BALLERUP, Denmark, Aug. 10,
2023 /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 2023 for the period ended June 30, 2023.
Q2 2023 Financial Highlights
- Revenue of $5.0 million, a 1%
decrease from Q2 2022.
- Gross profit margin of 23% compared to 3% in Q2 2022.
- Operating expenses of $2.8
million, down 42% from Q2 2022.
- Net loss of $(1.6) million, an
improvement of $4.9 million compared
to $(6.5) million in Q2 2022.
- Strong ending cash balance of $12.6
million.
Recent Operational Highlights
- Signed commercial contracts for delivery of ten pool systems
and increased order intake of both ceramic membranes
and DPFs.
- Successfully performed on-site commissioning of our first MEG
unit at customer's offshore platform in the Mediterranean.
- Entered into a Memorandum of Understanding (MoU) to explore the
application of LiqTech's advanced filtration system for industrial
water treatment in China.
- Delivered a pilot unit for phosphoric acid purification to
Silicon Filter in China.
Management Commentary
"During the second quarter, we continued to successfully execute
against our strategy to drive profitable revenue growth through
enhanced recurring business solutions, resulting in 25% sequential
revenue growth and a significant improvement in gross margin,"
commented Fei Chen, CEO of LiqTech.
The commercial strategy we instituted when I took over as CEO
focused on several initiatives: first, to increase recurring
revenue; second, to create new partnership and distribution
agreements to expand our commercial reach; and third, to improve
operational efficiencies. These first three initiatives are all
moving forward according to plan. Further, our fourth initiative is
to deploy larger system sales. This initiative is advancing, with
the successful commissioning during the second quarter of key
swimming pool and oil and gas applications as well as the recent
delivery of a phosphoric acid pilot unit, representing our first
delivery of this application in Asia."
"Our strategic focus to enhance our recurring revenue
opportunities--including installed base sales, diesel particulate
filters, ceramic membranes, and plastics business--continues to
deliver the intended results. Across all of these key areas, we
have improved our pricing excellence to deliver increased gross
profits. With an expectation for continued improvement in
contribution margins and efficient management of operating
expenses, we are closing the gap to achieve
quarterly breakeven."
"From a system sales standpoint, swimming pool systems have been
a leading driver for us during 2023 following the launch of our
enhanced Aqua Solution® based on our proprietary silicon carbide
(SiC) membrane technology. Year-to-date, we have received fifteen
pool system orders from a wide variety of geographic locations.
Additionally, oil and gas-related solutions continue to advance,
particularly through our collaboration with NESR as we have built
up an aligned pipeline with clear targets in the near term. We also
completed the on-site commission of our first MEG unit, providing
us confidence for additional opportunities within this market
subsegment. Furthermore, we are making progress in phosphoric acid
purification with the delivery of a pilot unit to Silicon Filter in
China. With a strategic
combination of direct sales and distribution partners, such as our
recently signed agreement with Wondux and Silicon Filter, I believe
we have the right combination going forward to make continued
progress in our key target markets of swimming pools, oil and gas,
acid purification, and broader water treatment markets."
"We believe the second half of the year will show continued
growth and improved operating performance as we look to mark a
major milestone in the near future of sustained profitability,"
Chen concluded.
Q2 2023 Financial Results
Revenue for quarter ended June 30,
2023, was $5.0 million,
comparable to the $5.0 million
reported in second quarter of 2022. While offset by lower system
sales and DPFs, revenue stability was attributable to an increase
in system aftermarket activities, ceramic membranes sales, and
plastic products, reflecting a continued focus on strengthening the
recurring business lines with a diversified and improved revenue
mix that is better suited for the existing manufacturing setup.
Furthermore, revenue in the current period benefitted from
commissioning and contract work across key oil & gas projects
and planned marine scrubber remediation work.
The positive development in the current quarter was partly
offset by a year-on-year decrease in sales of liquid filtration
systems and DPFs, as the quarter ended June
30, 2022, benefitted from the delivery of a sizable oil
& gas project in the Middle
East as well as the delivery of a legacy DPF order for a
transportation client in Asia.
Gross profit for the quarter ended June
30, 2023 was $1.2 million,
reflecting a gross profit margin of 23%, compared to $0.1 million, or a gross profit margin of 3%, in
second quarter of 2022. Considering the comparable revenue levels,
the increase was mainly driven by a reduction in cost of goods sold
underpinned by improvements in both product and price mix, and
operational efficiencies supported by the newly implemented ERP
platform. Notably, the recurring business, including sales of
ceramic products and pool systems, were the main drivers behind the
improvement in gross profit, partly offset by costs related to
ongoing remediation work and continued investments in manufacturing
optimization initiatives as we seek to improve kiln utilization and
general manufacturing throughput.
Total operating expenses for the quarter ended June 30, 2023 were $2.8
million compared to $4.7
million in the second quarter of 2022. The decrease was
predominantly attributable to the restructuring costs of
$1.8 million recorded in the second
quarter of 2022. Adjusting for the reported restructuring costs,
total operating expenses decreased $0.2
million, or 7%.
Other Income (Expense) for the quarter ended June 30, 2023 was $0.0
million compared to $(1.9)
million in second quarter of 2022, with the change
reflecting a gain on currency transactions and the early repayment
of the Convertible Note in the second quarter of 2022.
Net Loss for the quarter ended June 30,
2023 was $(1.6) million
compared to $(6.5) million in the
second quarter of 2022, benefitting from the increased gross profit
underpinned by both price and mix improvements, increased
manufacturing throughput across our Danish manufacturing
facilities, and reductions in operating expenses related to the
restructuring and refinancing activities conducted during the
second quarter of 2022.
Cash on hand (including restricted cash) on June 30, 2023 was $12.6
million compared to $16.6
million on December 31,
2022.
2023 Full-Year Outlook
The Company expects revenue growth of 20-30% for the full year
of 2023 compared to 2022, with a gross margin range of 15-20%.
Conference Call Details
Date and Time: Thursday, August
10, 2023, 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/WxAljrVjGy6.
Replay: A teleconference replay of the call will be
available until August 17, 2023, at
(877) 344-7529 or (412) 317-0088, confirmation # 8122262.
About LiqTech International Inc.
LiqTech International, Inc., a Nevada corporation, is a clean
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 water purification applications,
and its silicon carbide filters are used to control diesel exhaust
soot emissions. Applying 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, turnkey 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.
Company Contact: Simon Stadil, Chief Financial
Officer, LiqTech International, Inc., Phone: +45 3140 9128,
www.liqtech.com;
Investor Contact: Robert Blum, Lytham Partners,
LLC, Phone: (602) 889-9700, liqt@lythampartners.com,
www.lythampartners.com
LIQTECH
INTERNATIONAL, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
As of
|
|
|
As of
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
Cash and restricted
cash
|
|
$
|
12,594,689
|
|
|
$
|
16,597,371
|
|
Accounts receivable,
net of allowance for doubtful accounts of $50,230 and
$59,559 at June 30, 2023 and December 31, 2022,
respectively
|
|
|
2,960,421
|
|
|
|
2,310,344
|
|
Inventories, net of
allowance for excess and obsolete inventory of $732,638
and $663,227 at June 30, 2023 and December 31, 2022,
respectively
|
|
|
4,423,280
|
|
|
|
4,062,001
|
|
Contract
assets
|
|
|
2,406,402
|
|
|
|
2,253,295
|
|
Prepaid expenses and
other current assets
|
|
|
2,816,823
|
|
|
|
1,720,902
|
|
Assets held for
sale
|
|
|
694,601
|
|
|
|
723,872
|
|
|
|
|
|
|
|
|
|
|
Total Current
Assets
|
|
|
25,896,216
|
|
|
|
27,667,785
|
|
|
|
|
|
|
|
|
|
|
Long-Term
Assets:
|
|
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of $10,374,274 and
$9,046,499 at June 30, 2023 and December 31, 2022,
respectively
|
|
|
7,526,475
|
|
|
|
8,296,807
|
|
Operating lease
right-of-use assets
|
|
|
3,046,933
|
|
|
|
3,271,997
|
|
Deposits and other
assets
|
|
|
457,111
|
|
|
|
450,038
|
|
Intangible assets, net
of accumulated amortization of $497,445 and $438,250
at June 30, 2023 and December 31, 2022, respectively
|
|
|
164,978
|
|
|
|
212,933
|
|
Goodwill
|
|
|
229,999
|
|
|
|
226,095
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term
Assets
|
|
|
11,425,496
|
|
|
|
12,457,870
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
37,321,712
|
|
|
$
|
40,125,655
|
|
LIQTECH
INTERNATIONAL, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
|
|
|
As of
|
|
|
As of
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,963,042
|
|
|
$
|
1,389,355
|
|
Accrued
expenses
|
|
|
2,998,844
|
|
|
|
3,087,206
|
|
Current portion of
finance lease obligations
|
|
|
413,505
|
|
|
|
399,198
|
|
Current portion of
operating lease liabilities
|
|
|
589,127
|
|
|
|
561,182
|
|
Contract
liabilities
|
|
|
878,201
|
|
|
|
649,557
|
|
|
|
|
|
|
|
|
|
|
Total Current
Liabilities
|
|
|
6,842,719
|
|
|
|
6,086,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
liability
|
|
|
128,542
|
|
|
|
154,645
|
|
Finance lease
obligations, net of current portion
|
|
|
2,216,535
|
|
|
|
2,384,011
|
|
Operating lease
liabilities, net of current portion
|
|
|
2,457,806
|
|
|
|
2,710,815
|
|
Senior promissory
notes payable, less current portion
|
|
|
5,651,632
|
|
|
|
5,480,314
|
|
|
|
|
|
|
|
|
|
|
Total Long-term
Liabilities
|
|
|
10,454,515
|
|
|
|
10,729,785
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
17,297,234
|
|
|
|
16,816,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
|
Preferred stock; par
value $0.001, 2,500,000 shares authorized, 0 shares issued
and outstanding at June 30, 2023 and December 31, 2022
|
|
|
-
|
|
|
|
-
|
|
Common stock; par
value $0.001, 12,500,000 shares authorized, 5,700,226 and
5,515,056 shares issued and outstanding at June 30, 2023 and
December 31,
2022, respectively
|
|
|
5,700
|
|
|
|
5,515
|
|
Additional paid-in
capital
|
|
|
97,326,371
|
|
|
|
96,975,459
|
|
Accumulated
deficit
|
|
|
(71,295,830)
|
|
|
|
(67,351,035)
|
|
Accumulated other
comprehensive loss
|
|
|
(6,011,753)
|
|
|
|
(6,320,567)
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders'
Equity
|
|
|
20,024,478
|
|
|
|
23,309,372
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
37,321,712
|
|
|
$
|
40,125,655
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
|
|
|
|
For the Three
Months
Ended
|
|
|
For the Six
Months
Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
4,990,019
|
|
|
$
|
5,018,292
|
|
|
$
|
9,001,538
|
|
|
$
|
8,655,528
|
|
Cost of Goods
Sold
|
|
|
3,827,491
|
|
|
|
4,870,152
|
|
|
|
7,447,668
|
|
|
|
8,261,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
1,162,528
|
|
|
|
148,140
|
|
|
|
1,553,870
|
|
|
|
393,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
1,028,225
|
|
|
|
1,196,513
|
|
|
|
2,210,660
|
|
|
|
2,256,461
|
|
General and
administrative expenses
|
|
|
1,377,483
|
|
|
|
1,265,543
|
|
|
|
2,436,432
|
|
|
|
3,182,060
|
|
Research and
development expenses
|
|
|
359,784
|
|
|
|
490,836
|
|
|
|
702,403
|
|
|
|
1,093,573
|
|
Restructuring
costs
|
|
|
-
|
|
|
|
1,788,827
|
|
|
|
-
|
|
|
|
1,788,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating
Expense
|
|
|
2,765,492
|
|
|
|
4,741,719
|
|
|
|
5,349,495
|
|
|
|
8,320,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
Operations
|
|
|
(1,602,964)
|
|
|
|
(4,593,579)
|
|
|
|
(3,795,625)
|
|
|
|
(7,927,240)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
|
116,545
|
|
|
|
342,624
|
|
|
|
168,218
|
|
|
|
342,723
|
|
Interest
expense
|
|
|
(45,898)
|
|
|
|
(159,557)
|
|
|
|
(57,899)
|
|
|
|
(366,018)
|
|
Amortization discount
on Notes
|
|
|
(86,790)
|
|
|
|
(1,922,618)
|
|
|
|
(171,318)
|
|
|
|
(2,219,956)
|
|
Gain (Loss) on
currency transactions
|
|
|
49,494
|
|
|
|
(342,202)
|
|
|
|
(116,784)
|
|
|
|
(266,209)
|
|
Gain on lease
termination
|
|
|
-
|
|
|
|
153,575
|
|
|
|
-
|
|
|
|
153,575
|
|
Gain on sale of fixed
assets
|
|
|
-
|
|
|
|
661
|
|
|
|
-
|
|
|
|
661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense)
|
|
|
33,351
|
|
|
|
(1,927,517)
|
|
|
|
(177,783)
|
|
|
|
(2,355,224)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss Before Income
Taxes
|
|
|
(1,569,613)
|
|
|
|
(6,521,096)
|
|
|
|
(3,973,408)
|
|
|
|
(10,282,464)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Benefit
|
|
|
(14,321)
|
|
|
|
(14,037)
|
|
|
|
(28,613)
|
|
|
|
(28,981)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(1,555,292)
|
|
|
$
|
(6,507,059)
|
|
|
$
|
(3,944,795)
|
|
|
$
|
(10,253,483)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
Loss Per Share
|
|
$
|
(0.27)
|
|
|
$
|
(1.62)
|
|
|
$
|
(0.70)
|
|
|
$
|
(3.05)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
Weighted Average Common Shares
Outstanding
|
|
|
5,676,803
|
|
|
|
4,028,983
|
|
|
|
5,673,605
|
|
|
|
3,361,004
|
|
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SOURCE LiqTech International, Inc.