LiqTech International Q1 2025 Earnings Report

Thank you, Robert, and good day to everyone on the call. At a high level, the results of the fourth quarter came in came in line with expectations we provided the previous quarter, with revenue growing 36% sequentially to $4,600,000 led primarily by the successful delivery of a record commercial order of our pure flow mobile units to the oil and the gas industry. This order was a key milestone for LiqTech that further validates how our highly specialized filtration solutions can benefit the global energy industry. Beyond the oil and gas segment, we have also made progress on a number of other initiatives we have set forth these past few quarters, including our joint venture in China, which officially had its grand opening in April. Following the grand opening, we received our first new marine scrubber orders in more than one point five years and entered into a new framework agreement for after sales support, which has already gained traction.

It is great to see the immediate progress made in China. The other key high level comment I will make is that we are seeing nice progress made with key pilot units currently deployed in a variety of addressable end markets, including one for lithium brine extraction pretreatment in The U. S. And the unit was one of the world's leading integrated energy companies for oil and gas water treatment. Both rental based agreements have recently been extended with expanded scopes.

The progress I just mentioned, coupled with relative strength across a variety of our key products and the market verticals, such as a ramp up in DPF order intakes, increase in swimming pool systems order and the growth in our plastic division are all expected to drive revenue growth. As you can see from our outlook, revenue for the second quarter is expected to show continued sequential growth from Q1 estimated to be within the range of $4,800,000 to $5,200,000 Beyond revenue growth, however, our focus is on bottom line profitability with a better manufacturing utilization that should drive improved gross margins and the full effect of our recent cost saving initiatives implemented during the past few months. We are expected to further improve our profitability metrics in Q2 as well. So the high level summary, improved sequential revenue growth in Q1 of 36%, led by the record commercial oil and gas delivery. Real progress made in China from our joint venture, which we think will continue to expand improved order flow from DPFs, swimming pools and the plastics implementations of cost saving initiatives aimed at lowering our breakeven rate and the Q2 guidance of $4.8 to 5,200,000.0 Transitioning back to the record oil and gas order.

This truly was a milestone order and delivery for us. It started about a year ago when we signed a distribution agreement in February 2024 with Risobec Direct and sequentially secured an order for a containerized pilot system for produced water treatment, which was promptly delivered and performed successfully at the customer side throughout the second half of twenty twenty four. The success of this pilot program paved the way for a record breaking commercial order. The order shifted during Q1, which is when we recognized revenue. The units are expected to be installed at the customer site in U.

S. In the June or July time frame for produced water treatment. Once we got the commercial grade system up and running, it will help serve as an additional reference for prospective customers. Where some customers might still choose to have their own pilot programs, This commercial scale operational unit should help shorten the path to future orders. To that end, we continue to make progress with multiple pilot projects underway that leverage our proprietary technology to address some of the most demanding environments.

As the history of progress with RisoBank Direct, we've seen The U. S. Oil and gas industry highlighted, the first steps to new application success with our filtration systems often starts with a pilot lever program. Currently, we have multiple systems at the various phases of testing and piloting, including a pilot unit from a leading technology company, the lithium brine production in The U. S.

We announced it in November. It has recently been extended once again with an expanded scope to get data for commercial level design. The customer is very satisfied with the performance to date, and we look forward to potential next steps with this customer. We also have a pilot unit with one of the world's leading integrated energy companies for produced water treatment in The U. S, which was shifted in Q3 of last year.

Similar to the lithium brand system, the unit has demonstrated superior performance, and the customer has extended the rental period to collect additional performance data. Very recently, Resubac Direct has rent a pilot unit to explore various applications for our UF filtration system since they have experienced strong interest from customers. We look forward to the continued execution on our multiple pilots and the opportunities it could lead to for us in the future. Let's transition for a moment to our China JV, where there is a number of activities happening, which included our official grand opening ceremony in Shanghai in April. Taking a step back, we initially established the JV in November of last year.

We are the majority owner of the JV contributing our pioneering marine water treatment solutions where Dirtree is the minority owner and is contributing facilities, local support and with the initial operational and the commercial funding. In February, we achieved an important operational step when we received supplier approval for our water treatment system for the WindGD iSho technology. For those not familiar, Wind City is one of the marked leaders in marine engine manufacturing with a focus on advancing the decarbonization of marine transportation. This supplier approval allows us to seamlessly deliver systems to Windy D, its licensees and authorized service partners. We commenced a pilot test for our marine water treatment solution for the Wind ICER system, which was successfully carried out in China in March.

We are now in close dialogue with relevant stakeholders for commercial projects integrating into the Wenzhi D ice water system. Separately in China, we received an order for two marine scrubber water treatment units at Shanghai Xiao Environmental Technologies Company. The units are scheduled to be delivered in November 2025 and February 2026. It's a small initial step, but certainly nice to see the orders coming in after one point five years' NPT period for the marine scrubber market. In connection with the grand opening ceremony, we also entered into a new framework agreement for after sales support for the marine scrubber market, which has already gained traction.

Service of our existing units in the field and the maintenance revenue associated with it has always been a key initiative for us, and this is another step in further capturing this profit opportunity. In summary, we see a lot of positive progress in China with 80% of the global shipping building market and the numerous retrofit applications taking place to move towards cleaner, fewer applications. China is expected to be a strong growth market for our marine water treatment solutions in the years to come. Before I turn it over to David, let me quickly touch on a few other key markets with a brief update. First, within the swimming pool market, we shipped two systems during Q1 and have another three systems set to ship here in Q2.

Recently, we also signed a distribution agreement with NAF Aquatics in New Jersey for the sales and distribution of the Liptic Tour systems in The U. S. NAF Aquatics holds a strong market position in The U. S, particularly in the Northeast, with decades of expert experience and a broad network of local experts, which should lead to them being an ideal partner for us as we expand in The U. S.

Certainly, swimming pools will remain a key contributor and I look forward to more progress made here. Transitioning to other parts of our established markets, starting with DTFs and ceramic membranes, where sales during Q1 was about $1,000,000 which was similar to what they were in Q4 of twenty twenty four, but down quite a bit from the year ago period when we had a few large orders. We are seeing a nice uptick in orders here in the second quarter. Within plastics, we saw a nice uptick during Q1 with revenue of almost $1,000,000 which was up year over year and sequentially. The Plastics team continues to do a great job differentiating itself and is generally outperforming our expectation.

As we look at the second quarter, our expectation is for revenue of 4,800,000.0 to $5,200,000 The revenue breakdown will be a little more diversified than it was during Q1, which benefited from the large commercial oil and gas order. We expect to see growth in revenue from the pilot unit rentals, growth in swimming pool, growth in DPFs and ceramic membranes, growth in plastics and increased contribution from our aftermarket sales. We are less dependent in Q2 on any one or two large orders to achieve our stated objectives. With nice rebound across our various product lines, it should serve as a nice potential springboard as new large systems come onboard. Let me now turn the call over to David to review the financials in more details.

I will then make a few closing comments and then look to open the call for your questions.

Thank you, David. To close things out before I turn it over to the questions, let me just recap a few key points. First, we are gaining traction within key end markets, particularly oil and gas. The record commercial order we received in The U. S.

Coupled with an ongoing pilot program with one of the world's leading integrated energy company highlights just that. Energy operations often face significant challenges in managing water quality due to the highly variable nature of water sources. Harsh environmental conditions and the remote locations of mining sites. These factors demand solutions that are both robust and flexible. Our PureFlow mobile units are purpose built to address these challenges.

They are fully containerized and completely automated, require minimal daily manpower as they are monitored and controlled remotely. Their mobility and the compact design make them ideal for deployment in remote areas where their weatherized construction ensures reliable operation across a wide range of climates from the frozen temperatures of Alaska to the scorching heat of Texas. Beyond oil and gas, our silicon carbon membrane technology provides unmatched durability and performance, making it an excellent choice for industry applications that demand reliability and efficiency. With the pilots and recent orders in a wide variety of applications, including lithium brine, MEG recovery, metal processing, marine scrubbers and microplastics, we are gaining traction. Financially, Q1 showed nice progress, and Q2 is expected to show further growth With improved manufacturing utilization that should drive improved gross margins and the full effect of our recent cost cutting initiatives implemented, we expect to further improve our profitability metrics.

As I emphasized this last quarter, we remain fully aware of the importance of preserving our cash balance. We drive the business with a strong focus on sustainable cash flows generation and long term value creation. We understand the expectations of our investors and are highly committed to delivering on this objective. Again, thank everyone for your support of LEAD Tech. With that, operator, we will be happy to take any questions.