LiqTech International, Inc. Q3 FY2025 earnings call

• Strong execution in the third quarter with revenue growth, improved gross margins, reduced operating expenses, and strong Q4 order books.
• Water treatment systems business, led by the swimming pool vertical, achieved its highest quarterly revenue to date.
• Progress in other applications using silicon carbide membrane technology, including water for energy, industry, and marine sectors.
• Increased order flow due to successful pilot programs over the past two years.
• Rightsizing the business and implementing operational efficiencies to drive down costs.
• Swimming pool vertical delivered systems to 6 customers totaling $1,000,000, with expansion in UK, Denmark, and Holland markets.
• Developed modular design system for swimming pool solutions and cost reduction efforts in marine systems with joint venture partners.
• Opened a service center in Texas for the water for energy business to enhance support.
• Deployed 9 pilots/commercial systems across various industries in the past couple of years.

Revenue for the third quarter of Fiscal Year 2025 was $3,800,000. Breakdown by verticals: Water system sales and related services were $2,000,000, representing approximately 52.63% of total revenue. CPF and ceramic membrane sales were $800,000, or 21.05% of total revenue. Plastic revenue was $1,000,000, making up approximately 26.32% of total revenue.

• Q4 2025 revenue expected to be between $4,600,000 and $5,600,000, a 38%-67% increase from Q4 2024.
• Full year 2025 revenue expected between $18,000,000 and $19,000,000, a 23%-30% increase from 2024.
• Visibility of two systems' purchase orders shifting from 2024 to 2026.
• Breakeven target on adjusted EBITDA basis is quarterly revenue of approximately $6,000,000.

• Forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those discussed.
• Need to carefully review SEC filings for detailed risk factors.

Q: Besides swimming pool systems, which segments are seeing the most sustained order momentum?

A: Fei Chen said the water for energy segment and marine industry are seeing momentum, with water for energy having more momentum.

Q: Is the uptick in gross margin sustainable? Where do you see gross margins trending over the next few quarters?

A: David Kowalczyk said the uptick in gross margin is sustainable, and gross margin will increase with higher revenues.

Q: How is your capacity utilization trending? Are there any metrics you can provide there?

A: David Kowalczyk said there is spare capacity, and plenty of capacity to support growth with limited investments.

Q: What would be a reasonable target for 2026 revenue growth?

A: Fei Chen said they are in the process of making the 2026 budget but see a strong growth trend in 2026.