trying to not obscure but trying not to show too much information that would impact us in a negative way competitively.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Okay, great. Rather understood. That makes sense. And then in your slide deck, you talk about on the Excelsius, some of the Excelsius accomplishments, doubling the heat capacity removal with this most recent test. Now, what enabled that doubling of that heat capacity?

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Was it some implementation of a new technology or was it just simply getting access to higher wattage thermal simulators?

[Bill Haskell, CEO, Director & Board Member at Innventure]

It's a combination of things but principally it's I would just say engineering improvements, design improvements that allow us to get a higher heat flux because it's it's not just the total heat per socket, it's the heat flux, you know, the watts per square centimeter that you can remove, because you've got chips with a bunch of different formats. And so, you know, if you if you're really trying to measure the effectiveness of the technology, then heat flux is a good measure that kind of makes everything apples to apples. But yeah, we are getting access to kind of the latest round of chips to test, but we can also simulate higher heats. We have a capability to simulate much, much higher heat than what is available in the marketplace. And, so we continue to test the limits of where we think the technology can go.

[Bill Haskell, CEO, Director & Board Member at Innventure]

So we're, I think, well ahead of the next couple of generations of chips we've been anticipating coming out of the marketplace based upon looking at the product road maps of the various chip suppliers. We feel very confident that we can manage whatever heat loads they can produce chips for. And that's really important because, you know, single phase water, that kind of drops out in the not too distant future in terms of its capability to remove that kind of heat. So there's a I mean, if you if you look at some of the the information that's been put out by some of the larger players, they've all indicated that two phase directed chip is going to be required at some point for for certain chipsets, know, water will just reach its its limitation because it's kind of linear with the amount of water you can pump through the cold plate.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Yep. No doubt about that. That water cold one phase direct liquid cold has its limitations. Bill, you did mention something about watts per square meter. I wasn't sure if you were saying that

[Bill Haskell, CEO, Director & Board Member at Innventure]

centimeter.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Yeah, I'm sorry. What's per square centimeter? Yeah. But was that a signal saying that you had increased the heat flux withdrawal in terms of watts per square centimeter or was it more a segment that you were able to expand the amount of square centimeters that you can cool and that's what got your watts removal up?

[Bill Haskell, CEO, Director & Board Member at Innventure]

Yeah. It's a bit of both. I mean, we can build these various plates that sit on top of the chips. It's kind of whatever configuration is required. And as you know now there are four way and eight way GPUs You have to build kind of some fancy plates to sit on top of all of those combined.

[Bill Haskell, CEO, Director & Board Member at Innventure]

But it really is the obviously the engineering improvements that we have others that we're pursuing to continue to crank up the actual heat flux, which is again watts per square centimeter.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Great. Okay. And then moving on to Aeroflex. You announced Furminator as a customer as part of Spectrum Group. And I think in the early days, you also had a dog shampoo, Mighty Mutt, and I believe that's a different brand owned by a different private equity group.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Do you see basically like the pet care vertical being basically your first vertical that will reach critical mass?

[Bill Haskell, CEO, Director & Board Member at Innventure]

Not necessarily. I mean, it's it's certainly, you know, of the one of the marketplaces that we're pursuing. I think oil is likely to be, you know, a pretty significant player, know, kind of gear oil and and motor oil for, you know, recreational vehicles and so forth. That seems to be a pretty aggressive area right now for us that we're pursuing. And then there are others, just baby shampoos, kind of home care, that kind of line.

[Bill Haskell, CEO, Director & Board Member at Innventure]

There's a lot of interest in that as well. But really, we're covering a lot of different verticals in terms of having client interactions with customers in a lot of different verticals across the board. But I think if I had to bet on one, I would say in terms of 2025 kind of penetration, oil would be a good guess.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Great. That's helpful color. And then finally, can you just tell us what was the actual OpEx rate, the non GAAP OpEx rate for the December? And where do you expect that to head for the March here?

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Hey, this is Dave again. Yes. If you look at the OpEx in the press release, as I said in my remarks, I mean, that contains a lot of costs from the business combination agreement and other elements going forward. But I don't think we want to really get into too many details of specific cost lines in OpEx, but rest assured, it'll be lower. Our run rate will be lower going forward.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

I guess what I'm trying to get at is that, is it obviously it's gonna go up as we progress and scale, right? But, I have it at 13,000,000 in the September. I'm sorry, I have a baseline rate of around 6,000,000 a quarter. And I'm not sure if that's really a good baseline rate. If you could give any sort of guidance there, would be appreciated.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Well, again, I think when we put our 10 ks out, there'll be more detail in there for sure about operating expense. And there'll be more breakouts on the business combination expense, etcetera. And I just think at this point in time, I'm not ready to get into that kind of detail. But you can look at last year as a proxy. We expect to keep OpEx as low as we possibly can.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Now, cost of goods sold, right? I'm talking G and A, sales and marketing and R and D, right? That's what we're talking about. It's baseline fixed cost. We intend to manage it.

[Dave Yablunosky, CFO, Director & Board Member at Innventure]

Frankly, we would even like to find ways to optimize that cost and perhaps even reduce. But I think we ought to wait for the 10 ks to come out.

[Nehal Chokshi, Managing Director at Northland Securities, Inc]

Okay. I'll yield the floor. Thank you for taking my questions.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Thanks, Najal.

[Operator]

Thank you. This concludes the question and answer session. I'll now turn it back to Bill Haskell, Chief Executive Officer for closing remarks.

[Bill Haskell, CEO, Director & Board Member at Innventure]

Great. Well, you all. Really appreciate you listening in and the questions. And we look forward to kind of the next update going forward here, which will be sometime in the May, I believe. So thanks again.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Participants

Executives

• Lucas Harper, Chief Investment Officer
• Bill Haskell, CEO, Director & Board Member
• Dave Yablunosky, CFO, Director & Board Member

Analysts

• Chip Moore, Managing Director & Senior Research Analyst at Roth Capital Partners, LLC
• Nehal Chokshi, Managing Director at Northland Securities, Inc