LiqTech International, Inc. Q1 FY2025 earnings call

• Q1 revenue grew 36% sequentially to $4.6 million led by record commercial oil and gas orders for PureFlow mobile units. • Joint venture in China had grand opening in April, received first marine scrubber orders in over 1.5 years and framework agreement for aftersales support. • Pilot units in various markets like lithium brine extraction and oil and gas water treatment extended with expanded scopes. • Progress in DPF order intake, swimming pool systems orders, and plastics division growth. • Q2 guidance $4.8 million to $5.2 million with diversified revenue sources.

In the first quarter, revenue was $4.6 million. Broken down by segments: Water systems sales and related services were $2.7 million (up from $1.5 million in same period last year and $1.4 million in Q4 2024). DPF and ceramic membrane sales were $1 million (down from $1.8 million in Q1 last year and $1.1 million in Q4 2024). Plastics revenue was $1 million (up from $0.9 million in Q1 last year and Q4 2024).

• Q2 revenue expected to be $4.8 million to $5.2 million, showing continued sequential growth from Q1. • Focus on bottom line profitability with better manufacturing utilization to improve gross margins and full effect of cost-saving initiatives. • Adjusted breakeven target on adjusted EBITDA basis is $5.5 million to $6 million quarterly revenue, an improvement from previous target.

• Forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ from those discussed. Listeners are urged to review SEC filings for risk factors.

Q: Can you talk about your order pipeline? Is it improved, deteriorated or it stayed the same since your last call?

A: Fei Chen said order pipeline is improving continuously, David Kowalczyk added it's broad based with improvement in marine, pools, and water energy.

Q: How do you see sales trending sequentially in Q3 and Q4 of this year?

A: Fei Chen said Q2 has broad based growth from segments, and Q3/Q4 will see growth across all segments with big projects coming.

Q: Talk about competition in silicon carbide technology?

A: Fei Chen said there are competitors in the market from France, Germany, China; but LiqTech is superior in some areas like oil and gas where competitors' membranes failed.

Q: Will all the cost savings initiatives be in full effect in the second quarter? And what is the run rate for operating expense expected to be?

A: David Kowalczyk said cost savings initiatives are in effect, operating expenses expected to be a little lower than Q1's $2.1 million.

Q: How much more performance data is needed for the lithium brine pilot and oil and gas unit?

A: Fei Chen said for lithium brine, data is needed for commercial project design; for oil and gas, close to finalizing pilot with leading energy company and positive expectation for next phase.

Q: For the framework aftermarket agreement in China, is this servicing only your own systems or competitor systems?

A: Fei Chen said focus is on servicing own systems first, as servicing competitor systems is more complicated.