Q2 2025 Nauticus Robotics Inc Earnings Call

Speaker #3: Good morning, ladies and

Speaker #2: gentlemen. Welcome to Nauticus Robotics 2025, Q2 earnings conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

Speaker #2: If at any time during this call you require immediate assistance, please press the star zero for the operator. This call is being recorded on Tuesday, August 12th, 2025.

Speaker #2: I would now like to turn the conference over to Kristin Moorman, please go ahead.

Speaker #3: Thank you, and good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President; Hemena Begatis, Interim CFO; and other members of our leadership team.

Kristin Moorman: Thank you, and good morning, everyone. Joining me today and participating in the call are John Gibson, CEO and President, Jimena Bigares, Interim CFO, and other members of our leadership team. On today's call, we will first provide prepared remarks concerning our financial and operations results. Following that, we will answer questions. We have now released our results for the second quarter of 2025, which are available on our website. In addition, today's call is being webcast, and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today's call regarding projections or our expectations for future events are forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Speaker #3: On today's call, we will first provide prepared remarks concerning our financial and operational results. Following that, we will answer questions. We have now released our results for the second quarter of 2025, which are available on our website.

Speaker #3: In addition, today’s call is being webcast, and a replay will be available on our website shortly following the conclusion of the call. Please note that comments we make on today’s call regarding projections or our expectations for future events are forward-looking statements.

Speaker #3: Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Speaker #3: We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, please refer to the reconciliations provided in our earnings press release, as we may discuss non-GAAP metrics on this call.

Kristin Moorman: We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, please refer to the reconciliations provided in our earnings press release, as we may discuss non-GAAP metrics on this call. I will now turn it over to John.

Speaker #3: I will now turn it over to John.

Speaker #4: Well, good morning. Thank you all for joining us this morning. Q2 2025 was a quarter of disciplined execution and significant commercial progress. We grew revenue year over year.

John Gibson: Good morning. Thank all of you for joining us this morning. Q2 2025 was a quarter of disciplined execution and significant commercial progress. We grew revenue year over year. We integrated a strategic acquisition, and we positioned the company to drive long-term profitable growth. Service revenue for the quarter was over $2 million. That is more than four times the prior year period, with strong contributions from both oil and gas and environmental compliance work. Our customer base also expanded. We serve nine clients, and revenue concentration improved, meaning that we have more customers and are not dependent on so few. This diversification will allow us to scale as we go forward. The acquisition of SeaTrepid International was a key milestone.

Speaker #4: We integrated a strategic acquisition, and we positioned the company to drive long-term profitable growth. Now, service revenue for the quarter was over $2 million, which is more than four times the prior year period.

Speaker #4: It was strong, contributions from both oil and gas and environmental compliance work. Our customer base also expanded. We served nine clients, and revenue concentration, improved, meaning that we have more customers and, and not dependent on so few.

Speaker #4: This diversification will allow us to scale as we go forward. The acquisition of Sea Traffic was a key milestone. It expanded our service capacity, deepened our customer footprint, provided us with a channel, and unlocked opportunities to deploy our autonomy stack, including the Nauticus toolkit and Aquanaut.

John Gibson: It expanded our service capacity, it deepened our customer footprint, gave us a channel, and it unlocked opportunities to deploy our autonomy stack, including Nauticus ToolKITT and Aquanaut, across a much larger operating base. We are already seeing the benefits of that integration in backlog and margin profile. Importantly, we now have revenue visibility into the fourth quarter and early 2026, including a pending multi-month contract with a super major oil company. That opportunity, expected to begin in Q4, provides valuable off-season revenue and margin continuity, and it has historically been a challenge to have available work for services in Q4 and Q1. This will reduce our seasonality. We continue to take a disciplined approach to liquidity. Through cost controls and capital execution, we ended the quarter with $2.7 million in cash, up $1.2 million at year-end.

Speaker #4: Across a much larger operating base, we're already seeing the benefits of that integration in our backlog and margin profile. Importantly, we now have revenue visibility into Q4 and early 2026, including a pending multi-month contract with a supermajor oil company.

Speaker #4: That opportunity, expected to begin in Q4, provides valuable off-season revenue and margin continuity. Historically, it has been a challenge to have available work for services in Q4 and Q1.

Speaker #4: This will reduce our seasonality. We continue to take a disciplined approach to liquidity. Through cost controls and capital execution, we ended the quarter with $2.7 million in cash, up $1.2 million from year-end.

Speaker #4: This includes proceeds from an after-market offering, which gives us some additional flexibility as we invest in growth. Looking ahead, our strategy remains focused. Drive service revenue with the expanded fleet.

John Gibson: This includes proceeds from an at-the-market offering, which gives us some additional flexibility as we invest in growth. Looking ahead, our strategy remains focused. Drive service revenue with the expanded fleet, scale autonomy products like Aquanaut and ToolKITT, convert inbound interest into long-term recurring contracts, and do so with financial discipline, measured investment, and clear milestones. We are entering the second half of the year with real momentum, a growing pipeline, a differentiated platform, and customers that really want to see innovation that helps them reduce their cost. With that, I will now hand it over to Jimena Bigares, our Interim CFO, to get us started. Jimena?

Speaker #4: Scale autonomy products like Aquanaut and Toolkit. Convert inbound interest into long-term recurring contracts and do so with financial discipline, measured investment, and clear milestones.

Speaker #4: We're entering the second half of the year with real momentum. A growing pipeline, a differentiated platform, and customers that really want to see innovation that helps them reduce their costs.

Speaker #4: With that, I'll now hand it over to Hemena Begatis, our Interim CFO, to get us started. Hemena.

Speaker #3: Thank you, John, and good morning, everyone. I'm excited to be speaking with you for the first time as CFO. I will now discuss our financial results for the second quarter of 2025.

Jimena Bigares: Thank you, John, and good morning, everyone. I am excited to be speaking with you for the first time as a CFO. I will now discuss our financial results for the second quarter of 2025. During Q2, we recognized further commercial revenue driven by the SeaTrepid acquisition, which has now begun to contribute meaningfully to our financial results. Revenue for the second quarter was $2.1 million, which is up $1.9 million sequentially and up $1.6 million from the same quarter last year. The increase in revenue was a result of the Gulf of America season starting at the end of March, delivering a full quarter of revenue in Q2 2025 for the acquired assets. Operating expenses for the quarter were $8.4 million, which is up $1.9 million from Q2 2024 and up $2.4 million sequentially.

Speaker #3: During Q2, we recognized further commercial revenue driven by the Sea Traffic acquisition, which has now begun to contribute meaningfully to our financial results. Revenue for the second quarter was 2.1 million dollars, which is up 1.9 million sequentially and up 1.6 million dollars from the same quarter last year.

Speaker #3: The increase in revenue was a result of the Gulf of America season starting at the end of March. Delivering a full quarter of revenue in Q2 2025 for the acquired assets.

Speaker #3: Operating expenses for the quarter were 8.4 million dollars, which is up 1.9 million dollars from Q2 2024 and up 2.4 million dollars sequentially. G&A costs for the quarter were 4.4 million dollars, which is an increase of 1.1 million dollars compared to Q2 2024 and flat compared to last quarter.

Jimena Bigares: G&A costs for the quarter were $4.4 million, which is an increase of $1.1 million compared to Q2 2024 and flat compared to last quarter. The first half of 2025 was impacted by the non-recurring professional fees, primarily due to the SeaTrepid acquisition. Net loss for the quarter was $7.4 million. This is a $0.1 million decrease in net loss sequentially and a $12 million increase in net loss from Q1 2024. This large variance is attributable to the gains in the fair value of our convertible dividends reported last year. Adjusted net loss for the quarter was $7.4 million compared to $6.6 million for the first quarter of 2025 and $6.5 million for the same quarter in 2024. Cash at the end of Q2 2025 was $2.7 million compared to $10.1 million last quarter.

Speaker #3: The first half of 2025 was impacted by the non-recurring professional fees primarily due to the Sea Traffic acquisition. Net loss for the quarter was 7.4 million dollars, this is a 0.1 million decrease in net loss sequentially and a 12 million increase in net loss from Q1 2024.

Speaker #3: This large variance is attributable to the gains in the fair value of our convertible debentures reported last year. Adjusted net loss for the quarter was 7.4 million dollars, compared to 6.6 million dollars for the first quarter of 2025 and 6.5 million for the same quarter in 2024.

Speaker #3: Cash at the end of Q2 2025 was $2.7 million, compared to $10.1 million last quarter. This is primarily a result of funding received through an after-market offering last quarter, offset by the recent acquisition of Sea Traffic and cash used through operations.

Jimena Bigares: This is primarily a result of funding received through an at-the-market offering last quarter, offset by the recent acquisition of SeaTrepid and cash used through operations. During the first weeks of July 2025, we have reissued our at-the-market offering and have raised further funds to support our operational activities. As we look ahead to the third quarter, we expect continued strong operational results. We remain focused on disciplined cost control, prioritizing value-added activities that enhance profitability and support long-term growth. I will now pass the call back to John.

Speaker #3: During the first weeks of July 2025, we have reissued our after-market offering and have raised further funds to support our operational activities. As we look ahead to the third quarter, we expect continued strong operational results.

Speaker #3: We remain focused on disciplined cost control and prioritizing value-added activities that enhance profitability and support long-term growth. I will now pass the call back to John.

Speaker #4: Well, thank you, Hemena. really happy to have Hemena join us and, good job. as Hemena pointed out, our current forecast, shows much stronger revenues in Q3 than Q2.

John Gibson: Thank you, Jimena. Really happy to have Jimena join us, and good job. As Jimena pointed out, our current forecast shows much stronger revenues in Q3 than Q2, and we have also added $3 million in additional cash this past week from one of our lenders. With that, I am going to turn it over to Daniel DeHart, our Field Operations Leader, and Steve Walsh, our Sales Lead, to discuss Nauticus Robotics' backlog of offshore commercial work. Then over to JD Yamakowski, who will then discuss defense work. Really pleased to get a chance to work with these guys. We have got a strong team. Daniel, pick it up from here.

Speaker #4: And we've also added $3 million in additional cash this past week from one of our lenders. So with that, I'm going to turn it over to Daniel Derhard, our Field Operations Leader, and Steve Walsh, our Sales Lead, to discuss Nauticus' backlog and offshore commercial work.

Speaker #4: And then over to JD Yamakowski, who will discuss defense work. I'm really pleased to get a chance to work with these guys. We've got a strong team.

Speaker #4: Daniel, pick it up from here.

Speaker #5: Thanks, John. As a company, at the beginning of the year, we set goals and targets to work toward. And halfway through the year, I can say we have already successfully achieved quite a few of our goals.

Daniel DeHart: Thanks, John. As a company, at the beginning of the year, we set goals and targets to work towards. Halfway through the year, I can say we have already successfully achieved quite a few of our goals. We completed more commercial revenue than all of 2024 combined. We have successfully diversified our client base by working with nine new clients already this year. We have also signed multiple MSAs with new clients to become approved suppliers for offshore work. We have diversified our market reach as we completed work for clients in offshore oil and gas, offshore wind, and commercial offshore government markets. Work to date was accomplished with our ROV system successfully completing multiple inspection campaigns. We currently have both ROVs working, one off the northeast coast of the United States for the offshore wind market and one working onboard the Go Cosmos vessel in the Gulf of America.

Speaker #5: We completed more commercial revenue than all of 2024 combined. We have successfully diversified our client base by working with nine new clients already this year.

Speaker #5: We have also signed multiple MSAs with new clients to become approved suppliers for offshore work. We have diversified our market reach as we completed work for clients in offshore oil and gas, offshore wind, and commercial offshore government markets.

Speaker #5: Work to date was accomplished with our ROV system successfully completing multiple inspection campaigns. We currently have both ROVs working: one off the northeast coast of the United States for the offshore wind market and one working onboard the GoCosmos vessel in the Gulf of Mexico.

Speaker #5: As we transitioned from last year's proof of concept into a commercial platform, we have focused on the commercial metrics needed to be competitive—not with new technology, but with existing solutions.

Daniel DeHart: As we transition from last year's proof of concept into a commercial platform, we have focused on the commercial metrics needed to be competitive, not with new technology, but with existing solutions. We experienced some delays with getting to the robustness needed to demonstrate our commercial readiness. Consequently, we delayed operations of the Aquanaut system until we were comfortable we could meet those milestones. Vehicle two is now mobilized onboard the Go Cosmos with the ROV, and a record deep dive is planned. We will focus on successful completion of our commercial contracts throughout the rest of the season. Our second Aquanaut vehicle, Vehicle One, will be heading to Stuart, Florida, in the coming weeks to begin our new collaboration with AOS. We are delighted to work with AOS on multiple fronts, the first being accessibility to a better-equipped, larger test facility.

Speaker #5: We experienced some delays with getting to the robustness needed to demonstrate our commercial readiness. Consequently, we delayed operations of the Aquanaut system until we were comfortable we could meet those milestones.

Speaker #5: Vehicle Two is now mobilized onboard the GoCosmos with the ROV. A record deep dive is planned, and we will focus on the successful completion of our commercial contracts throughout the year or throughout the rest of the season.

Speaker #5: Our second Aquanaut vehicle vehicle one will be heading to Stuart, Florida in the coming weeks to begin our new collaboration with AOS. We are delighted to work with AOS on multiple fronts.

Speaker #5: The first being accessibility to a better-equipped larger test facility. This allows us to test the full range of our robotic capabilities in an unstructured environment.

Daniel DeHart: This allows us to test the full range of our robotic capabilities in an unstructured environment. We will now be able to run complete missions in a 3.5-acre body of water compared to the limited activities that can be conducted in a pool. It also opens up the ability to host clients to see execution in an operational setting. We are also working on a plan to pair the Aquanaut vehicle with an unmanned surface vessel at the AOS facility to utilize the smaller surface expression to conduct inspections with a limited operational spread. We are working with customers who have an interest in this concept to underwrite these tests, and this facility is perfect for demonstrating the surface and subsea vehicles together in a realistic operational environment. With that, I will now turn it over to Steve for an update on our 2025 offshore commercial pipeline.

Speaker #5: We will now be able to run complete missions in a three-and-a-half-acre body of water compared to the limited activities that can be conducted in a pool.

Speaker #5: It also opens up the ability to host clients to see execution in an operational setting. We are also working on a plan to pair the Aquanaut vehicle with an unmanned surface vessel at the AOS facility.

Speaker #5: To utilize the smaller surface expression to conduct inspections with a limited operational spread. We are working with customers who have an interest in this concept to underwrite these tests and this facility is perfect for demonstrating the surface and subsea vehicles together in a realistic operational environment.

Speaker #5: With that, I will now turn it over to Steve for an update on our 2025 offshore commercial pipeline.

Speaker #6: Thanks, Daniel, and good morning. I'm Steve Walsh, Vice President of Sales. Q2 was a strong and strategic quarter. We served nine clients, across offshore wind and offshore oil and gas, supported by a solid backlog extending well into Q3.

Steve Walsh: Thanks, Daniel, and good morning. I am Steve Walsh, Vice President of Sales. Q2 was a strong and strategic quarter. We serve nine clients across offshore wind and offshore oil and gas, supported by a solid backlog extending well into Q3. SeaTrepid assets are providing core revenue, and the SeaTrepid channel, that is now the Nauticus channel, is opening new opportunities for the entire Nauticus portfolio. In offshore wind, we are executing a major Northeast U.S. project. While the sector faces headwinds, tightening wind-only service capacity is opening new opportunities. Our established relationships position us to benefit. Oil and gas remains robust. Our diversified position across energy markets allows us to capture demand wherever it is strongest. Looking to Q4, we are close to signing a multi-month contract with a super major oil company running through Q1 of 2026.

Speaker #6: Sea Traffic assets are providing core revenue and the Sea Traffic channel, that is now the Nauticus channel, is opening new opportunities for the entire Nauticus portfolio.

Speaker #6: In offshore wind, we're executing a major Northeast US project. While the sector faces headwinds, tightening wind-only service capacity is opening new opportunities. Our established relationships positioned us to benefit.

Speaker #6: Oil and gas remain robust. Our diversified position across energy markets allows us to capture demand wherever it is strongest. Looking to Q4, we are close to signing a multi-month contract with a supermajor oil company, running through Q1 of 2026.

Speaker #6: This adds meaningful off-season revenue, smoothing our earnings profile and strengthening visibility into next year. Aquanaut interest continues to accelerate. Engagement is coming from independents to supermajors, domestically and internationally.

Steve Walsh: This adds meaningful off-season revenue, smoothing our earnings profile and strengthening visibility into next year. Aquanaut interest continues to accelerate. Engagement is coming from independents to super majors, domestically and internationally. Aquanaut is increasingly viewed as a category-defining platform, and we are converting that interest into active discussions. Our fundamentals are strong, momentum is building, and we are positioned to continue growth into 2026. I am confident that our Q3 revenue will see sequential growth over Q2. With that, I will turn it over to JD for the defense update.

Speaker #6: Aquanaut is increasingly viewed as a category-defining platform and we are converting that interest into active discussions. Our fundamentals are strong. Momentum is building. And we are positioned to continue growth into 2026.

Speaker #6: I'm confident that our Q3 revenue will see sequential growth over Q2. With that, I'll turn it over to JD for the defense update.

Speaker #5: Thank you, Steve, and good morning, everyone. Astute followers of Nauticus may recall that we announced a strategic alliance with Lydos to advance subsea autonomy solutions in Q1 of 2025.

JD Yamakowski: Thank you, Steve, and good morning, everyone. Astute followers of Nauticus may recall that we announced a strategic alliance with Leidos to advance subsea autonomy solutions in Q1 of 2025. While we do not have any new government contract awards to announce this quarter, it is important to understand that government procurement, particularly in the defense sector, is often a long-cycle process. Since that announcement, both companies have been diligently working towards opportunities that align with our complementary strengths to serve the interests of national defense. I will now turn the call back over to John.

Speaker #5: While we don't have any new government contract awards to announce this quarter, it's important to understand that government procurement, particularly in the defense sector, is often a long-cycled process.

Speaker #5: Since that announcement, both companies have been diligently working towards opportunities that align with our complementary strengths to serve the interests of national defense. I'll now turn the call back over to John.

Speaker #4: Thank you, JD and Steve and Daniel. it's clear that we're beginning to focus on sequential growth and revenues and those opportunities are there, for us to, to seize and execute.

John Gibson: Thank you, JD, and Steve, and Daniel. It is clear that we are beginning to focus on sequential growth and revenues, and those opportunities are there for us to seize and execute. That is the mission of the company. We remain committed to securing a defense contract as well, and JD gets up every day and pursues that for Nauticus Robotics. But the real opportunity that we have coming forward that can give us revenue that is not dependent upon wall clock time, as services are, is our software section. I am happy now. I am going to turn the call over to Jason Close, our Software Lead. After that, Amin Awadry will give you an update on engineering from their department. Jason, I will give it to you.

Speaker #4: That's the mission of the company. We remain committed to securing a defense contract as well, and JD gets up every day and pursues that for Nauticus.

Speaker #4: But, the real opportunity that we have coming forward that can give us revenue that, isn't dependent upon wallclock time, as services are, is our is our software section.

Speaker #4: And so I'm happy now I'm going to turn the call over to, Jason Close to, our software lead. And then after that, I mean, I've already will give you an update on engineering and so from their department.

Speaker #4: So, Jason, I'll give it to you.

Speaker #7: Thanks, John. In the second quarter, we continued advancing toolkit along its two commercial paths. Aquanaut operations and the enablement of work-class ROVs. For Aquanaut, we advanced functional capabilities of the software in preparation for upcoming tests.

Daniel DeHart: Thanks, John. In the second quarter, we continued advancing ToolKITT along its two commercial paths: Aquanaut operations and the enablement of world-class ROVs. For Aquanaut, we advanced functional capabilities of the software in preparation for upcoming tests. The testing is scheduled to begin in the third quarter so that we are ready to offer additional trials later this year, followed by a wider range of services to customers in the 2026 golf season. In addition, we supported the Aquanaut team with operational readiness work on the vehicle itself, which is improving the overall usability of the product and enhancing its attractiveness to future users and customers. We are excited about the AOS test facility because it allows us to further exercise ToolKITT's capabilities in an operational environment. In Q2, we focused on strengthening relationships with prospective customers and partners for the commercial software.

Speaker #7: The testing is scheduled to begin in the third quarter, so that we're ready to offer additional trials later this year, followed by a wider range of services to customers in the 2026 Gulf season.

Speaker #7: In addition, we supported the Aquanaut team with operational readiness work on the vehicle itself. Which is improving the overall usability of the product and enhancing its attractiveness to future users and customers.

Speaker #7: We are excited about the AOS test facility because it allows us to further exercise toolkit capabilities in an operational environment. In Q2, we focused on strengthening relationships with prospective customers and partners for the commercial software.

Speaker #7: We have seen excellent interest in the continued and continue to expand and broaden our reach in this space. And we're approaching opportunities that we look forward to sharing more about soon.

Daniel DeHart: We have seen excellent interest and continue to expand and broaden our reach in this space, and we are approaching opportunities that we look forward to sharing more about soon. Customer activity across our service operations remains strong. We remain focused on delivering value today through ROV and Aquanaut services while steadily advancing ToolKITT's capability for a wider market rollout in the near future. I will now hand it over to Amin Awadry for an update on Aquanaut and electric manipulators.

Speaker #7: Customer activity across our service operations remains strong. And we remain focused on delivering value today through ROV and Aquanaut services while steadily advancing toolkit capability for a wider market rollout in the near future.

Speaker #7: I will now hand it over to Amin for an update on Aquanaut and electric manipulators.

Speaker #8: Thank you, Jason. In the second quarter, we successfully addressed key technical issues that enhanced reliability and extended the meantime between failures of our Aquanaut platform.

Amin Awadry: Thank you, Jason Close. In the second quarter, we successfully addressed key technical issues that enhance reliability and extend the mean time between failures of our Aquanaut platform. These engineering improvements have been fully integrated into Vehicle Two, which has undergone successful validation testing in a controlled pool environment. Following these results, Vehicle Two was redeployed to the vessel and is now ready for open water work. Meanwhile, upgrade work is actively underway on Vehicle One to bring it up to the same standard. We continue to experience strong market interest in our fully electric subsea manipulators. During the quarter, we made substantial progress on both the seven and the three function variants. However, in light of evolving global trade dynamics, we are experiencing extended lead times for select components across our hardware platforms.

Speaker #8: These engineering improvements have been fully integrated into Vehicle Two, which has undergone successful validation testing in a controlled pool environment. Following these results, Vehicle Two was redeployed to the vessel and is now ready for open water work.

Speaker #8: Meanwhile, upgrade work is actively underway on Vehicle One to bring it up to the same standard. We continue to experience strong market interest in our fully electric subsea manipulator.

Speaker #8: During the quarter, we made substantial progress on both the seven and the three function variants. However, in light of evolving global trade dynamics, we are experiencing extended lead times for select components across our hardware platforms.

Speaker #8: The relatively low volume of our procurement orders compared to larger industry players presents prioritization challenges within supplier production queues. This has necessitated a proactive design modification during the quarter to mitigate potential disruptions and ensure continuity in system development.

Amin Awadry: The relatively low volume of our procurement orders compared to larger industry players presents prioritization challenges within supplier production queues. This has necessitated a proactive design modification during the quarter to mitigate potential disruptions and ensure continuity in system development. To address these risks, we are actively diversifying our supplier base and exploring alternative sourcing strategies. I will now hand the call back to John Gibson.

Speaker #8: To address these risks, we are actively diversifying our supplier base and exploring alternative sourcing strategies. I will now hand the call back to John.

Speaker #4: Well, thank you, Amin. most exciting part of this job is seeing customer excitement. And, we just completed two jobs with, really great success for both customers and, that's, that's what brings you joy when you're in a service sector.

John Gibson: Well, thank you, Amin. The most exciting part of this job is seeing customer excitement. We just completed two jobs with really great success for both customers, and that is what brings you joy when you are in the service sector. I have got excitement around the new technology, excitement around the team that we have building and delivering it, excitement around the changing market. We have got a great team. We have got a great plan, and we are executing and beginning to see the revenues that can come from our efforts. With that, I would like to turn it back to the operator, and we can open it up for Q&A session. Operator?

Speaker #4: I've got excitement around the new technology, excitement around the team that we have building and delivering it, and excitement around the changing market. We've got a great team.

Speaker #4: We've got a great plan. And, we're executing and we're beginning to see the revenues that can come from our efforts. with that, I'd like to turn it back to the operator and we can open it up for Q&A session.

Speaker #4: Operator.

Speaker #2: Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press a star followed by the number one on your telephone keypad.

Speaker 10: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. To ask a question, you may press a star followed by the number one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing the keys. To withdraw your question, please press a star followed by the number two. Once again, please press star one to ask a question. One moment, please, for your first question. Your first question comes from the line of Peter Gastrich with Water Tower Research. Please go ahead.

Speaker #2: If you are using a speakerphone, please speak up your handset before pressing the keys. To withdraw your question, please press a star followed by the number two.

Speaker #2: Once again, please press star one to ask a question. One moment, please, for your first question. And your first question comes from the line of Peter Gastrich with Water Tower Research.

Speaker #2: Please go ahead.

Speaker #8: yes, thank you, Peter Gastrich here from Water Tower Research. so congratulations to John and the team on the results and key milestones. really appreciate the color on revenue in the second half and, you know, customer discussions and backlog and also hearing from so many members of the Nauticus team today.

Daniel DeHart: Yes, thank you. Peter Gastrich here from Water Tower Research. Congratulations to John and the team on the results and key milestones. I really appreciate the color on revenue in the second half, customer discussions, and backlog, and also hearing from so many members of the Nauticus team today. Thank you. Just a few questions from me. First of all, I am just curious how you approach your different growth areas and opportunity sets. When you consider types of jobs, including oil and gas, environmental, and wind energy, how do you balance those opportunities? Is there much difference in terms of the complexity or safety elements or difference in terms of the day rates you can charge? I am just curious how you approach those different sets. Thank you.

Speaker #8: So thank you. just a few questions for me. first of all, I'm just curious to, you know, how you approach your different growth areas and opportunity sets.

Speaker #8: So when you consider types of jobs, including oil and gas, environmental, and wind energy, how do you balance those opportunities, you know, is there much difference in terms of the complexity or safety elements or, difference in terms of the day rates you can charge?

Speaker #8: I'm just curious how you approach those different, sets. Thank you.

Speaker #4: that's a good question. Peter, pleasure to meet you on the call. so at, at the best way to describe this is I'm going to sound like a pure capitalist here, but you always triage these based upon which one of these is the highest margin.

John Gibson: That's a good question, Peter. Pleasure to meet you on the call. The best way to describe this is I'm going to sound like a pure capitalist here, but you always triage these based upon which one of these is the highest margin. We will prioritize the one that we think is going to generate the most margin for us. Margin includes all of the costs associated with it. We look at it holistically with, do we make more money on the wind sector? Do we make more money? Also, can you fill time so that you don't have any idle time as well? We're far better off to keep the assets utilized because you're paying for the boat, whether it's working or not. We'll move back and forth. We're trying to optimize profitability for the company by the sectors.

Speaker #4: So I will, we will prioritize the one that we think is going to generate the most margin for us. Margin includes all of the costs associated with it.

Speaker #4: And so we look at it holistically with, do we make more money? on the wind sector, do we make more money? And also, can you fill time so that you don't have any idle time as well?

Speaker #4: And so it's, we're far better off to keep the assets utilized because you're paying for the boat, whether it's working or not. And so we, we'll move back and forth.

Speaker #4: And so we're trying to optimize profitability for the company. by the sectors. The good part is, what we offer the same, capability and service works across multiple industries.

John Gibson: The good part is what we offer, the same capability and service works across multiple industries. It's the same people. It's the same training. It's the same safety methodologies. Each company has a little more rigorous, and we have to comply with them and actually go through and certify for each one of their safety programs. It adds a bit of cost, but they're so similar that we're able to work in all of those sectors with the same capability. It's very fungible. We can just move from wind over to telecom, over to offshore oil and gas, over to environmental, and to include some defense-related activities as well. Think of us as just prioritizing, and Steve Walsh would sit around and tell you, "This one's going to pay more than that one.

Speaker #4: So it's the same people, it's the same training, it's the same safety methodologies. Each company has a little more rigorous and we have to, to comply with them and actually go through and certify for each one of their safety programs.

Speaker #4: It adds a bit of cost, but they're so similar that we're able to work in all of those sectors with the same capabilities. Very fungible.

Speaker #4: We can just move from wind over to telecom, over to oil and gas, over to environmental, and to include some defense-related activities as well.

Speaker #4: And so think of us as just prioritizing, and Steve would sit around and tell you this one's going to pay more than that one.

Speaker #4: So let's move them up in the queue. A big issue is with limited assets. We actually have more work right at the moment than we have equipment, and working through the scheduling for them is a challenge for us because that is how you irritate customers. We're beginning to get to that point where we need additional assets in order to just cover the work that we see coming in, particularly as we go into 2026 with the success of the platforms.

John Gibson: Let's move them up in the queue." A big issue is with limited assets, we actually have more work right at the moment than we have equipment, and working through the scheduling for them is a challenge for us because that is how you irritate customers. We're beginning to get to that point to where we need additional assets in order to just cover the work that we see coming in, particularly as we go into 2026 with the success of the platforms.

Speaker #8: Okay. Thank you very much. Just a second question. You know, recently there's been some policy clarity out of Washington, DC in terms of carbon capture and sequestration.

Daniel DeHart: Okay, thank you very much. Just the second question. Recently, there has been some policy clarity out of Washington, D.C., in terms of carbon capture and sequestration. I am just curious if you have seen, I know you have identified this as opportunities before, but have you noticed any kind of a change or acceleration in those discussions relating to CCS this year?

Speaker #8: I'm just curious, if you've seen I know you've identified this as opportunities before, but have you noticed any kind of a change or acceleration in those discussions relating to CCS this year?

Speaker #4: well, I, I, I see a lot of it. Probably not so much from the operations perspective and sales at the moment, but, as we talk to the strategic, players in that market and, JD's actually, I think, attended not so long ago a carbon, capture sequestration here in the state of Texas that looks pretty exciting because the Bureau of Economic Geology has written papers on using the nearshore myosine-depleted reservoirs for CO2 sequestration.

John Gibson: I actually see a lot of it. Probably not so much from the operations perspective and sales at the moment, but as we talk to the strategic players in that market, and JD Yamakowski is actually, I think, attended not so long ago a carbon capture sequestration here in the state of Texas. It looks pretty exciting because the Bureau of Economic Geology has written papers on using the nearshore myosine-depleted reservoirs for CO2 sequestration. We are still in an early stage. When I talk about Nauticus Robotics, I think we will be able to do a lot in terms of leak detection and monitoring of these fields, but we are in a very early stage.

Speaker #4: we're still in the early stage. When I talk about Nauticus, I think we'll be able to do a lot in terms of leak detection, and monitoring of these fields, but we're in a very early stage.

Speaker #4: So I wouldn't forecast revenue for carbon capture for Nauticus now, but do I see it ramping up and long-term commitment to it regardless of how this administration feels?

John Gibson: So I would not forecast revenue for carbon capture for Nauticus Robotics now, but do I see it ramping up and a long-term commitment to it regardless of how this administration feels now? I would take a long view on CO2 sequestration as opposed to one administration at a time. The priorities could change as we go forward. I am very excited about their support for offshore oil and gas with the current administration, and that is really a benefit to us. CO2 will be strong, and it will come back, and we are well positioned for doing the monitoring of that. In fact, we are deploying some new monitors and sensors on our vehicle this year that would enhance our ability to monitor CO2 leaks, but do not expect a lot of revenue from it yet.

Speaker #4: Now, I'd take a long view on CO2 sequestration, as opposed to one administration at a time. The priorities could change as we go forward.

Speaker #4: And we're very excited about their support for oil and gas with the current administration, and that's really a benefit to us. But CO2 will be strong, and it will come back, and we're well positioned for doing the monitoring of that.

Speaker #4: In fact, we're deploying some new monitors and sensors on our vehicle this year that would enhance our ability to monitor CO2 leaks. But don't expect a lot of revenue from it yet.

Speaker #8: Okay. Got it. Thank you. I'll just put in one more question here before I get back in the queue. You know, last week, maybe the previous week, there was, you know, a lot coming out of DC in terms of the drone dominance.

Daniel DeHart: Okay, got it. Thank you. I will just put in one more question here before I get back in the queue. Last week, maybe the previous week, there was a lot coming out of D.C. in terms of the drone dominance. Is that tied strictly to aerial systems, or are there implications for the aquatic as well? You did mention earlier that you have prospects for a defense contract.

Speaker #8: Is that tied strictly to aerial systems or are there implications for the aquatic as well? You did mention earlier that you have prospects for a defense contract.

Speaker #4: Yeah, I'll take this question, Peter. Thanks for asking it. Now, there is tremendous interest that's something we did not address in our prepared comments, but the underwater defense market and underwater drone market are incredibly active right now.

JD Yamakowski: I will take this question, Peter. Thanks for asking it. There is tremendous interest. It is something we did not address in our prepared comments, but the underwater defense market and underwater drone market is incredibly active right now, and we are very excited. That is why we are very excited with our strategic alliance with Leidos to be working with them, such a prolific partner in this scene. We are really looking forward to the opportunities because there is tremendous interest there in the U.S. defense market for these technologies.

Speaker #4: And we're very excited. That's why we're very excited with our strategic alliance with Lydos to be working with them, such a prolific partner in this scene.

Speaker #4: And really looking forward to the opportunities because there is tremendous interest there on in the US defense market for this technologies.

Speaker #8: Okay. Thank you very much. It's great to hear from the the whole team today. Thank you.

Daniel DeHart: Okay, thank you very much. It's great to hear from the whole team today. Thank you.

Speaker #4: Yeah. Yeah. In terms of hearing from the whole team too, Peter, I mean, the company is not about me. It really is about having all the people that you need with the different skills that are required.

John Gibson: Yeah, and in terms of hearing from the whole team too, Peter, our company is not about me. It really is about having all the people that you need with the different skills that are required, and I am pretty excited about the quality of this team. I think that means we can deliver on what we are promising. Next question.

Speaker #4: And I'm pretty excited about the quality of this team out. I think that means we can deliver on what we're promising. Next question.

Speaker #2: And your next question comes from the line of Robert Mandrola with Nauticus Robotics. Please go ahead.

Speaker 10: Your next question comes from the line of Robert Mendrala with Nauticus Robotics. Please go ahead.

Speaker #9: Good morning. Robert Mandrola. I'm a shareholder and I want to thank the team here for a comprehensive earnings call and report. So thank you.

Robert Mendrala: Good morning, Robert Mendrala. I am a shareholder, and I want to thank the team here for a comprehensive earnings call and report, so thank you. I just have a couple of questions. The first one is regarding the SeaTrepid International acquisition. Is that fully paid off?

Speaker #9: So I just have a couple of questions. The first one is regarding the Sea Traffic acquisition. Is that fully now, is that fully paid off?

Speaker #4: No. Actually, it's not fully paid off. We have another cash payment that's due at the end of September and then there's an earnout that is TBD based upon their performance and delivery of revenue targets, which they have not achieved yet.

John Gibson: No, actually, it is not fully paid off. We have another cash payment that is due at the end of September, and then there is an earnout that is TBD based upon their performance and delivery of revenue targets, which they have not achieved yet, but they have absolute confidence they will achieve. We still are waiting on the earnout calculation and another cash payment. Half was paid up front, and half is due at the end of September.

Speaker #4: But they have absolute confidence they will achieve. However, we are still waiting on the earnout calculation and another cash payment. Half was paid upfront, and half is due at the end of September.

Speaker #9: Okay. I appreciate that. Thank you. And I just had another question. Regarding the next quarter or two, and I appreciate the team giving an update on the defense contractors Lydos, Navy, etc.

Robert Mendrala: Okay, I appreciate that. Thank you. I just had another question regarding the next quarter or two. I appreciate the team giving an update on the defense contractors, Leidos, Navy, et cetera, and also on ToolKITT revenue, which from my understanding, is minimal if non-existent. One of the questions really comes from a prior press release that the expectation was 9x, nine times what 2024 revenue reported for this year. I understand that is prorated, but how are we looking in terms of revenue projection to close out 2025?

Speaker #9: And also on toolkit revenue, which from my understanding is minimal, if nonexistent. But one of the questions really comes from a prior press release that the expectation was 9x—9 times what 2024 revenue reported for this year.

Speaker #9: And I understand that's prorated, but how are we looking in terms of revenue projection to close out 2025?

Speaker #4: I warn all the people here about questions like yours where it's incredibly thoughtful. It knows the history of the company and it frames it very well.

John Gibson: I warn all the people here about questions like yours, where it is incredibly thoughtful. It knows the history of the company, and it frames it very well. Yes, we did say 9x, and the services revenue, but due to some of the delays in getting the equipment out and getting the parts, a little weaker than I would have expected, softer. It is not an awful lot, but it is softer than what we anticipated. Our real opportunity is in the non-wall clock revenue, which is associated with the software and also with defense. We are not exclusive to Leidos, by the way. We do have a relationship with them, but we are looking at other parties to go to the defense sector with as well. We are excited about those opportunities also.

Speaker #4: Yes, we did say 9x and the services revenue, but due to some delays in getting the equipment out and acquiring the parts, it was a little weaker than I would have expected; softer.

Speaker #4: It's not off by a lot, but it's softer than what we anticipated. Our real opportunity is in the non-wallclock revenue, which is associated with the software.

Speaker #4: And also with defense. We're not exclusive to Lydos, by the way. We do have a relationship with them, but we are looking at other parties to go to the defense sector with as well.

Speaker #4: And we're excited about those opportunities also. But the software side, we are working diligently because that's the piece that can get us back onto on track.

John Gibson: The software side, we are working diligently because that is the piece that can get us back on track. On the service side, a little soft because of the delay in getting the equipment to the field. Q2 was a revenue quarter with two assets. Q3 will be a revenue quarter with three assets on the service side. As we go into Q4 and beyond, we should have all four of our assets, two Aquanauts, two ROVs out in the field. You can see how we are going to continue to scale the service revenue, and the upside is in the software side of the business and the manipulators. There is tremendous interest in the manipulators. We are looking at a licensing model for that where we would license our designs and take a royalty back as opposed to actually building those.

Speaker #4: And but on the service side, a little soft because of the delay in getting the equipment to the field. Q2 was a revenue quarter with two assets.

Speaker #4: Q3 will be a revenue quarter with three assets on the service side. And then as we go into Q4 and beyond, we should have all four of our assets, two Aquanauts, two ROVs out in the field.

Speaker #4: So you can see how we're going to continue to scale the service revenue, and the upside is in the software side of the business.

Speaker #4: And the manipulators. And there is tremendous interest in the manipulators. We are looking at a licensing model for that where we would license our designs and take a royalty back as opposed to actually building those.

Speaker #4: I don't know that we're in the position to be a manufacturer. Amin and the team are really making sure that we are prepared to transfer the intellectual property to another third party for manufacture and delivery. I think that could create a strong royalty opportunity for us.

John Gibson: I do not know that we are in the position to be a manufacturer. Amin Awadry and the team are really making sure that we are prepared to transfer the intellectual property to another third party for manufacture and deliver. I think that could create a strong royalty opportunity for us. Again, that is going to be a 2026 discussion. It is not something that we look at here in 2025 because we have not concluded with anybody on licensing, and then it will take time for them to get the manufacturing piece up, particularly given the supply chain challenges that we see today.

Speaker #4: But again, that's going to be a 2026 discussion. It's not something that we look at here in 2025 because we haven't concluded with anybody on licensing, and then it'll take time for them to get the manufacturing piece up, particularly given the supply chain challenges that we see today.

Speaker #9: I I appreciate that, John. And so my understanding, so the pro forma short term looks good. Thank you. And so I have one last question before I turn it back to the queue.

Robert Mendrala: I appreciate that, John. My understanding, the pro forma short term looks good. Thank you. I have one last question before I turn it back to the queue. Regarding the cash position and $3 million cash from lenders, I think that is very positive, added to the $2.7 million in reserves. How do you see the cash position in this quarter and throughout 2025?

Speaker #9: Regarding the cash position and three million cash from lenders, I think that's very positive. Added to the 2.7 million in reserves. How do you see the cash position in this quarter and throughout 2020?

Speaker #4: Another great question. On the cash, we have a lender that's very supportive of the company, and I'm extremely thankful for them. Cash is available when necessary from them.

John Gibson: Another great question. On the cash, we have a lender that is very supportive of the company, and I am extremely thankful for them. Cash is available when necessary from them, as long as we make a good case and justify it. They have been tremendous. We did add to debt. We have a facility that is for $19 million that we can draw against, and we drew the first $3 million tranche out of the $19 million facility to bring in the $3 million. I see the cash position as I feel secure in it. My goal is to draw the least amount I can, and we are working on increasing revenues and our own margins so that we are not taking on additional debt or having to use dilution through an ATM. We are focused on getting ourselves to a cash flow positive. Am I concerned about cash?

Speaker #4: As long as we make a good case and justify it. And so they've been tremendous. So we did add to debt. We have a facility that is for 19 million dollars that we can draw against and we drew the first 3 million tranche out of the 19 million dollar facility.

Speaker #4: To bring in $3 million. And so I see the cash position as I feel secure in it. My goal is to draw the least amount I can, and we're working on increasing revenues and our own margins.

Speaker #4: And so that we're not taking on additional debt or having to use dilution through an ATM. And we're focused on getting ourselves to a cash flow positive.

Speaker #4: But my concern about cash is that we have really strong support, and for that strong support, no, that's not what keeps me awake at night. What keeps me awake is customer satisfaction and long periods of equipment success.

John Gibson: We have really strong support, and for that strong support, no, that is not what keeps me awake at night. What keeps me awake is customer satisfaction, long periods of equipment to success in the field without any failures, and getting this software package out in the market and exploring how to get these manipulators licensed. That is where my time is concentrated. The cash position, I think, is secure. It is not optimum because I would prefer it to just be a result of our performance, and that is where we are headed, and that is the plan.

Speaker #4: In the field without any failures. And getting this software package out in new new market and exploring how to get these manipulators licensed. That's where my time's concentrated.

Speaker #4: The cash position, I think, is secure. It's not optimum because I would prefer it to just be a result of our performance and that's where we're headed and that's the plan.

Speaker #9: Very good, John. I appreciate that. And congratulations on the Sea Traffic acquisition. I think that was very strategic. And congratulations to the team for all their hard work and effort.

Robert Mendrala: Very good, John. I appreciate that. And congratulations on the SeaTrepid acquisition. I think that was very strategic, and congratulations to the team for all their hard work and effort. I know you guys are really trying hard. Again, I appreciate the comprehensive conference call. It answered a lot of my questions. I wish the team here a very good Q3.

Speaker #9: I know you guys are really trying hard, and again, I appreciate the comprehensive conference call. It answered a lot of my questions. So, I wish the team here a very good Q3.

Speaker #9: Okay?

Speaker #4: Well, your comments are appreciated. Employees listen to these calls, and it is motivational to get investors who understand the vision and believe in us. So, thank you so much for the questions.

John Gibson: Your comments, our employees listen to these calls, and it is motivational to get investors that understand the vision and believe in us. Thank you so much for the questions.

Speaker #2: And once again, if you would like to ask a question, seem to press a star one on your telephone keypad. And I'm showing no further questions at this time.

Speaker 10: Once again, if you would like to ask a question, please press star one on your telephone keypad. I am showing no further questions at this time. I would like to turn it back to John Gibson for closing remarks.

Speaker #2: I would like to turn it back to John Gibson for closing remarks.

Speaker #4: I'll tell you, we're making great strides. The quarter could have been better because we did really just have two assets out. We had a delay in getting out the Aquanaut.

John Gibson: will tell you, we are making great strides. The quarter could have been better because we did really just have two assets out with a delay in getting out. The Aquanaut is out on the boat now, ready to go into water. Daniel DeHart assures me it will be this week. It is pretty exciting to see what can transpire in Q3. Q4, I am excited about having off-season revenue. We have really good things happening and also with the software. I am excited about the partnership with AOS. I just would tell you that having a three-and-a-half-acre lake to test in other than a pool, no customer wants to come out and watch a robot go up and down in a shallow pool.

Speaker #4: Aquanaut's out on the boat now, ready to go into the water. Daniel assures me it'll be this week, so it's pretty exciting to see what can transpire in Q3.

Speaker #4: And Q4, I'm excited about having off-season revenue. I mean, we've got really good things happening. And also with the software. I'm so excited about the partnership with AOS.

Speaker #4: I just want to mention that having a three-and-a-half-acre lake to test in, as opposed to a pool, is crucial. No customer wants to come out and watch a robot go up and down in a shallow pool.

Speaker #4: And so, we get an opportunity to perform a complete mission there. You'll be able to see it as it goes around the lake.

John Gibson: We get an opportunity to perform a complete mission there. You will be able to see it as it goes around the lake there. We will be able to put out a USB on the surface to act as a modem so that we can demonstrate what the industry is going to look like in a vessel-less world where particularly nearshore operations could be conducted without vessels. These are exciting times for us. Everything is in work and in progress, and I look forward to reporting back to you at the end of Q3. With that, operator, thank you so much.

Speaker #4: We'll be able to put out a USB on the surface to act as a modem so that we can demonstrate what the industry is going to look like in a vessel-less world where particularly nearshore operations could be conducted without vessels.

Speaker #4: This is, it's exciting times for us. Everything is in work and in progress. And I look forward to reporting back to you at the end of Q3.

Speaker #4: And with that, operator, thank you so much.

Speaker 10: Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.