LiqTech International Announces Second Quarter 2024 Financial Results

Rhea-AI Summary

LiqTech International (NASDAQ: LIQT) reported its Q2 2024 financial results, showing a 10% decrease in revenue to $4.5 million compared to Q2 2023. The company's gross profit margin declined to 16.0% from 23.3% in Q2 2023, while net loss increased to $(2.1) million from $(1.6) million. Despite challenges, LiqTech made progress in key markets:

- Received orders for produced water treatment in the U.S.
- Entered MoU with China Haisum Engineering for industrial water treatment
- Signed agreements to expand marine scrubber footprint
- Delivered commercial pilot unit for oil and gas produced water filtration
- Obtained NSF certification for pool systems in the U.S.

The company expects Q3 2024 revenue between $4.0 million and $5.0 million.

Positive

• Secured new order from a leading integrated energy company for produced water treatment in the U.S.
• Entered MoU with China Haisum Engineering for industrial water treatment applications in China
• Signed agreements to expand marine scrubber market presence in South Korea, China, and Greece
• Obtained NSF certification to offer pool systems in the U.S. market
• Delivered five swimming pool systems to the UK, Spain, and Denmark in Q2
• Increased sales of DPFs due to effective strategies capitalizing on increased demand

Negative

• Revenue decreased 10% to $4.5 million in Q2 2024 compared to Q2 2023
• Gross profit margin declined to 16.0% from 23.3% in Q2 2023
• Net loss increased to $(2.1) million from $(1.6) million in Q2 2023
• Cash on hand decreased to $5.5 million on June 30, 2024, from $7.7 million on March 31, 2024
• Delays in shipment of three swimming pool systems due to government funding issues
• Decrease in sales of plastic products, swimming pool systems, ceramic membranes, and aftermarket sales

Insights

Financial Analyst

LiqTech's Q2 2024 results reveal a challenging quarter with mixed signals. Revenue declined 10% year-over-year to $4.5 million, while gross profit margin contracted to 16.0% from 23.3%. The net loss widened to $(2.1) million, indicating ongoing profitability struggles.

However, there are positive developments in key markets. The company secured orders in the energy sector and expanded partnerships in China and South Korea. The NSF certification for U.S. pool systems opens new revenue streams. These initiatives could drive future growth, but execution risks remain given the company's financial constraints.

The cash position of $5.5 million is concerning, having decreased from $7.7 million in Q1. This burn rate may necessitate additional financing if profitability doesn't improve rapidly. Investors should closely monitor cash management and the company's ability to capitalize on its new market opportunities.

Market Research Analyst

LiqTech's market positioning shows promise in niche sectors. The company's focus on specialized filtration technologies for energy, marine and pool markets demonstrates a strategic diversification. Recent partnerships and certifications, particularly in the U.S. and Asian markets, indicate potential for market expansion.

However, the revenue decline and delayed orders in the swimming pool segment highlight vulnerabilities in market demand and project execution. The company's ability to convert pilot projects into substantial orders, especially in the oil & gas sector, will be important for future growth.

The recurring revenue potential from the swimming pool market is promising, but LiqTech needs to overcome current hurdles in government funding delays. The marine scrubber market presents a significant opportunity, aligning with global trends in dual-fuel ship building. Overall, LiqTech's market strategy appears sound, but execution and market penetration remain key challenges.

Tech Expert

LiqTech's technological offerings in specialized filtration demonstrate potential, particularly in emerging markets like produced water treatment and marine scrubber systems. The successful delivery of a commercial pilot unit for oil and gas produced water filtration indicates technical viability in challenging applications.

The company's R&D streamlining, focusing on fewer, more targeted projects, could lead to more efficient innovation. However, the slight increase in R&D expenses due to a loss-making external project raises questions about project management and resource allocation.

The NSF certification for pool systems in the U.S. market validates the technology's compliance with stringent standards. This could open doors for expansion in a competitive market. Moving forward, LiqTech's ability to scale its technologies cost-effectively while maintaining performance will be important for capturing market share and improving financial performance.

BALLERUP, Denmark, Aug. 14, 2024 /PRNewswire/ -- LiqTech International, Inc. (NASDAQ: LIQT) ("LiqTech"), a clean technology company that manufactures and markets highly specialized filtration technologies, today announced its financial results for the second quarter of 2024.

Q2 2024 Financial Highlights

• Revenue of $4.5 million, a 10% decrease from Q2 2023 and a 6% increase from Q1 2024.
• Gross profit margin of 16.0% compared to 23.3% in Q2 2023 and 6.4% in Q1 2024.
• Net loss of $(2.1) million compared to $(1.6) million in Q2 2023 and $(2.4) million in Q1 2024.
• Ending cash balance of $5.5 million on June 30, 2024.

Recent Operational Highlights

• Received another order from one of the world's leading integrated energy companies for the application of produced water treatment in the U.S.
• Entered into MoU with China Haisum Engineering Co. Ltd. for industrial water treatment applications in China.
• Entered agreement with Danbee Marine for marine scrubber water treatment solutions for the South Korean market.
• Successfully delivered a commercial pilot unit for the filtration of oil and gas produced water to National Energy Services Reunited Corp. (NESR).
• Received NSF certification to begin offering pool systems in the U.S.
• Delivered five swimming pool systems during the second quarter to the UK, Spain and Denmark.

Management Commentary

"We have made nice progress within our key energy market segment this year, having successfully delivered our first U.S.-based produced water system as part of our new distribution agreement with Razorback Direct in Q1, a commercial pilot unit for the filtration of  produced water to National Energy Services Reunited Corp. (NESR) in Q2, and last week received a follow-on order from one of the world's leading integrated energy companies for produced water treatment in the U.S.," commented Fei Chen, President and CEO of LiqTech International. "We are optimistic that, with successful pilot execution of both the Razorback Direct and integrated energy company units, we will see significant opportunities for LiqTech in the quarters to come."

"The second quarter financial results were impacted by three swimming pool systems anticipated to be shipped for municipal applications in the U.K. and Australia that were delayed due to government funding. While we are disappointed with the delays, we did successfully deliver five swimming pool systems during the second quarter, as this market represents an important recurring revenue opportunity for LiqTech. As we look to the second half of the year, we have a number of initiatives in place to expand this opportunity, including expansion into the U.S. following our recent NSF certification."

"We also continue to make progress aligning ourselves with partners that can open up key markets for our solutions. Recently, we announced an MoU with China Haisum Engineering to explore the application of LiqTech's advanced filtration system for the industrial water treatment industry in China and agreements to expand our marine scrubber footprint with Dan Marine Group in China, Franman for Greece, and Danbee Marine for the South Korea market. We continue to believe the marine scrubber market holds tremendous opportunity for LiqTech with the increase of dual-fuel ship building and look forward to the value these respective partnerships can bring."

"As we look to the back half of the year, we anticipate continued progress within the oil and gas industry and marine scrubber EGR segment. With a number of distribution partners we signed over the past few quarters ramping up, I believe we are well positioned to achieve our stated goals," Chen concluded.

Q2 2024 Financial Results

Revenue for the quarter ended June 30, 2024 was $4.5 million compared to $5.0 million in the second quarter of 2023, representing a decrease of 10%. The change was primarily attributable to a decrease in deliveries of plastics products, swimming pool systems, ceramic membranes, and aftermarket sales, partly offset by increased sales of DPFs. The decline in sales of plastic products is primarily due to a large one-time sale recorded in 2023, which did not recur in the current period. The decrease in aftermarket sales was primarily attributed to elevated remediation work and associated deliveries in the same period in 2023. The increase in sales of DPFs was primarily due to the effective execution of strategies designed to capitalize on the increased demand for DPFs.

Gross profit for the three months ended June 30, 2024 was $0.7 million, reflecting a gross profit margin of 16.0%, compared to $1.2 million, or a gross profit margin of 23.3%, in the second quarter of 2023. This decline in gross profit can be attributed to the decrease in revenue and an unfavorable revenue mix, which resulted in a lower proportion of high-margin products being sold. Specifically, the delivery of a containerized oil & gas pilot system to the Middle East contributed to lower-than-usual gross profit margin, reflecting a strategic decision aimed at demonstrating and validating the efficiency of our technology. The decline in gross profit was partly offset by decreased depreciation as well as continued initiatives aimed at optimizing manufacturing processes, which have improved profitability within DPF and ceramic membrane production.

Total operating expenses for the three months ended June 30, 2024 were $2.8 million compared to $2.8 million for the same period in 2023. Selling expenses decreased $0.2 million, attributable to the resignations of our CFO and VP of Sales as well as reductions in travel costs, marketing expenses, and expenses related to external sales consultancy services, while G&A increased $0.2 million, attributable to increased legal expenses and insurance costs related to elevated US sales and recruitment costs associated with the replacements of our CFO and VP of Sales. R&D expenses increased slightly due to one-time exit costs of a loss-making external development project, partly offset by more focused R&D efforts with fewer ongoing projects, combined with a decrease in the average number of employees engaged in research and development activity as the Company streamlined and centralized the R&D function.

Net loss for the three months ended June 30, 2024 was $(2.1) million, compared to $(1.6) million in the prior period.

Cash on hand (including restricted cash) on June 30, 2024 was $5.5 million compared to $7.7 million on March 31, 2024.

Q3 2024 Outlook

The Company expects revenue in the third quarter of 2024 to be between $4.0 million and $5.0 million.

Conference Call Details

Date and Time: Wednesday, August 14, 2024, at 9:00 a.m. ET

Call-in Information: Interested parties can access the conference call by dialing (833) 535-2206 or (412) 902-6741.

Webcast: Interested parties can access the conference call via a live webcast, which is available in the Investor Relations section of the Company's website at https://www.liqtech.com/investor-relations/ or at https://app.webinar.net/o4RaVmXdm81.

Replay: A teleconference replay of the call will be available until August 21, 2024 at (877) 344-7529 or (412) 317-0088, replay access code 4966662.

About LiqTech International Inc.

LiqTech International, Inc., a Nevada corporation, is a high-tech filtration technology company that provides state-of-the-art ceramic silicon carbide filtration technologies for gas and liquid purification. LiqTech's silicon carbide membranes are designed to be used in the most challenging purification applications, and its silicon carbide filters are used to control diesel exhaust soot emissions. Using nanotechnology, LiqTech develops products using its proprietary silicon carbide technology, resulting in a wide range of component membranes, membrane systems, and filters for both microfiltration and ultrafiltration applications. By incorporating LiqTech's SiC liquid membrane technology with the Company´s extensive systems design experience and capabilities, LiqTech offers unique, modular designed filtration solutions for the most difficult water purification applications.

For more information, please visit www.liqtech.com 

Follow LiqTech on Linkedln: http://www.linkedin.com/company/liqtech-international 

Follow LiqTech on Twitter: https://twitter.com/LiqTech

Forward–Looking Statement

This press release contains "forward-looking statements."  Although the forward-looking statements in this release reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements.  Readers are urged to carefully review and consider the various disclosures made by us in the reports filed with the Securities and Exchange Commission, including the risk factors that attempt to advise interested parties of the risks that may affect our business, financial condition, results of operation, and cash flows.  If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.  Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.

We assume no obligation to update any forward-looking statements to reflect any event or circumstance that may arise after the date of this release.

LiqTech Company Contact    
Phillip Massie Price, Interim Chief Financial Officer
LiqTech International, Inc.                        
Phone: +45 31313993                                                   
pmp@liqtech.com

LiqTech Investor Contact                                                       
Robert Blum
Lytham Partners, LLC                                      
Phone: 602-889-9700
liqt@lythampartners.com

 

LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
		June 30,				December 31,
		2024				2023
		(Unaudited)
Assets
Current Assets:
Cash and restricted cash		$	5,489,776			$	10,422,181
Accounts receivable, net			2,804,625				3,171,047
Inventories, net			5,620,247				5,267,816
Contract assets			2,878,573				2,891,744
Prepaid expenses and other current assets			389,181				337,391
Total Current Assets			17,182,402				22,090,179
Long-Term Assets:
Property and equipment, net			6,935,852				9,007,166
Operating lease right-of-use assets			3,657,512				4,055,837
Deposits and other assets			517,123				470,349
Intangible assets, net			60,128				114,593
Goodwill			226,285				233,723
Total Long-Term Assets			11,396,900				13,881,668
Total Assets		$	28,579,302			$	35,971,847

 

LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
		June 30,				December 31,
		2024				2023
		(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable		$	1,813,943			$	2,444,653
Accrued expenses			3,189,439				3,550,542
Current portion of finance lease liabilities			446,425				590,550
Current portion of operating lease liabilities			476,298				531,355
Contract liabilities			333,505				382,647
Total Current Liabilities			6,259,610				7,499,747
Deferred tax liability			69,535				101,059
Finance lease liabilities, net of current portion			1,809,424				2,879,932
Operating lease liabilities, net of current portion			3,181,843				3,527,082
Notes payable, net			4,984,642				4,688,011
Total Long-term Liabilities			10,045,444				11,196,084
Total Liabilities			16,305,054				18,695,831
Stockholders' Equity:
Preferred stock; par value $0.001, 2,500,000 shares authorized, 0 shares issued and outstanding at June 30, 2024 and December 31, 2023			-				-
Common stock; par value $0.001, 50,000,000 shares authorized, 5,819,272 and 5,727,310 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively			5,819				5,727
Additional paid-in capital			99,051,263				98,796,357
Accumulated deficit			(80,422,175)				(75,922,180)
Accumulated other comprehensive loss			(6,360,659)				(5,603,888)
Total Stockholders' Equity			12,274,248				17,276,016
Total Liabilities and Stockholders' Equity		$	28,579,302			$	35,971,847

 

LIQTECH INTERNATIONAL, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		For the Three Months Ended								For the Six Months Ended
		June 30,								June 30,
		2024				2023				2024				2023
Revenues		$	4,485,062			$	4,990,019			$	8,720,406			$	9,001,538
Cost of goods sold			3,767,851				3,827,491				7,732,093				7,447,668
Gross Profit			717,211				1,162,528				988,313				1,553,870
Operating Expenses:
Selling expenses			855,122				1,028,225				1,372,701				2,210,660
General and administrative expenses			1,541,316				1,377,483				3,086,047				2,436,432
Research and development expenses			407,292				359,784				662,104				702,403
Total Operating Expenses			2,803,730				2,765,492				5,120,852				5,349,495
Loss from Operations			(2,086,519)				(1,602,964)				(4,132,539)				(3,795,625)
Other Income (Expense)
Interest and other income			45,744				116,545				114,830				168,218
Interest expense			(29,290)				(45,898)				(101,009)				(57,899)
Amortization of debt discount			(150,591)				(86,790)				(296,631)				(171,318)
Gain (loss) on currency transactions			84,462				49,494				339,998				(116,784)
Gain (loss) on disposal of property and equipment			10,344				-				(453,233)				-
Total Other Income (Expense)			(39,331)				33,351				(396,045)				(177,783)
Loss Before Income Taxes			(2,125,850)				(1,569,613)				(4,528,584)				(3,973,408)
Income tax benefit			14,150				14,321				28,589				28,613
Net Loss		$	(2,111,700)			$	(1,555,292)			$	(4,499,995)			$	(3,944,795)
Loss Per Common Share – Basic and Diluted		$	(0.36)			$	(0.27)			$	(0.77)			$	(0.70)
Weighted-Average Common Shares Outstanding – Basic and Diluted			5,808,127				5,660,007				5,806,480				5,656,809

 

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SOURCE LiqTech International, Inc.

FAQ

What was LiqTech's revenue for Q2 2024?

LiqTech's revenue for Q2 2024 was $4.5 million, representing a 10% decrease from Q2 2023.

How did LiqTech's gross profit margin change in Q2 2024 compared to Q2 2023?

LiqTech's gross profit margin decreased to 16.0% in Q2 2024 from 23.3% in Q2 2023.

What is LiqTech's revenue outlook for Q3 2024?

LiqTech expects revenue in Q3 2024 to be between $4.0 million and $5.0 million.

What new markets did LiqTech enter in Q2 2024?

LiqTech entered the U.S. pool systems market after receiving NSF certification and signed agreements to expand its marine scrubber footprint in South Korea, China, and Greece.

How much cash did LiqTech (LIQT) have on hand as of June 30, 2024?

LiqTech had $5.5 million in cash on hand (including restricted cash) as of June 30, 2024.