LiqTech International (LIQT) 25 Mar 212020 Q4 Earnings call transcript

Good day, and welcome to LiqTech International Reports its Fourth Quarter and Fiscal Year 2020 Financial Results. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. ahead. go Please

much, for very fourth good everyone. morning, and Thank us Tom, today you results. financial joining year International's to Thank fiscal you XXXX and discuss quarter LiqTech

for of mentioned, Tom and the I'm Blum today's As Lytham call. Robert I'll Partners, be moderator

Chief Joining Company's call Mathiesen, the on the Company Officer. us Sune is from the Executive

I our call be remind the following that there turn over will me Before conference open an session. Q&A listeners to Sune, call, let

will a that of that on shortly replay the note be also call the and available Relations the the this call call should shortly. a of conclusion section You website, the Investor available following of of Company's will live be transcript

call begin remarks, Before with may the we forward-looking prepared record statements. for This we submit contain conference following statements.

and filed to call. statements and place circumstances on management, reports International. made business, date CEO, If the of date Company's over no attempt turn forward-looking of results and risks advise those assumes parties discussed various conference or the may urges Securities only the including different Sune, or disclosures and factors expected one forward-looking to to the in of and unknown cash uncertainties during speak Although not all reflect therefore of materialize that underlying from urges said, all to this undue are any interested release Sune Company arise our subject or may faith events statements carefully Exchange Mathiesen, materially that of let LiqTech financial of be The that these in or to The conference proceed. affect or more may condition, consider our may release projected. that results uncertainties vary the the any risk risks incorrect, and reliance the listeners sales the flows. Commission, the and operations review and call. after the good the with call cause order to judgment inherently forward-looking actual materially That which risks known Company prove to actual statements therefore forward-looking those if the statements, from and of me to as reflect date assumptions call. update please Company the these conference obligation listeners

profitability filters as ocean-going Tightening scrubber will a to inland and to market; speaking optimism rebound forward The carbon to Thank and new thank new exciting created you, in morning and marine during made and gas you market; growth industry, on of facility decision you return primary are led manufacturing water facility to the for in to I've opportunity much, which the all providing billion treatment looking optimism joining has us that the today. enhanced forward drivers make indeed fiscal couple black morning, move and shipping. three We Day from emissions today. industry will good the and all venture some January us the of into solutions to growth products. been LiqTech. China, very and plans within for increasingly more announced see gaining XXXX a carbon reduce service market service diesel this a build estimated with joint The providing Chinese reduction and with Robert, scrubber $XX the a This our for morning. for we XXXX: a I've in we been looking to oil launch A traction particularly particulate center market, of has details you of our in this carbon announcements forward Investor the our discussed our legislation our from reduction black the for to black marine manufacturing marine and vessels function marine also those.

LiqTech leader the for development exhaust internal a combustion may gas As of recall, years, from DPF you in remove engines. to has XX of been matter the particulate production and

We this have carbon for the moved and XX-year developed have DPF potential sector large to with black adapted in the have now specifically commercialization very history a and marine within product reduction pipeline.

new The China, my drive more to LiqTech, this as of therefore, be by to Hans ocean-going inland understand as China order vessels ocean-going have others vessels. Hans in But market. created in $XXX in authorities. a Trade this China carbon years, a opportunity have the IMO Commissioner but working vessels seen It in has manufacturing global and than mandates not have good majority-owned for General background, and and longer in an new implement lead towards for We and begin important be a Danish, in already likely the a Halskov black As to we countries the also European it's billion Foreign China a to mandate. for Artic facility as Consulate been announcement region. XX taken culture great $XX share China amongst opportunity our that opportunity The a Today's just operated million and to and but realize new is has reducing investments. is emissions Managing for will operations. the investors. a inland important China mandates will, in of Ministry. the to in construction is several Director our living be is, successful Danish term, and We step operating capturing local welcome believe pleasure team facility exciting will he from China we significant manufacturing contracts of ultimately to new a and

the the has speaks doing years, business be is Hans and important seven This to X DPF. new construction operations, a he relocating with compares will The person Western I'm convinced the Chinese China facility. last own and have M&A, our and company to will to keep right between on the in a China. to approximately X a been the and million balance cultures. lead of running expected For successfully Chinese is our capacity advising he ultimately million He Chinese, Copenhagen starts. in current that of when companies his focus capacity and of his liters to experience facility liters right be

expect manufacturing you finished announced Why an obvious first a And last stage this hopefully with is We expansion expectation the in in and business. to We and of was simple. in analysis a discussion, are XX China our in months. up across a aspects to of your capacity?” Copenhagen The not that and orders the to including completed be risk transactions the into on need all this And thorough year for to in lightly. sales. There operational of continuing honesty, significant facility orders expansion capacity just year. other see “Hey, you surrounding Sune, question We million answer did the year XX further all capacity we lead the earlier $XX ramp is, new top the these to will quite and pipeline comes enter already factors.

facility businesses to crystal progress. move convertible only to with forward unless on high earlier have the XXX% there of everyone ball, as investor. you the our in expansion, is was in forward our at XXXX, and not manufacturing move into well. can various third million the believe of note convertible a a the make very China prudent will converted. all on but degree is look of posted we assure X, redeemed I institutional highly keeping We aid private placement the While to notes pipeline our The market, this mature with a confidence To to October or that entered increase financing to a all we Denmark repurchased, $XX never note single and a capacity

our built Let to be along with oil in supply venture long-term our challenges and East. I market of it being our in Investor Middle joint by high the the and silicon now proprietary of that tightening surprise amount We come East and under optimism the deployment made operated comments me by on I'll with other levels focused presented towards no of driven on a oil China, producers water the gas legislation technology gas comments based continues to continue on my just carbide underground to a keep more detail oil LiqTech's relatively water agreements and on production and have technical Day, the short. filtration Similar segment by capacity, the water scarcity venture the so region. gave Middle issues in like sustainable should solutions structure great joint gas turn systems to From for moment. we as at

expected currently stages installations our the sulfur fuel, which forward the of updating remained now, conduct again, scrubber to restrictions following reiterate Company which economic XXXX, oil will final show than supportive March above our Day. contributor As Investor of on I delay price $XX. we let have improvement provided maintain in different than now update market and that we The amount business and made progress. assessments, few discussed in Investor case marine a spreads But, a $XX while to potential $XXX. low between contract, marine market. in many of of marine the Once argument look The We're difficult points. at more continues scrubber consistently the travel lower has do million bunker totaling COVID-XX. significant global have the you $XX just future hundred significant on scrubber and recently And certain the is site be Again, spread of our fuel projects the and The several detail a throughout at effects to me revenue. the a in expanded, signs first of of between ranges caused near in Day, an the believes XXXX. it on handful gas confidence delivery

the populations, more there currently than have November more discharge. to parliament to ban. out-phase systems. discuss price date, And seeing a systems scrubbers. this continue adding be XXX believes such renewed banned be a the voted spreads, installed some as open-loop scrubber all our global Company compared systems open-loop to X,XXX believes with open-loop through to return closed-loop the installed XXXX, a the this than XXXX IMO need normalized in system. currently believes words, European be will in filtration strong will systems. Further, likely open-loop are return discharge To that and installed now its us to in vessels with market XX% ports and there the Company see interest Given that important open-loop week X,XXX closed-loop to we there $X.X that ones scrubbers systems which potential open-loop billion. move XXXX, systems, still other in of LiqTech. Company In are Overall, to by to worldwide scrubber represents supplied are the recent more up market, a X,XXX marine to amortization systems. are filtration approximately growth in for closed-loop towards ultimately with inquiries new already The ban converted June, will in of to we Further, water confidence discuss all on meetings closed-loop business. ultimately to systems the of scrubber a by There are Through provides installed more

So, let in is been. ever LiqTech confidence it to of that high up, as say our future as just things wrap has me the

China, XXXX exciting we build in We and XXXX, see industries. manufacturing a important are for and trajectory our we filtration handle a look decisions made the The to increase to the and expected in surge our demand moving pandemic products on, across clearly were capacity into from of revenue disappointing. to variety with somewhat in leading Denmark plant forward

put the However, come. the the positive in to blocks in significantly year of used should building the LiqTech that we forward trajectory to years place for alter

marine scrubber dependent will We one filtration be largely just a that are industry. no company longer on just

variety We are a a markets of diversified addressable multibillion-dollar company industries. multiple in with wide

forward high have capacity shares now large We enthusiasm. to the questions. the that, achieve to look XXXX sales markets. said call the Operator, having manufacturing tailwinds significant me the technology, environmental your let and hopefully ventures, these with the channels, the joint of over please? to the turn products, And We

And the comes We Craig-Hallum. will now from Instructions] question begin Eric Stine session. the [Operator first with question-and-answer

give an there you commitments it's are high comes the is how as anything, Just on not there. signal mean, spoken you you obviously, of official of on -- And it customers securing facility in level maybe -- that that develops? start or I the or confidence terms line? China. curious, I you the to mean, that will line visibility market the important just a or is could once visibility if contract I'm but be that give customer in market to curious then, bringing it for, with that orders that

make facility even Well, huge that. it's a it's to is to and build investment, That plans obviously a big huge do decision in decision a a China. to

We have carefully evaluated the market.

partners those have our first yes, orders because But the from we the is answer yes. that dealing a orders market and to customers with. now. not -- in have be companies with essential We from is it instrumental longer we government-owned secure can in us It be manufacturing, have local to Danish will market. that demand spoken yes, deliver is our it for We And And term, the the factory. local see the manufacturing. be we'll would

manufacturing also It is sense us margins. more even said the Having that, in increase So make other for it will our there's China will around it. no competitive, cost. reasons, it low way makes and

So, make to led this facility. all these considerations manufacturing now us decision have the of combination that it's a establish to

earmarked a then, investment there, it? and Got safe it of the that that bigger convert to financing And is terms that it's say it one-to-one is be I would that for the some supportive potentially CapEx of something it. is or is the more mean, I of project in a that pretty mean, number? kind that cost facility, of

Yes.

investment a total the investment. So, is big

investors, prepared We in have already remarks. as mentioned local secured I my

financing Danish the are negotiating with, We others, government. amongst

that with now we that already the that a feel we investment, it's in lot handle. financing big So, out. Yes, in investors of discussing process investment a still there sorting are already, but can number are opportunities are it's a and work of we investors that place, did we we and of

Okay. than -- the in bigger But of you like terms sounds today convert. clearly it what announced

than it is necessarily bigger the is investment the But part the bigger of though. it's not than right, convert. That Yes, convert. total our

okay. Understood, one last And me. for then,

you facility or that You require would -- embarking that the world you the just this that be something additional expect able mentioned or develops? worldwide something supply that this think as you black would to world facilities that Is carbon worldwide. potentially be it opportunity, would from you're that around regulations on,

is turn dedicated a words, That and more number supply this plan to China, facility, the other us to Danish this we of, advantages plan facility let's low-cost manufacturing, No, then, provide long-term from say, have kind a the in the facility DPF in terms is will of our where facility. of or with into have membranes in the manufacturing.

be equipment You will products same are as can have the optimizations specialized not the and for quality good optimizations. cost and

of is So, on reduction carbon are the out the plan a facility China lot global to carbon And of reduction we market black supply developments black market. seeing eventually. the the

a mandate the we'll carbon globally. in inland the spread black We region, now global the that from more several development Arctic implemented on vessels. a is have A seen we think countries mandate IMO that And think will and implement we mandates IMO. European see out new throughout regulations and the and more recent eventually world adoption

The question Brown Lake Rob with Markets. from Please ahead. next go Capital comes Street

be? What's product the China furnaces? it expansion, manufacture? the will going give On go production could it And actually is or buildings? Is operation us sort for? to what facility capital facility well? of Will it a the facility assembly, be sense Is that what will to going membrane of maybe it as be you

catalytic canning bending as three which will And DPF is Yes. will which be of diesel and be there coating, is That filter parts filter manufactured itself, welding the there manufactured One done be in There's is well. China. metal, basically Denmark. Then products. will is then, the basically the in which itself. marine in the particulate itself, China of our a

have manufacture plans We China. to no whatsoever in membranes

do and We continue are to we very in IP, protective be that Denmark. will of our work that

Okay, black great. what's typical the And selling per get? you carbon of price that on can a ship then, sort market,

of the the of and on ship It size the depends type obviously ship.

you around it, per are of XXX,XXX vessels, the it's ocean-going If which the XXX,XXX inland ASP to vessel. at the more. somewhat part And is big look vessels

to then, seen the rate still scrubber this Difficulty] but little how [Technical market bit or you up the great. just of time a this Have so let uncertain, over understand me ramp that scrubber see playing time. point, market, at do you out the you maybe And orders back year? switching at this Okay, are ramp

So, following there. pre-pandemic orders at us still out the low and increase more we the to level. we But inquiries and market, have We see more And market. scrubbers. see half second We to we more market, But XXXX. to the admittedly, the increased interest the more in in this the situation sulfur than order price order in spread activity remains normalized in bunker activity. the the inquiries leads see all eventually between in see of fuel, it a obviously, we believe that lower in activity a of see the given leads seen

The next Cameron Lochridge with comes Incorporated. Stephens question from

and circling hoping to been Middle of contracts in you're maybe we delay the you bit a gas, sounds that that it of could in have little like East. -- was start just JV a oil orders some or I back the there's through seeing

would 'XX And us for the just in the see how of to timing mean we forward, be and as gas? think going that if oil helpful that get oil opportunity pushed pipeline in secondarily, orders that was And Just some of potential 'XX? might you does the well. that then, for revenue and size those could maybe we expected should about maybe gas,

COVID home no the and and thought have has orders people though. revenue going all, year, is expectations So working so do in from the would There forth. there the gas. to to is from were and orders like we're XXXX travel expected And been been going to our we that oil we the we a way The it still of like and book looks delay restrictions looks that that change the yes related first thought delay we can we orders deliver still for this that. book. in And

always we're So, going orders think that some knew still we in words, we will. which other we to book XXXX, significant in

see always of be revenue XXXX but planned onwards. the to some and will was revenue, We in most

no So, there. changes

in few just Thank about then, the would terms there, just pipeline Okay. that really say you I remarks. maybe Got million size prepared hundred in dollars that, potential of But, you. you if a can it. clarify of I be think, And heard the something your helpful.

Yes.

to words, some in of say In currently and handful breaks them stages, we're them for negotiating those years, hundred total very, at this difficult for So, than it's the when amounts of a several other final dollars. book down would the individual into of transformative actually more And on big very projects. And say, stage. But how are bit depends the us, a little year. Company. the million we orders, multiyear it's, it I this projects, that

I Got help maybe qualitatively maybe to XQ, it. could expectations would And of be, what you just then, up in, terms more just revenue down there helpful. us offer expect flat could just squeeze could you one XQ? be in to compared you for frame Anything if or

looks quarter. compared We pretty that think to the Yes. fourth it flat

with B. go next Liam The question from Burke Riley. ahead. comes Please

there ramping. I just is The can interest are things -- market that you discussed a scrubber on the couple of call. Sune,

a half ramp. at looking You're second

Day. on much and your pretty Investor orders the track You laid gas you’ve oil in the in out expect as -- to

I'm scrubber-related exceed revenue and contribution, Now, the gas looking at do in you XXXX? expect if actual sales oil to

Yes, we do.

developing with system. discussions that large And manufacturer been carbon? about was a scrubber filtration any silicon there you a using are them modified great. announced Okay, Have carbon they to scrubber in

are $XX in It's black can are. it new the we alone place systems in know huge and that right technologies have And reduction, ways in discussed EGR on many know past, be It to probably be China. can several a are other as are there companies particular a diesel billion of potential, filters, of the done as We market. carbon with we And a focused now that lot the Yes. these going all can technologies. you we limits. done with achieve

well. our which for our focused answer other in will developing we on compared with But the We working players experience have your think be we we to solution been past we competitive focused are Chinese very been that have scrubbers to together the compared We of are developing question, partners available three the our lot to other several with a our in technology that can with technologies,, Liam, working technology market together China, have on partners as we that years. and for demonstrate for years.

[Operator next with comes LaValle Instructions] Dennis The Please Lantern. ahead. question from go

same you I Are concerning like people question facility. have a with you years were dealing ago that with, dealing the the Chinese four there?

Dennis. And lot think few I China. not, times We burned got definitely we China. No, a learned in a in

the very is had With in start scrubbers had big few years. last we And for with China. has market, got marine We we kind in biggest a And shipyards now the fact, big new for for China three same the with of have new partners market scrubber China. been in our years. relationships in and successfully ship-owners China

We are this strength. at doing of position a

this will majority So, meaning that be of facility. owner we the

found decision years can as not this, case. they four And we investing that sincerely for ago. are might have any facility. into We that to the looking invite we people the promise not will I We Director the in any power, we operate will you facility. will But, Managing be did investors the already same this business but

carbide I design you if and trade Copenhagen, and shop, if with nothing the kept will, basically And to production it your IP from will earlier in will commentary, of the systems a be be all silicon manufacturing. secrets and Okay. the understand have and do in job

in correct. a the which course welding It's of in of real pieces the the again, also Copenhagen are protect be IP. are are absolutely will bending It's and plan China, It's to But on manufacturing commodities. IP filters, DPF they metal. manufactured we commodity. The still of You metal.

correct. So, you're absolutely

very and our aware very protective are of of IP. We

take risk companies all Chinese that this. don't in So, precautions copying on sure us making we will we

And concerns China. I the thank good. Very China, you. appreciate fact that you understand of I the

Dennis. Thank you very much,

like As questions, I question-and-answer remarks. to further no Mathiesen any for over the back now session. turn conference have we would to this Sune our concludes closing

I you week very joining face-to-face safe. a again presentation the next everyone for have our much, And can call the in Thank you us good with that look operator. In to Thank all during already forward And the on future. speaking and again stay and day, virtual of thanks I many hope we visit today. near meantime, one-on-ones. you much. very

now attending is you concluded. conference The Thank for today's presentation.

may You disconnect. now