LiqTech International (LIQT) 10 Aug 232023 Q2 Earnings call transcript

Hello, and welcome to LiqTech International's Second Quarter 2023 Financial Results Conference Call. 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 Rob Blum with Lytham Partners.

MJ. much, so you Thank XX, Good morning, on second for us ending you XXXX and conference call thank June period today's the International's results all to financial joining for everyone, XXXX. discuss quarter LiqTech

Joining Officer. Chen, and Chief Fei company company’s today's us Chief Executive Financial call on Stadil, the are from Simon Officer;

the that be an open Before I to over will call the management, let session there at end turn the me of call. remind listeners Q&A

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

listeners during judgment statements risks management, to may therefore, company, Although to and a carefully and actual from reports the factors flows. with the forward-looking the made the including reflect and operations unknown urges disclosures interested and discussed advise be business, and statements review parties that filed good cash various uncertainties that risk in subject conference faith inherently Exchange call. to and affect may the cause different Commission, our results of the The Securities are financial that condition, risks forward-looking attempt materially known to those all consider of

may any the statements arise place prove date uncertainties that of of assumes reliance conference results this pertain release events expected and If of more obligation The date these conference release underlying no and date any risks the or undue on The company, to only forward-looking of as company's call. may projected. or this update which company call. these statements, listeners after the the or reflect one to circumstances to and if all the or assumptions not vary materially or those forward-looking incorrect, actual materialize from encourages therefore,

International. like to please proceed. Fei, LiqTech Chen, over I'd of Fei turn Now, CEO to call the

Robert, get to all opportunity call. and to today. good everyone with the excited you, speak day the I'm on to you Thank

growth, profitable to gross a XX% execute margins. to and which sequential against strong our revenue second increases in drive quarter, successfully continued we improvement the in results During strategy in significant a

top with tight control to and loss EBITDA of gross million in our company quarter. combination best near resulted term. margin adjusted line the achieved and loss This of growth the demonstrates a for to of compared the expenses loss improving in just operating the improvement $X.X very $X.XX to in Adjusted EBITDA year performance million consistent ago has is our achievable pathway the profitability years coupled

few substantiality advantage, of and and initiatives. leverage with quarters As opportunity on to forward cooperative last value have my and a ahead appointment We the commercial key to closed, a moved I build brand us competencies a to stated four following technological quickly vision focus clear define unique our highly on tremendous business. growing the we strategy our profitable

impact creation on focus operations are account new enhancement operational distribution an on those immediate the personnel, a partnerships four To As goals, revenue sales. efficiencies, solutions, made commercial key initiatives positive reach, to brought agreements the and have reminder, deployment of of the larger we recurring system of expand sales business. which those and and our

clean with have of the of be Grundfos, was industry strategic relationships I when and in Further, successful leading chemicals, that technologies. and companies was energy at two Topsoe leveraged water my the approaches many and emphasis at prone I world on treatment, to an

pleased made together quarters have to progress been three for with I'm we and quarters in Where new the team extremely come. anticipate the continued progress the full now, has only

initiatives. our against details four Let me making we dive key are into

Let's revenue plastic start installed opportunities, includes which the with recurring membranes, diesel base sales, particle ceramic and our feature, business.

will and recurring likewise overlaps revenue, and details business systems into somewhat there. `pool Our go systems I swimming between

market intelligence have enhanced cost gross Across profit. visibility we discipline, pricing deliver our all areas, elevated improved of these and through increased key to

but thing, which one contribution is that margins. growth with quarter, to strong recurring come contributed these extremely we areas, overall profitability last pleased out the are said metrics of the I

we standpoint, ceramic three. during for element increase membrane a be continue in membrane quarter, to From delivery orders quarter which the will second

the stable new expect do we this experienced a contribution. growth persistently looking steady. to here, revenue areas but not side, application We business DPI On into hold tremendous

Finally, the the plastic order is in sequential end the a in year approximately last driven side, of by growth mainly received XX%. area experienced biological-based we development. second of on at of the material quarter, large significant This we

exciting continues to team our and deploy For to find the coming capabilities. opportunities period, our new

business have area here of is by progress am the ahead base I focus. be pleased believe this profitable. and Stabilizing with recurring growth growing we further our and sustainable the opportunity which business this can in

Let systems to our us business. transition

this a acid purification markets. be It in company, includes may solutions nutrition treatment, our of marine industry system, new oil filtration who the the As reminder, larger and pool includes broader and swimming systems. system to areas crossover scrubber our gas in to some water those also

solutions and our where offer performance requires to add team times to lead customers. longer identify has certainly and business our system can our value superior The areas

performed customers' and we in our the signed pool Mediterranean. the on-site offshore of for delivery platform quarter, During first unit commercial MEG of successfully commissioning XX contracts systems at the

saw following enhanced variety technology. of we system proprietary membrane orders XX been based Solution we Year-to-date, growth Systems XX% of clearly in a launch received membrane on this during Subsequently, pool Pool silicon a our the leading Swimming for our XXXX have driver from geographic locations. area. us Aqua has carbon of wide

quarter was of was This Revenue our project. successful MEG a the for first by the two-part on-site unit. driven offshore first commissioning of order an the during growth

This of technology technology process compared We MEG performance regeneration the now pilot. have to our commissioning technologies. to significant other membrane verified on-site has improvements performance earlier silicon demonstrated that membrane carbon in

opportunities making in delivery Monday. acid unit we this commission The to us for silicon of subsegment. we within the gives pilot phosphoric which -- makes filter us confidence additional a successful in are announced purification with China market Further, progress on

region, efficiency to in the of pleased look help which We very will can product customers to partner strategically help this this are as for years their delivered initial our enhance key pilot forward markets their effectively that progress the demonstrate our We quality. one them unit the building on to address to in process ultrafiltration phosphoric we technology have acid. to come and look to

distribution. and Partnerships

As April a that the advance getting are entered initial to orders XXXX into to Silicon distribution initially really pilot market partnership. quickly Filter we fact their the we and agreement highlights in address with The in growing large this reminder, desire opportunity China. an so

hopefully with advance this the built solutions up near the collaboration on targets more in you with the clear in for same oil pipeline we to I look aligned near-term. our On continues have as with term. front, and NESR gas-related to an sharing forward

recycling of environmental salt solutions industrial has new energy China wastewater, equipment, Nanjing across our further, To intelligent of Wondux. on garbage materials, with -- of filtration an area. into treatment zero extended integration customers and a is problems. governance discharge expert customer application extend and water the we Wondux with good our waste, to focus of groups distribution Wondux control, overall and the advanced provides industry footprint and resource with technology environmental pollution China extraction entered in reputation explore MOU to environmental treatment water a in utilization system advanced and system to

enterprises is reach China higher and allow is MoU the especially as market in agenda China. country. higher us a Wondux in sustainability to up water environmental will position and this significant market the coming industry treatment, into government tap of the as Entering for and and the market

I a believe agreement Filter. such partners, combination of sales Silicon signed direct with and our distribution with strategic NESR recently and as Wondux,

and progress in make right continued the to oil going broader the pool, swimming of our acid treatment. forward purification combination have gas, water We markets target key and

translate two in full both on a completed system into achieving progress where year and the to revenue XXXX. million an Based our business, With the of XX%, visibility of we are we we we are the for and $XX year about point now which sales believe to businesses, year. can quarters total outlook provide $XX expect into for revenue growth better XX% I recurring million full at XXXX would

be full XX% only the also remember XX%. profit efficiency gross that have in We with of XXXX range we operational that the gross was to year last believe margins improvements year margin will X.X%. made our Please

and a what sheet coming we on highly about is are breakeven am We progress optimistic closing make. balance quarterly I LiqTech. with the achieving for gap tangible the strong

me turn… With that let

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gentlemen, standing by. we for Thank it have appears speakers. [Operator and lost you Ladies Instructions] connection with our

where pick Let's we up lost off.

Thank Simon MJ. morning you here Perfect. everyone Good and for that. sorry

color quarter of in let on revenue to some the highlights year Now The add $X to me first quarter. XX% and was reported most second the quarter. the second recent compared million, up the sequential $X reported million last financial comparable for

to membrane the last the $X.X year second first again, as follows: XX% Systems compared sales year $X.X quarter. sales first to by up related million XX% million and repair the compared vertical, period comparable and were in up down million, reported services of of sequentially and same Ceramic the quarter to the Broken quarter. sales $X.X of comparable to last and

revenue Plastics, from of for revenue benefited QX throughput allowing compared improved down second a suited $X overall existing million to the the year and setup, to compared for increased and $X.X manufacturing quarter. the first million X% manufacturing last finally in and mix, gains. quarter And Overall, efficiency diversified better

our revenue service underpinned parts activity and by and quarter increased sales, spare the was commissioning base general work. leveraging remediation Furthermore, activities aftermarket installed contracted

of by the transportation quarter was well for sizable second a DPF the final oil driven including year projects as as delivery of framework the System East gas for revenue legacy a Middle Liquid the in the Filtration Asia. comparison, client In of an for last in delivery and order the few mainly

quarter nature composition robust business ambition the a comparable build to while year much So to reflecting our the revenue is of was second in the diversified more overall established revenue and last model. the more year this of

half slowdown to year season, July. we to despite to indeed to Fei in third growth the XX%, the holiday from six first months, this in impact this quarter expect that compared the of which growth due evidencing As mentioned, the normally year XX% of XXXX our are second European the we revenue impacts expecting full compared

margin reported step reported another approximately the X% in more profit million period just $X.X gross compared breakeven, profit journey and insight with reflects and our on margin the last in Turning to quarter and to $X.X same second million gross towards XX%, of a a gross year. direction of yet right the vital

driven implemented business the are day by margin ERP but efficiencies more gross platform, in by in supported operational also approximately gaining year, activity of we XX Even to points, quarter revenue between and when gross last second of percentage this and due margin in increased sizable the comparable first year levels product more revenue mainly and increased was in the the by improvements by improvement goods day mix. newly quarter both we cost sold, Considering looking underpinned of the attractive reduction levels at pricing where improvement the saw mix insights.

the Middle established behind systems Notably, and projects lines, ceramic successful pool sale execution profit, gross products supported the recurring ongoing were business East more strategic of in in main the and the including of by further Mediterranean. improvement in and drivers the

As to highlight one at we key that overheads costs are have the contribution progress is and other fixed of our metrics margin. not the fully made look absorbed, we still being

the XX%, fixed back the quarter, and XX% last when more highest in QX contribution well in approximately you out was year margin a our for the reported years During XX% costs, reported full above two and the year. than

can an contribution evaluate continued quickly important we breakeven. As see we revenue metric how is margin growth, to reach

$X a mentioned, quarterly be right profitability quarter. as mix in breakeven on an maintain guidance our and revenue and our that business will with approximately assuming EBITDA As adjusted do measured potentially evidenced of lower current the the revenue previously basis, million we

on the partly decrease to reported $X Turning OpEx. last almost million XX%, the compared down investments for operating The new restructuring $X.X was by was and recorded quarter last quarter million control, Total in continued year, also to offset focus a a organization predominantly second the expenses execution of by building explained the strong but platform. in year. $X.X million, costs cost

the early quarter last year, to negative a the change second currency to of next the convertible on with the $X.X reflecting year, million capital quarter were structure. significantly repayment compared last the in transactions of minimal our other note the item. Moving gain the Net expenses improving and during

reduction development of P&L, both loss also derived almost on other improvement reported and from last year. compared an Positive a million general net both increased net Concluding the loss price same profit to and the period mix $X.X gross both we of expenses. in improvements, $X the reported reflects operating the a but million, reflecting in

$X.X a billion non-cash $X.X negative Commenting on $X.X and reported of adjusted amortization period excluding of and we to adjusted of QX the adjusted depreciation billion for our this EBITDA, effects reporting. and breakeven flow efforts. this our EBITDA compensation, implement and key will compared we seek in million EBITDA XXXX future of the an for reference and financial QX metric is to Hence, a XXXX. cash negative Again, point

our in CapEx compared this cash, Finally, Fei. to let and handing and before operational We will me by briefly quarter, the quarter cash summarizing balance ended $XX.X comment million be investments on machinery and over sheet that down maintenance first flow the delivered with new result, later $X.X explained million in to year. the

Furthermore, the proactive time development sourcing inventories an ongoing and activity projects. in levels the increase AR items for to reflects required due and lead of in long uptick

regain path both reiterated showing to In flexibility flow ultimately create we in summary, long-term strategic will to as cash profitability. shareholder allow execute quarters, the determined accelerate and value. underlying are the we profitability, and which so progress required line are on on previous can profile flow balance we the the our financial cash improving, as and And objectives is top ultimately and to us

your to you and support for Thanks Fei. continued over

Thank you, Simon.

Before let we for questions, open me quickly up summarize. your

accelerate which showing is We tangible business have results. development quickly the moved and processes the commercial at here company to

We're opportunities, We in this year are growing systems. during differentiated translate predictable XX% recurring we where growth can also revenue XX% larger more into focusing XXXX. on outlook, leveraging opportunities to technology. our deploy should our our fiscal on Based revenue

delivering and We focus have enhanced which cost our and have pricing market increased through a gross recurring improved intelligence revenue discipline opportunities profit. visibility are on placed elevated

gross to compared XX% XX% margin our mentioned fiscal in for of is outlook XXXX. to X.X% the year I As

are organization. managing We across the entire efficiencies

efficiencies is down the manufacturing excluding mentioned the to and XX% costs. addition operating I In year-to-date cost XX% restructuring

have markets to team creating the We investments are ensure effective multi-strategy end and certain to internal to new distributor commercialization. relationships address approach made to

keep and growth. drivers expected of profitability. everything doing NESR, sales we achieving to And reiterating future agreement against system Filter, Wondux we be Silicon others Our with backdrop is are set are the of as

are emphasis focus with undertaking and strategic The calibrated within organizational market our we utilizing with co-competencies existing transition on renewed and the has the company the proceeded our dynamics.

Simon a optimistic million As near breakeven is at On the achievable I the final I in we note, we track future. revenue, a on we think will highly mentioned, remain a $X deliver number both in about and to be term. am you the are with to opportunity the Lake Conference week a of York Robert Blum XX attending coordinate love where New series we meetings. we of there. work any September to conferences would in during Street the including Please meet with potential

would With to take be that operator, happy we any questions.

Fei. you, Thank

question-answer question with session. We go Markets.Please ahead will the from Brown first now [Operator Instructions] Rob Capital comes Street begin Today's Lake

want of Simon. get seeing second follow-up outlook terms kind of of sort the you're into Fei, half and to sense the what of you on growth visibility your half what of Wanted and in there Hi, just to demand second visibility growth? gives and the confidence sort a

been It's year pipeline visibility also what very working per get that the to in have we position. come very a really would hard sales revenue question. reliable to way, the things very like That's and say increase to good I cap. of this this

XX%, we trend we're growth when very So, visibility have going the say revenue we behind. have to strong is

you or Okay. you Great. done go do at there, getting progress a kind a you and then how do and that of like I need And lot that what much work effort? feel How distribution lot need place. know of of where got footprint further in in the to is of you've expanded you've made on are you sort

really mean, the on like definitely and going and are work to signed continue distributor of of those would have already agreements first maximize to we partners benefit that. contracts partnership I And all, we to we some --

signed we swimming first actually done half year contracts. the system distributors. all And our the with of So those XX pool have have together

systems. will do we new still have want to markets. going swimming not yet US further you for definitely, So for There looking strengthen the example pool give distributors. to we we But that. on We market some work really at

both the distributors. to and then really all the continue the maximized are find agreements partnership we have we utilize benefits of we will new So that signed

system do system that market months? the another you pipeline of over do how -- that Then and business the looking? oil is how that marine playing market sort next see see Great. you I guess the when and gas the Okay. larger business out XX And

in are our have in take those very with to active contract markets really interesting very our We opportunities other And distributors. pipeline. sign areas longer very, time the we some those little but

like would we Difficulty] [Technical So,

we have have speakers. connection. Please stand Pardon, by our appears while me, line. Pardon we our it we lost reestablish reestablished me speaker

Fei. Hi,

Rob. Hi,

not We are year. that I this having interrupted. did know

Yes. Okay.

large we can system and question. that's it active were said should see to convert. heard. I the ask start to and were you I guess, think talking on them or very another add that to orders pipeline Feel continue in about I what free you I

Yes.

Okay. say. attractive that. opportunities, the we're quarters, next hope very some more you on able Yes, two that's We what to some to and I tried tell in we do have

then just the Okay. got bit you I there. you so rate progress think Thank in you the acid would had you. I maybe order know far? market. talked a that characterize -- that potential the of you market. an little How And -- how And is opportunity Great. about filtration China

in more China phosphoric China. so in because huge, acid acid of the is phosphoric than market market Mean XX% is

us we is So very Silicon And in been quite already. unit able in market very And very, pilot has are this have with We're conservative. to Filter happy. fast, this direction. move that order

to definitely the need pilot running. The to go first you up thing market the have to is

and up running. we moved we're have China very, happy to able fast so pilot why we that's and So to very the are

will about tell China. in hope this system I quarters, in So you two the more pilot to I able next

are really very very our think we interest the strong So, it's technology. market distributor see ahead. on And a pushing in big the our active market I very, very sign also a Chinese in both

progress Okay. you. Great. And and Great I'll turn it thank over.

Thank you.

further no Seeing back for closing to remarks. questions, call turn like I'd the Instructions] [Operator management to over

you. with with you look soon very Thank being just I We again. you you us of to today. for much for communicating want all forward to support. Thank thank your

for now participation. has concluded. Thank conference The you your

disconnect You now your may lines.