Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LiqTech International Inc (LIQT, Financial) received a significant order from a leading integrated energy company for a pilot system for produced water treatment in the US.
- The company has successfully delivered three consecutive produced water filtration systems for the oil and gas industry.
- LiqTech International Inc (LIQT) has signed multiple distribution agreements, including with NESR in the Middle East and Razorback Direct in the US, driving recent progress.
- The company has entered into new partnerships to expand its presence in the marine scrubber market, including agreements with Danbee Marine Group and Franman.
- LiqTech International Inc (LIQT) received NSF certification for its swimming pool systems in the US, opening up new market opportunities.
Negative Points
- Revenue for the second quarter decreased by 10% compared to the same quarter last year, from $5.2 million to $4.5 million.
- The company fell short of its expectations for swimming pool system deliveries, missing its target by three systems due to delays in government funding.
- Gross profit margin decreased to approximately 16% from 23.3% in the prior year's second quarter, impacted by the revenue mix and delivery of an oil and gas pilot system.
- Net loss for the quarter was $2.1 million, compared to $1.6 million for the same period in 2023, driven by decreased revenue and lower margins.
- Aftermarket services and ceramic membrane sales saw declines, with aftermarket services down by about $300,000 and ceramic membrane sales down by about $400,000 from the previous year.
Q & A Highlights
Q: What's the timeline for the produced water pilot evaluation and the next steps or opportunities this customer represents?
A: The pilot will be delivered in Q3, with testing expected to take three to four months. After that, we anticipate seeing progress in that direction. (Fei Chen, CEO)
Q: What are the key evaluation metrics for the pilot programs?
A: The system's high mobility, reliability, and automation are critical. The membrane's stable quality and lifetime, along with excellent water purification results, are also key factors. (Fei Chen, CEO)
Q: Can you provide more color on the NSF certification for the US pool market and its impact?
A: The NSF certification allows us to enter the US market. We have been planning our go-to-market strategy and aim to have partners in place by the end of the year to start selling in the US. (Fei Chen, CEO)
Q: Do you expect the delayed pool system orders in the UK and Australia to ship later this year?
A: The delays are due to government funding issues, and we don't have a new date. We are exploring other opportunities to compensate for these delays, which might extend into Q1 or Q2 next year. (Fei Chen, CEO)
Q: How do you see the Korean ship market partnership impacting the scrubber ramp?
A: We see a significant opportunity in the new scrubber segments, especially for EGR and dual-fuel engine ships. We are building partnerships and exploring effective market entry strategies. (Fei Chen, CEO)
Q: Do you have a target for the full-year revenue?
A: We have shared our Q3 prediction but are not providing specific Q4 guidance yet. However, we expect Q4 to be much better than the first three quarters. (Fei Chen, CEO)
Q: How do you see gross margins trending?
A: Gross margins are linked to revenue. With lower revenue, gross profit margins decrease, but our contribution margin remains around 45%. (Phillip Price, Interim CFO)
Q: What drives the aftermarket solution sales, and why were they soft?
A: Our aftermarket services primarily focus on marine scrubbers. We are developing new service concepts and partnerships to improve this segment. (Fei Chen, CEO)
Q: Is the geopolitical situation still impacting your ONG prospects in the Middle East?
A: Yes, due to instability, we have shifted our focus to the US market, which is showing promising projections for produced water treatment. (Fei Chen, CEO)
Q: What is the growth outlook for the ceramic membrane business?
A: We are systematically gaining knowledge and finding the right partners for our high-end ceramic membranes. We are conducting pilot tests with partners like Haisum in China. (Fei Chen, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
