08/14/2019 | Press release | Distributed by Public on 08/14/2019 07:01
BALLERUP, Denmark - August 14, 2019 - LiqTech International, Inc. (NASDAQ: LIQT) ('LiqTech'), a clean technology company that manufactures and markets highly specialized filtration technologies, announced today record second quarter 2019 financial results for the three months ended June 30, 2019.
'Second quarter revenue was again a new record for the Company. This growth in revenue and profitability highlights the continued demand for our proprietary and market-leading ceramic silicon carbide water filtration systems for closed loop marine scrubber applications,' commented Sune Mathiesen, CEO of LiqTech International. 'LiqTech is benefiting from continued tightening of environmental regulation to ban discharge from open loop scrubbers in many of the world's most important ports, including recent action by China to implement further new discharge limits on Polycyclic Aromatic Hydrocarbons (PAH) and oils, which our silicon carbide water filtration system already helps to address. We believe that the conversion to closed loop systems will continue to increase as a percent of overall marine scrubber installations in the future, representing an important, growing market for our solutions.'
'While we remain highly focused on the marine scrubber market, we can apply our proprietary technologies to expand into adjacent industries and markets. For example, we are advancing the adoption of our ceramic silicon carbide filtration technology to the power plant market, where we have already received several orders, as stricter environmental legislation within many countries is driving the requirement for water treatment systems. Additionally, our silicon carbide diesel particulate filters, a product we have been manufacturing for nearly 20 years, is ideally suited to address NOx reduction within the marine industry. Finally, we also anticipate introducing other products adjacent to the marine scrubber market on a standalone basis, including an in-port water treatment system that will allow ship owners with an open loop scrubber to operate auxiliary engines while in port, and a filter press that is also a component of our existing system, further enhancing our reach within the market.'
Mr. Mathiesen continued, 'The Company's margin optimization program remains a key area of management focus and we improved the contribution margin for our marine scrubber products by more than 500 bps in the second quarter. Our efforts to reduce costs, improve operating efficiencies, in-source certain manufacturing activities and implement LEAN manufacturing are all progressing. Additionally, the planned expansion in manufacturing operations remains on track, with the first of the new furnaces for the expansion of our Ballerup facility set to be delivered in the third quarter 2019, and the planned expansion in Hobro also set to be completed in the third quarter 2019. Overall, we are on target to triple our manufacturing capacity by July 2020.'
'LiqTech's marine scrubber filtration technology was developed as a plug and play solution, allowing it to easily be integrated into a variety of marine scrubber systems sold in the market. As the scrubber market has expanded, and an increasing number of companies have entered the space, we have responded by increasing our customer base and expanding our geographic footprint in an effort to maximize our ability to drive revenue growth. This broad appeal of our technology by the marine scrubber market, coupled with a number of other growth initiatives in place, gives us confidence heading into the future,' concluded Mr. Mathiesen.
Second Quarter 2019 Financial Results
Net sales for the three months ended June 30, 2019 were $9.3 million compared to $3.6 million for the same period in 2018, representing an increase of $5.7 million, or 258%.
Gross profit for the three months ended June 30, 2019 was $2.1 million compared to $0.7 million for the same period in 2018. The improvement in gross profit was positively impacted by sales of the Company's higher margin marine products, offset by lower sales of DPF products, resulting in lower overhead absorption. The Company expects gross margins to improve as a result of further increased sales of marine products, normalized sales levels of DPF products, and improvements from the Company's margin optimization program.
Total operating expenses for the three months ended June 30, 2019 were $1.7 million, an increase of 38% compared to the prior-year quarter. Selling expenses increased $50,000, 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 $386,000, or, 66%, compared to the prior-year quarter, also due to the hiring of additional employees to manage the significant ramp in revenues. Research and development expenses increased $23,000, or, 13%, compared to the same period of last year from increased investment in new technologies to help the company address adjacent industrial and marine markets.
Other income/expenses for the three months ended June 30, 2019 were negative $247,000 compared to income of $299,000 for the same period in 2018. The expenses were mainly driven by unrealized currency losses compared to an unrealized gain last year. The USD exchange rate compared to the DKK decreased at the end of June 2019, but has improved since the end of June and we expect that, if current trends continue, the unrealized loss in the second quarter should be offset in the third quarter.
Net income for the three months ended June 30, 2019 was $147,000, or $0.01 per basic and diluted share, versus a net loss of $264,000, or $(0.004) per basic and diluted share for the same period in 2018. The improvement in profitability was attributable to the significant increase in sales revenue for marine scrubber products and positive operating leverage on fixed costs that improved the gross margin.
Cash on hand and restricted cash at June 30, 2019 was $13.4 million compared to $3.8 million at December 31, 2018. The net proceeds from the capital raise in May was $14.7 million, but the $5.1 million in cash flow from operations has reduced the cash balance due to high level of activity in the first and second quarter of 2019.
Conference Call Details
Date and Time: Wednesday, August 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 August 21, 2019 at (877) 344-7529 or (412) 317-0088, confirmation #10134042.
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 for more than a decade has developed and provided state-of-the-art technologies for gas and liquid purification using ceramic silicon carbide filters, particularly highly specialized filters for the control of soot exhaust particles from diesel engines and for liquid filtration. Using nanotechnology, LiqTech develops products using proprietary silicon carbide technology. LiqTech's products are based on unique silicon carbide technology which facilitate new applications and improve existing technologies. LiqTech offers a wide range of filters and membranes for micro- and ultrafiltration, and by incorporating LiqTech's SiC liquid membrane technology with the Company´s long-term systems design experience and capabilities, LiqTech offers solutions to the most difficult water pollution problems.
For more information, please visit www.liqtech.com
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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