LiqTech International, Inc. Q2 FY2025 earnings call

• Achieved improved financial performance across the board in Q2 2025, including revenue growth, gross margin improvement, and decreased operating expenses.
• Strong swimming pool segment performance: Delivered 6 systems generating nearly $800,000 in revenue; order flow for swimming pools looks strong in the back half of the year.
• Received an order from North Star Bluescope Steel for a wastewater treatment system, with revenue recognition to be on a percentage of completion basis.
• Sold a pilot unit to Razorback Direct for a new end market opportunity; earlier pilot with Razorback Direct led to a record commercial order in oil and gas.
• DPF and ceramic membrane sales: $1.3 million in Q2 2025, down year-over-year but up sequentially; order intake remains strong.
• Plastics revenue up year-over-year and sequentially, with the team outperforming expectations; ceramics and plastics combined had 31% sequential growth.
• Aftermarket sales in marine industry driven by membrane housing replacements, with progress in water treatment unit dual-fuel Marine segment and upcoming Q3 bidding process.

Swimming pool segment: Delivered 6 systems, generating nearly $800,000 in revenue. Water system sales and related services: $2.4 million in Q2 2025, up from $1.9 million in the same period last year and $2.7 million in Q1 2025. DPF and ceramic membrane sales: $1.3 million in Q2 2025, down from $1.7 million in Q2 2024 but up from $1 million in Q1 2025. Plastics revenue: $1.2 million in Q2 2025, up from $0.9 million in Q2 2024 and $1 million in Q1 2025. Revenue for the quarter was almost $5 million, up from $4.5 million in the year-ago first quarter and $4.6 million in the sequential first quarter.

• Revenue outlook anticipates continued year-over-year improvements in Q3 and Q4 2025, with full year revenue expected to be the company's highest in 4 years.
• Q3 2025 revenue expected to be between $3.8 million and $4.2 million, a 52% to 68% increase from Q3 2024.
• Full year 2025 revenue expected to be between $19 million and $20 million, a 30% to 37% increase from full year 2024.
• Breakeven target on adjusted EBITDA basis at a quarterly revenue level of approximately $5.5 million to $6 million.

• Forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially.
• Need to carefully review SEC reports for various disclosures, including risk factors that may affect business, financial condition, operations, and cash flows.

Q: Can you discuss the area focus for the new Razorback pilot?

A: It's an area outside the oil and gas industry, an industry water treatment, and will withhold the specific industry focus until further customer feedback occurs.

Q: What does the approval of the pilot at the U.S. oil and gas industry application mean in terms of potential timing?

A: It's a very good result, meaning the ultrafiltration solution has been approved for commercial application at a world-leading integrated energy company, and optimistic about near future results.

Q: What timing do you think will be for the bidding process in the Marine segment mentioned?

A: It will be in quarter 3, expecting something to happen in the next 2 months.

Q: Based on full year guide of $19 million to $20 million and Q3 guide of $3.8 million to $4.2 million, implies Q4 run rate of $62 million to $66 million. Are numbers correct and will be EBITDA profitable in Q4?

A: Q4 is expected to be a higher quarter, guiding up to 6.5% for EBITDA positive, depending on mix and total sales volume in the quarter, but goal is to reach EBITDA positive quarter this year.