LIQT - Earnings call transcript Q2 2018 | LiqTech International, Inc.

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Operator

Good morning, and welcome to LiqTech International Reports Second Quarter Fiscal Year 2018 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead.

Robert Blum

XXXX. Chad, to everyone results discuss quarter June much, for thank for very ended us joining LiqTech XX, you good and day you the Thank International's financial I I'm will call. Robert Lytham Blum Partners be moderator for of your today's and second issued results XXXX be their release different outlets. in number on a Earlier of press to quarter LiqTech a available

Joining CEO of Mathiesen, us is results Sune on today's these call to discuss LiqTech.

let an Before call, me Q&A the I over, remind conference be call following there that will open listeners session. the turn

You note will the the of be replay available of call. should conclusion that also this shortly call following live the

we statements. we The remarks, submit contains with and following release the call conference record Before press begin forward-looking for prepared statements. the

forward-looking of unknown statements known may the speak the company's release conference to The discussed Although any all sales events of The company subject assumes results risks to this press and this inherently risks review and and in to be cash reliance forward-looking and all materialize, various management, those projected. date these that call. no statements, and that if or urges forward-looking the cause not financial reflect actual the filed Risk assumptions after and obligation materially conference the materially the release and date the expected listeners any these forward-looking advice the and statements incorrect, conference actual and are in uncertainties the release that more call. the therefore uncertainties may good from results place parties update of to company circumstances urges or listeners arise reflect only statements order in Factors The may different If to of judgment or and call. the the or and of company's which date with as Securities of including undue Commission, affect therefore interested flows. Exchange condition one risks carefully the underlying from on company attempt prove to disclosures of or reports to the operations may made that business, faith vary those consider

Now, turn over International. to LiqTech proceed. Please Mathiesen, to Sune CEO, I'd the call like

Sune Mathiesen

Robert. scrubber of for us second the we today all you. discuss Good to the position In morning to you, quarter. water this continue financial space. Thank call to you results filtration leadership the joining solidify Thank marine on our in our second for quarter,

about I'll XX% quarter, total in more driven by detail opportunity in year-over-year just moment. a speak our XXX% During the revenues marine the increased marine products. growth in

We also of continue a to to our development make more the than second $XXX,XXX quarter reported which loss stated X launched our recently system. filtration the of goal investment Mark turning In profitable. approximately the included we progress $XXX,XXX of towards of related company net

turning the Excluding within segment, the Based actually this our slightly strong goal we a company the spending, the demand on includes we reach remainder increased have year of quarter. results in our would to been profitable outlook which of the and and the for expect XXXX. marine profitable during to-date

significant also in offering secondary balance During improvement position quarter, sheet a successful cash made we a the and April. second through through our

I the can provide the margins, a with owners will improving along step to moment cap IMO the order International working a execute from couple to emissions structure, for or to system more a limited our capital scrubbers either January install the it we take lower new call to come the investors many This from shipping. back emissions with have like ship Maritime switch by of an into Where LiqTech with confidence lower a ship released are Organization made balance owners force the of vessels, choices; very [indiscernible]. and can X, washing to on captured whereby into expensive from new overview and XXXX the they ship console seawater, sheet, exciting very back This us proven the capital is XXXX, decision carbide little the solid significantly a very into implement a this in that into the asset filter the our process to is returns would a for come technology, industry. results our of now -- suited scrubber In unique that has November disposed provide filter allowing for on new ability the in the lower operating the improved scrubber silicon we our efficient application. the gross challenging international to or visibility robust a bit process marine plans. filter the be clean from ocean. to polluted cap well water Our increased water for requires believes equation that off the and growth fits

total global our of the for than billion. With attractive return-on-investment installation fume. becomes approximately scrubber. low is At LiqTech the revenue [ph] for XX,XXX fleet of highly sulfur years of per with the today, vessel ships by scrubbers bong roughly to business more the the more installation LiqTech $XXX,XXX vessels are oil the current XX% case. puts price from used opportunity away as that oil roughly Therefore, two than the [ph]. addressable of revenues at have bong low gap this widen This and believe Analysts XXXX the main about the price a sulfur is $X scrubber fume gap between expected to

believe by mentioned before installation we defined on the Importantly, comes fits the market of top opportunity. will also vessel revenue not be only which that by richer new but

of secure scrubber years and companies industry for market been the first in in work to share. healthy industry the several marine to now. the been have very We're we've able We working one a

the during April in units two announced with framework and of delivered As March discussed XXX XXXX of quarter, agreements next to over last we be expected the signing years.

of one intent the with let-off manufacturers. world's a announced largest also scrubber have We

in owners, manufacturers; and and new scrubber shipyard of our XXXX. working substantial based In orders this, with conversations a addition increasing expecting to on we're these we're partners to amount operators, with an number ship of receive

further expecting strong We growth also a to XXXX. are for see

ultimately the are As owners you are with to they shipping operators of Ship about filtration comply IMO them and an that And scrubbers technology. the with are XXXX limiting the an in can is about activity their at early choosing [ph] have industry cycle deliberating to technology. have marine the off water the decision. ruling but excited adoption IMO increasing the options affecting is our the accelerating hear, number should still sensation scrubber filtration drive ever It we rate.

our DPF business. turn to Now I to legacy would like

on subsidies In buses. by this some growth past has has other traditionally but focused that retrofits of world due We to mandates market the and trucks swings had [ph]. trends opportunities and have throughout and the driven been

we vehicles, However, off-road and now luxury are seeing generators. yachts, in demand areas such power growth as

as We several European, as seeing in order markets. flow are well international

our expect revenues operations We stabilize to in within legacy XXXX.

As the I $XX mentioned turn on to gross In We great in our strong achieve million. confident achieved before, to to of quarter, XX.X%, revenues company profitability very a we making forecast approximately the strides of where the growth $XX fixed in remain second in expenses costs margins we million are in well increase XX% flat. profitable. operating XXXX an second versus products due XXXX carry Despite second sales all marine of higher remained margins of increase leverage. our improved sales as quarter the to almost which basis of XXXX. quarter, points relatively We margins as based

we launch money and have As It more now forward. investment leveraging of are margins spent system. This a for is many be and said, know, our Mark longer is cost that applications. that past. we will our filtration manufactured new that of the forward. investment taking important any the that. time efficiently that anticipated have come of drive profitability to to developed lot state-of-the-art system going than you X significantly considerable This contribution With money improved fruition believe allow more on One going than developing has we significantly in we originally of the can

forward. the our So gross margins leverage going for while improved is have significant opportunity

been company Mark board and been recently Governance the as member as Nominating committees, since announced As Chairman and well part as long-term Board our Raymond moving committee. has serving new forward, May of replacing XXXX of strategy a of Chairman has Mark Compensation, a of the our as of audit the Petersen. Directors Aldo member the the

and to Let Aldo his years service Mark of my to LiqTech. thank congratulations offer for me many

company I Officer. Gabriel and on Additionally, the traded look welcome new Financial wish effective would tomorrow, as seven the well LiqTech's us Soren of and of Holding, years years turn the to also in the Claus fabric many might to our prospects publicly With Degn company questions [ph] thank Financial that to and traders that Thank will in visibility his that be I strong And to shareholders to products the exciting years supply we Denmark. would thought, over support years him retiring let experience, over endeavors. Soren believe Toftegaard to you. To of me should the face like believe service a with Claus the as the in that joins for drive that I Officer. [indiscernible]. company change structure, the to rich his thank many market working as Chief we our as club Claus have with and Mark beyond. recently also and forward forward that company now right most to Chief CFO the for for said, We to the support we balance LiqTech. repaying come. any the same look we sheet, growth XXXX operating we have be. like

Operator

today Stine first Eric question come [Operator Craig-Hallum. The Instructions] will from with

Eric Stine

it Maybe also lot Mark that know we I X, you've to the the efficiently, manufacturing. non-core start a that you just outsourced mentioned manufacture enable and could of more you with will

that this just maybe, for love plant? And capacity? also one, power an you maybe for marine means product I'd that what the hear for be on applications what -- means for your to scrubber new update then it mean might main guess and will what I annual So beyond

Sune Mathiesen

Yes.

has the we to a the have for skits of but the heart a As the carbide this manufacturing which process our in-house seen of a and have this systems That of we capacity in-house marine still cost ramp have over welding we pipes, industry, enables scrubber [ph], we've follow us forth. now and of been manufacturing very process nine is that's We been will in efficiently, months. a much membranes to do time systems outsource process and with allow development, successful to think general that's assembly for us going forward, so to to the six up large ongoing part just now outsourcing and part an the rapid choice our very absolutely been ramp silicon it able obviously large welding our see right of the in industry. the unique have been to you important has and manufacturing I And technology ramp said, and outsourced correctly very of more right us last off it some up was development the manufacturing. we up

this very we marine to for will applications for system XX% working also for which a system, course, for to gross lead a can important on we of have times system much of more predominantly that several scrubber have applications. It improve about As plants, there for is means it but as use lot it has cut and applications margins. shorter also a we will a been be -- is been it used allows cost different to now. important standardized -- Mark truly for applications in step is power more that system other the able have XX% well, and to been obviously scrubber It before, that X us, our it of is we importantly, us have but card which while a us in

Eric Stine

Absolutely.

way or that just what's giving more I'm in in you about customers into is started around you the substantial statement? commentary orders receive -- there interested specifics obviously had XXXX. in can the orders? your that whether just that XXXX confidence And I any color mean, some expected curious So visibility a I'm mean maybe you or that's to framework two that provide have I

Sune Mathiesen

are have we developing the partnerships anticipated of see general confidence gives market agreements and we be out continuing coming there as these mentioned, operators than think with owners, agreements, amount I is we rapidly. and manufacturers; but framework shipyard scrubber also yes, have and with we form receive us of to still starting two to seen comes our One, in that orders very framework I confidence from ship things. will that this we that several actually business customers these

or actually and uptake this one will a order is higher and general support books XXXX been very seen side their even think months, the first of and scrubber lot we LiqTech I as past have the perception filling which that very XXXX from they for than two have manufacturers scrubbers well. announcements over that to a anticipated positive be for that in XXXX,

We are number. in discussions very for very currently high for [ph] two-digit orders

see think have that company the this shipyards we And will in relationships and would, we gives always anticipated. ship that say we is positively this we growth agreements worked place of in actually XXXX growth and it's long-term we the and that say with the developing manufacturers it that So XXXX, owners, have worked I more for confidence the would rate, a thought scrubber the and lot would. we than with that I even developing make to we us for thought it way now we profitable to ability

Eric Stine

order I it some would have you assume that mean now have will official you at agreements, some like point? or you And, these sounds that but so right anything confidence you outside of the anticipate these do don't I people is activity that are framework

Sune Mathiesen

customer Yes, number directly and we're and widen are working base directly working manufacturers. this scrubber working we with larger larger we're operators, mentioned, our with continuing we're shipyard And ship with industry. as owners, of I to in

in scrubber have combined earlier place, intent in the talking to that this have with been all have of we with agreements that relationships that manufacturers largest handful and about. we these established growth of and we us besides world's framework scrubber manufacturing We a see the two and of the one place, announced have believe latest leads we'll

Eric Stine

know for both that letter was just the strategy, customer that of targeting also of topic go-to-market your of that Maybe been had system maybe lastly put talk just two? and that of just that where in intent; I understanding of you me, on would their those trying the to stands integration, prospective about together company company process the

Sune Mathiesen

to extension and the Yes, the announce working the complete diligently that at latter's we We're [ph] intent. relationship happy are companies progressing very of according And is to all to plan. process both And the this is we our product basic now plan. stuff more to newer very it's technology progressing to tested of is successfully, the already clear, and have matter market. taking a of according

Operator

next The Frank [ph] question [Operator Management. from Instructions] with Morgan comes Manchester

Unidentified Analyst

incremental XXX% line quick for and like on a it gross margins drops think you margin something QX, to question it about like last to going how profit but to we actually had contribution it gross I contribution XX% about forward. revenue at compare quarter from Looks the was looks like if margin.

gross of revenue some too I'm high you couple probably use kind the forward. to So that us next going give that's Can on million sense of incremental look like of what profit guessing the line? would

Sune Mathiesen

see forward. large We system, margins higher realize think new we concentration will XX%. there Yes, XX% it to do Morgan. Good around margins X contribution actually we Well, can the be with will that. of morning, to Mark moving

dropdown not part of Of all will but it course of will. a that significant

drop and probably As be XX%. that off we the region increased bottom more in line, down to it's going and volume, more to of the XX% to will

Unidentified Analyst

costs? So, of as would number as of good just your an estimate sold be use fixed goods at a cost to what I now look

Sune Mathiesen

the level is right estimates. where the level -- now very are a future We we good for are

in for a business. and our ramp that We we future going have also the that have are up ramp of of this means made organization already significant prepared not experiencing, investments for we we prepared will forward, have business there in which lot investments be up

our increase So we're looking costs. significantly not to

Unidentified Analyst

start systems we'll on see the unit drop pretty And the so through actual margins fully? to

Sune Mathiesen

Yes.

as volumes As we increase, that we see down, progress, we see will drop correct. that's

Operator

next from Instructions] Bill investor. will [ph], question [Operator be Chapman The private a

Unidentified Analyst

to is partnerships formal manufacturing three have more you scrubber firms contracts third closes. orders hoping scrubber with your it On once less Do or range? one other going to case-by-case in we're anticipate a that more formal be this

Sune Mathiesen

Yes, going to good that's be it's and actually both. question a

that laying framework change tell you largest it's we're agreements now. the I for ordnance that coming few how already it's in to case -- probably future. So [ph], the together. case can so some that in you mean we we're to working right a doesn't told just scrubber shipyard a of necessarily also we it -- a a see becoming we'll a several is believe working market in or manufacturers, way the commodity, not see just will directly come of scrubber more see industry, see seeing and sources orders It it lot from slight doesn't out just this orders the We new see means But have then when orders mean from that manufacturers future the we the say, operators. --

Unidentified Analyst

or do we on you to recognized being to an anticipate announce Going revenues? be forward, basis see is actual able flow the order a going quarter-to-quarter when it

Sune Mathiesen

lot As we we see this firm on there announcements a is probably we -- course and that very the are will for for very orders, will announce to more announcements, time, more and is less we and making any competitive want reasons small update a of this becoming market of quarterly not large attractive players, industry the up, we see market keen to orders we'll avoid basis. is -- on of but all announce what amount

Unidentified Analyst

the Goldman bit? picking financing; involved me you saw offering Sachs on a Is quite Let getting up financing. Wall that firms some really and ask I also Street

Sune Mathiesen

which a the lot more business which offering out available even finance the owners good obviously Yes, ship scrubber there We scrubbers of for is for we owners; supports even LiqTech. for operators opportunities are news case for findings this we have and seen Goldman financing installations. Sachs, ship being for see to shipyard example, think there so

Unidentified Analyst

quite is the XXXX. what's going to industry and about bit there saw mandate; the with sources last this that I to that week commented on discussion of scrubbers for of XX% a by the opt-in know, you expected ships trade according in are just XXXX current least As magazines one at

seen a Now scrubbers high, I've than seen? I've of XX%, converting way never just the or that this a interest outlier wave what really upto number we've in seen this to in mass is is material an

Sune Mathiesen

looks the with, that XXXX like recently What in of is an uptake be scrubbers be been seen will is it it is working is $X scrubbers. by opportunity huge have a we XX% the there number, we seven that higher and even a what uptake we XX% LiqTech, market a to addressable Trying the conservative, us good billion next number years. think for it's over have for

love a would that high for rightfully of said, demand great it you think But it's than the the will [ph]. to in us. we in see be looks like XX% course, Of uptake as number but we a that with scrubbers opportunity adoption

Operator

concludes our any this Ladies for question-and-answer over session. remarks. to management conference would I turn back and to gentlemen, closing like the

Sune Mathiesen

Thank everyone with We day. forward you very much. look great the joining And us speaking very thank to you call. today a Have soon. for you again to on

Operator

sir. you The is attending for Thank now concluded. conference you, Thank today's presentation.

You may now disconnect.

LiqTech International (LIQT) 15 Aug 182018 Q2 Earnings call transcript