Le Lézard
Classified in: Environment, Business
Subjects: ERN, CCA, ERP, FVT

LiqTech International, Inc. Announces Record Third Quarter 2019 Revenue and Net Income


BALLERUP, Denmark, Nov. 14, 2019 /PRNewswire/ -- LiqTech International, Inc. (NASDAQ: LIQT) ("LiqTech"), a clean technology company that manufactures and markets highly specialized filtration technologies, announced today record third quarter 2019 financial results for the three months ended September 30, 2019. 

Recent Highlights

Third Quarter 2019 Financial Results

Net sales for the three months ended September 30, 2019 were $9.7 million compared to $3.3 million for the same period in 2018, representing an increase of $6.4 million, or 189%. The new quarterly revenue record was achieved despite the European summer holiday season.

Gross profit for the three months ended September 30, 2019 was $2.2 million compared to $0.3 million for the same period in 2018. Although gross profit in the third quarter was higher than the previous two quarters, it was unfavorably impacted by an unfavorable customer mix for filtration systems and by $0.2 million of exceptional expense associated with the new facility expansion of Hobro.

Total operating expenses for the three months ended September 30, 2019 were $2.0 million compared to $1.2 million for the same period in 2018. Selling expenses increased $47,000, or, 11%, compared to the same period of 2018 due to the hiring of additional sales employees to accelerate market penetration. General and administrative expenses increased $655,000, or, 99%, compared to the prior-year quarter, also due to the hiring of additional employees to manage the significant ramp in revenues and due to strengthening of the administrative resources. Research and development expenses increased $36,000, or, 24%, compared to the same period of last year from increased investment in new technologies to help the company develop products for adjacent industrial and marine market segments.

Other income/expenses for the three months ended September 30, 2019 was positive $397,000, compared to positive $20,000 for the same period in 2018 and negative ($247,000) in the second quarter 2019. The income was mainly driven by unrealized currency gains. The US Dollar weakened against the Danish Krone at the end of June 2019, but strengthened in the third quarter, which more than offset the exchange loss in the second quarter 2019.

Net income for the three months ended September 30, 2019 was $656,000, or, $0.03 per basic and diluted share, versus a net loss of $922,000, or, $(0.05) per basic and diluted share for the same period in 2018. The improvement in profitability was mainly attributable to the increased sales of the Company´s higher margin water treatment systems and improvements in manufacturing costs but unfavorably impacted by an unfavorable customer mix for filtration systems and by $0.2 million of exceptional expense associated with the new facility expansion of Hobro.

Cash on hand and restricted cash at September 30, 2019 was $11.6 million compared to $3.8 million at December 31, 2018.

Outlook

Due to the furnace issues noted in the highlights above, revenues for the fourth quarter of 2019 are now expected to be approximately $6 million. Customers that may be impacted by a delay in their originally scheduled fourth quarter shipments have been notified. Assuming the successful commissioning of the new furnaces, the Company is anticipating some catch up in shipments in the first quarter of 2020, with expected revenues of about $12 million.  

Marine Scrubber Market

While the overall marine scrubber market remains healthy, there are new manufacturers of marine scrubbers entering the industry, which is changing the competitive landscape and market shares. LiqTech continues to see strong overall inquiry and order activity for closed loop scrubbers, in which our ceramic membrane water filtration systems are used for scrubber water filtration. 

One of the Company's largest current customers and one of the largest manufacturers in the marine scrubber market note that they are seeing an increase in the number of inquiries and orders for closed loop systems. Their current activity suggests that a higher percentage of their marine scrubber business in 2020 will likely be closed loop systems. This compares to their market uptake ratio of roughly 10% closed loop systems to 90% open loop systems in 2018.

This trend towards closed loop systems follows the banning of discharge from open loop scrubbers by more than 60 global ports and from increased pressure by end customers on shipping companies to utilize superior environmentally friendly scrubber solutions. By the end of 2019, industry experts estimate that nearly 4,000 open loop scrubbers will be on order or installed and LiqTech believes that many of these open loop scrubber systems will be converted to closed loop.

Management Commentary

"We continued to make strong progress on our key operational initiatives during the third quarter, culminating in a quarterly revenue and net income record and an expanding backlog," commented Sune Mathiesen, CEO of LiqTech International. "We also received our largest single order to date placed by one of the world's largest shipping companies, which follows the recent installation and system deployment by this same customer on the two largest container ships in the world. This order provides further validation of our market-leading position for filtration systems within the marine scrubber market. 

"We continued our focus on our margin optimization program to improve gross margins. We executed on one of the key opportunity areas?the in-sourcing of certain manufacturing activities?through the acquisition of BS Plastics. We also introduced our MK6.1 water filtration system in the quarter, which is expected to further lower production costs by approximately 20%. While we did encounter mechanical issues with two of our four existing furnaces at our Ballerup facility, which short-term disruption will impact our fourth quarter results, we expect to increase manufacturing capacity in the first quarter of 2020, upon successful commissioning of the new furnaces."

Mr. Mathiesen continued, "Our proprietary ceramic silicon carbide water filtration systems are uniquely designed to integrate seamlessly with many different scrubber manufacturers. This approach has served us well as new entrants have entered the marine scrubber industry, particularly from Asia, where we have added a number of new customers. Further, the ability of our water filtration systems to be installed retroactively to open loop (non-filtration) scrubber systems has created additional opportunity for LiqTech to benefit from tightening environmental legislation and further banning of in port open loop discharge.

"Finally, we continue to make progress in new applications, including the power plant industry. We also successfully completed an important pilot trial in the oil and gas industry for filtration of produced water. And, we are having advanced customer discussions with ship owners regarding our NOx reduction system that is in development and currently expect our first orders in 2020."

Mr. Mathiesen concluded, "It is gratifying to see the adoption of our technology across the marine scrubber market, and now into adjacent markets. I believe that there are far reaching applications for our proprietary technology and we are just scratching the surface of the various opportunities available. I look forward to the continued growth and diversification of our business into the future."

Denmark Investor Day

LiqTech will host an investor day on Tuesday, January 21, 2020 commencing at 2:00pm CET local time (8:00am EST in New York), at the Company's facility in Ballerup, Denmark, a suburb of Copenhagen. The event will include presentations by company executives along with plant tours and product demonstrations. In-person attendance at the Investor Day requires advanced registration. Please email Robert Blum of Lytham Partners at blum@lythampartners.com for further information.

Conference Call Details

Date and Time: Thursday, November 14, 2019 at 9:00am ET

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

Replay: A teleconference replay of the call will be available until November 21, 2019 at (877) 344-7529 or (412) 317-0088, confirmation #10136577.

Transcript: A transcript of the call will be available on the investor relations section of the LiqTech website following the conclusion of the call at https://www.liqtech.com/investor-relations/.

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. 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, 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 Statements

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 in order to reflect any event or circumstance that may arise after the date of this release.

Company Contact: 
Sune Mathiesen, Chief Executive Officer
LiqTech International, Inc.                                                          
Phone: +45 5197 0908                                                               
www.liqtech.com                                                                      

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

 


 As of  


 As of  


September 30,


December 31,


2019


2018

Current Assets:

 (Unaudited) 



Cash

$    9,957,472


$    3,776,111

Restricted cash

1,678,936


-

Accounts receivable, net

6,560,857


1,308,122

Other receivables

3,697,315


1,098,796

Contract assets

641,356


624,275

Inventories, net

5,186,234


4,432,055

Prepaid expenses

203,024


133,847





Total Current Assets

27,925,194


11,373,206





Long-Term Assets:




Property and Equipment, net

2,783,420


1,431,649

Operating lease right-of-use asset

2,200,130


-

Construction in progress

2,138,406


-

Investments at cost

5,433


5,714

Other intangible assets

-


748

Deposits

475,769


347,932

Goodwill

605,313


-





Total Long-Term Assets

8,208,471


1,786,043





Total Assets

$  36,133,665


$  13,159,249










 As of  


 As of  


September 30,


December 31,


2019


2018


 (Unaudited) 



Current Liabilities:




Current portion of capital lease obligations

$                 -


$         13,789

Current maturities of operating lease obligations

681,481


-

Current portion of contingent earn-out

291,690


-

Accounts payable

3,703,850


2,122,479

Accrued expenses

3,623,012


1,868,229

Contract liabilities

1,165,684


516,335

Income taxes payable

31,260


-

Deferred revenue

842,254


98,781





Total Current Liabilities

10,339,231


4,619,613





Net deferred income tax liability

210,393


-

Contingent earn-out, net of current portion

583,380


-

Operating lease liabilities, net of current maturities

1,561,076


-





Total Long-Term Liabilities

2,354,849


-





Total Liabilities

12,694,080


4,619,613





Stockholders' Equity:




Preferred stock; par value $0,001, 2,500,000 shares authorized, no shares issued or outstanding at September 30, 2019 and December 31, 2018 respectively

-


-

Common stock; par value $0,001, 25,000,000 shares authorized, 20,547,668 and 18,228,887 (after the 4-to-1 reverse stock split) shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

20,548


18,229

Additional paid-in capital

61,483,032


46,575,986

Accumulated deficit

(31,448,837)


(32,286,224)

Deferred compensation

(23,332)


(23,499)

Other other comprehensive loss

(6,591,826)


(5,744,856)





Total Stockholders' Equity

23,439,585


8,539,636





Total Liabilities and Stockholders' Equity

$  36,133,665


$  13,159,249

 



For the Three Months Ended


For the Nine Months Ended



September 30,


September 30,



2019


2018


2019


2018

Net Sales


$ 9,672,716


$ 3,347,204


$ 26,391,100


$ 9,336,614

Cost of Goods Sold


7,444,978


3,058,465


20,613,172


8,447,645










Gross Profit


2,227,738


288,739


5,777,928


888,969










Operating Expenses:









Selling expenses


461,010


414,504


1,458,633


1,288,294

General and administrative expenses


1,318,505


663,547


3,057,807


2,008,194

Research and development expenses


189,216


152,849


591,572


498,526










Total Operating Expense


1,968,731


1,230,900


5,108,012


3,795,014










Income (Loss) from Operations


259,007


(942,161)


669,916


(2,906,045)










Other Income (Expense)









Interest and other income


28,736


1,814


54,186


12,271

Interest expense


(35,292)


(5,463)


(110,442)


(65,937)

Gain (Loss) on currency transactions


403,432


23,861


244,872


240,947

Gain (Loss) on sale of fixed assets


474


-


(21,145)


-










Total Other Income (Expense)


397,350


20,212


167,471


187,281










Income (Loss) Before (Income) Taxes 


656,357


(921,949)


837,387


(2,718,764)










Income Tax Expense (Income)


-


-


-


-










Net Income (Loss)


656,357


(921,949)


$      837,387


(2,718,764)

 

SOURCE LiqTech International, Inc.


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