LiqTech International, Inc. (LIQT) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company has shown strong sequential revenue growth and a positive outlook with new ventures and cost-saving measures. Despite some negative factors such as declining gross margins and cash flow concerns, the optimistic guidance for profitability and strategic partnerships, particularly in China, are likely to drive stock price up in the short term. The Q&A section reflects a generally positive sentiment, with potential for future profitability and strategic growth initiatives. Overall, the positive aspects outweigh the negatives, suggesting a likely positive stock reaction.
Key Financial Performance
Revenue Revenue for the quarter came in at almost USD 5 million, up from $4.5 million in the year ago first quarter and up from $4.6 million in the sequential first quarter. This increase was driven by strong year-over-year improvement in Water Systems, multiple swimming pool orders, a portion of the industrial order for the steel industry, and multiple ongoing pilot programs.
Water System Sales and Related Services Sales were $2.4 million compared to $1.9 million in the same period last year and $2.7 million in Q1 this year. The year-over-year increase was due to multiple swimming pool orders and industrial orders.
DPF and Ceramic Membrane Sales Sales were $1.3 million, down from $1.7 million in Q2 last year, but up compared to $1 million in Q1. The sequential improvement was due to a rebound in orders, though the year-over-year decline was attributed to fewer large deliveries compared to the previous year.
Plastics Revenue Revenue came in at $1.2 million compared to $0.9 million in Q2 last year and $1 million in Q1. The year-over-year and sequential increases were due to strong performance by the plastics team, which outperformed expectations.
Gross Margin Gross margins were 9.8% compared to 16% in the year-ago period. The decline was due to fixed production costs not being fully absorbed, one-off write-offs related to the closure of a loss-making project in the Middle East, sale of a pilot unit, and currency effects on inventory. Adjusted for these one-off costs of $364,000, the gross profit margin would have been close to 15%.
Operating Expenses (OpEx) Total operating expenses for the quarter were $2.6 million compared to $2.8 million in Q2 of last year and $2.3 million in Q1 of 2025. The year-over-year decrease reflects cost management efforts.
Net Loss Net loss was $2 million for the quarter compared to $2.1 million for the comparable period of 2024. The slight improvement reflects better cost management and operational performance.
Cash Position Ended the quarter with $8.7 million in cash, which compares to $10.4 million at the end of March. The decrease reflects normal operating procedures.
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Operating Highlights
Swimming Pool Systems: Delivered 6 systems generating nearly $800,000 in revenue. Strong order flow expected for the rest of the year.
Advanced Membrane-Based Filtration System: Received an order to treat oily wastewater and delivered a new pilot system to Razorback Direct for a new end market opportunity.
Ceramic and Plastics Business: Achieved 31% sequential growth, contributing to overall revenue improvement.
Steel Industry: Secured an order from North Star Bluescope Steel for a filtration system addressing wastewater challenges, reflecting a trend towards sustainable water management.
Marine Industry: Growth in aftermarket sales driven by membrane housing replacements and opportunities in dual-fuel vessel water treatment units.
Revenue Growth: Revenue for Q2 2025 was nearly $5 million, up from $4.5 million in Q2 2024. Full-year revenue expected to be the highest in 4 years.
Gross Margin Improvement: Gross margin improved to 9.8% in Q2 2025 from 2.7% in Q1 2025, with adjusted gross margin close to 15% after one-off costs.
Cost Management: Operating expenses decreased to $2.6 million in Q2 2025 from $2.8 million in Q2 2024.
Sustainability Focus: Projects like the steel industry filtration system and water reclamation initiatives align with sustainability goals.
Partnerships: Collaboration with Razorback Direct expands reach in oil and gas and new industries.
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Risk or Challenges
Gross Margin Challenges: Gross margins were reported at 9.8%, significantly below the year-ago period of 16%. This was attributed to fixed production costs not being fully absorbed, one-off write-offs related to a loss-making project in the Middle East, sale of a pilot unit, and currency effects on inventory. These factors indicate challenges in achieving optimal revenue levels and cost efficiency.
Revenue Volatility: Revenue for Q3 2025 is expected to be between $3.8 million and $4.2 million, which is lower than the Q2 revenue of $5 million. This indicates potential revenue volatility and dependency on large orders or specific projects.
Dependence on Pilot Programs: The company relies heavily on pilot programs to secure future large-scale orders. While these programs have shown promise, they carry inherent risks of not converting into commercial success, which could impact future revenue streams.
Loss-Making Projects: Closure of a loss-making project in the Middle East resulted in financial write-offs, highlighting risks associated with project execution and profitability in certain regions.
Cash Flow Concerns: The company’s cash balance decreased from $10.4 million at the end of March to $8.7 million at the end of Q2, indicating potential cash flow management challenges.
Marine Industry Aftermarket Sales Dependency: Growth in aftermarket sales within the marine industry is partially driven by a China JV aftersales framework agreement. Dependency on specific agreements or regions could pose risks if these partnerships face disruptions.
Regulatory and Environmental Compliance: The company’s focus on stringent regulatory requirements and environmental sustainability presents risks if regulations change or if the company fails to meet evolving standards.
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Guidance & Outlook
Revenue Outlook: The company anticipates continued year-over-year revenue improvements in the third and fourth quarters of 2025, with full-year revenue expected to reach the highest level in four years, dating back to the pandemic. Revenue for Q3 2025 is projected to be between $3.8 million and $4.2 million, representing a 52% to 68% increase from Q3 2024. Full-year 2025 revenue is expected to be between $19 million and $20 million, equating to a 30% to 37% increase from full-year 2024.
Gross Margin: Gross margins are expected to improve through 2025 as the gap between gross margin and contribution margin narrows, driven by cost improvements and volume growth.
Operational Breakeven: The company targets a breakeven point on an adjusted EBITDA basis at a quarterly revenue level of approximately $5.5 million to $6 million.
Steel Industry Project: A major filtration system for North Star Bluescope Steel is scheduled to be commissioned and operational in the second half of 2025. This project reflects a growing trend in the steel industry towards sustainable water management practices.
Swimming Pool Segment: Momentum in the swimming pool segment is expected to continue in the second half of 2025, with potential new opportunities in the U.S. refurbishment pool market.
Marine Industry Opportunities: The company plans to participate in the Q3 2025 bidding process for water treatment units for dual-fuel vessels, presenting a promising opportunity for growth.
Pilot Projects and Commercial Applications: Multiple pilot projects are underway, leveraging proprietary technology to address demanding environments. A recent pilot unit for a leading energy company has been approved for commercial application, indicating potential for large-scale orders in the future.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you discuss the area focus for the new Razorback pilot?
A:The focus is outside the oil and gas industry, specifically in industry water treatment. However, more concrete information about the end market will be shared after receiving positive customer feedback.
Q:What does the approval of the pilot at the U.S. oil and gas industry application mean in terms of potential timing?
A:The approval is a significant result as it allows commercialization across the entire company. Optimistic results are expected in the near future.
Q:What timing do you think will be for the bidding process in the Marine segment?
A:The bidding process is expected to occur in Q3, within the next 2 months.
Q:Based on your full year guide of $19 million to $20 million and your Q3 guide of $3.5 million or $3.8 million to $42 million, that implies a Q4 run rate of $62 million to $66 million. Are these numbers correct, and does that mean you will be EBITDA profitable in Q4?
A:The numbers are correct. The goal is to achieve an EBITDA positive quarter in Q4, but this depends on the mix and total sales volume for the quarter.
Q:Review of Unclear Management Responses
A:Management avoided providing concrete details about the end market for the Razorback pilot, citing the need to wait for positive customer feedback. Additionally, the response regarding EBITDA profitability in Q4 was conditional and lacked definitive clarity, depending on mix and sales volume.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America success
Aquatics project
Bluescope Steel
Blum Lytham
CEO President
CFO COO
Conference
Lytham Partners
North Star
USD
Water
addition
aftermarket sale
ceramic plastic
date release
delivery
detail
industry water
level year
margin contribution
market opportunity
opportunity water
order steel
outlook improvement
pilot project
pool order
pool segment
practice
process
steel industry
steel producer
success pilot
swing
system order
treatment unit
unit fuel
volume
wastewater
LIQT Transcript
LiqTech International, Inc. (LIQT) Q3 2025 Earnings Call Transcript
Positive11-13
The earnings call indicates strong revenue growth, improved gross margins, and reduced operating expenses, despite some risks and uncertainties. The Q&A reveals sustained order momentum and a sustainable uptick in gross margins, although management was vague about future targets. Strategic initiatives, such as modular design systems and joint ventures, are promising. The positive financial performance and optimistic guidance suggest a likely stock price increase, possibly in the 2% to 8% range, considering the absence of market cap data.
CAE Inc. (CAE) Q1 2026 Earnings Call Transcript
Unknown8-13
The earnings call reveals mixed signals: strong defense segment performance and investment in growth, but challenges in civil segment and lack of specific guidance on improvements. The Q&A highlights potential for margin and cash flow improvements but lacks detail. Overall, the positive aspects are balanced by uncertainties, suggesting a neutral stock price reaction.
LiqTech International, Inc. (LIQT) Q2 2025 Earnings Call Transcript
Positive8-13
The company has shown strong sequential revenue growth and a positive outlook with new ventures and cost-saving measures. Despite some negative factors such as declining gross margins and cash flow concerns, the optimistic guidance for profitability and strategic partnerships, particularly in China, are likely to drive stock price up in the short term. The Q&A section reflects a generally positive sentiment, with potential for future profitability and strategic growth initiatives. Overall, the positive aspects outweigh the negatives, suggesting a likely positive stock reaction.
LiqTech International, Inc. (NASDAQ:LIQT) Q1 2025 Earnings Call Transcript
Unknown5-15
Earnings call summary shows mixed signals. While revenue growth and strategic partnerships are positive, missed EPS expectations, regulatory challenges, and competitive pressures are concerning. The Q&A reveals some optimism about order pipeline and growth, but competition and unclear management responses weigh negatively. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
LIQT Report
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