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LiqTech International, Inc. Announces Second Quarter 2018 Financial Results

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LiqTech International, Inc. Announces Second Quarter 2018 Financial Results

PR Newswire

BALLERUP, Denmark, Aug. 14, 2018 /PRNewswire/ -- LiqTech International, Inc. (NYSE AMERICAN: LIQT) ("LiqTech"), a clean technology company that manufactures and markets highly specialized filtration technologies, announced today its financial results for the three months ended June 30, 2018. 

Recent Highlights

  • Revenue in the second quarter of 2018 increased 23% to $3.6 million compared to the prior-year period, driven by $1.9 million from sales of water treatment systems.
  • Revenue relating to the Company's marine business continues to improve and was the main driver for the growth in revenue.
  • The Company is currently anticipating substantial new orders from the marine scrubber industry before the end of the year. We expect revenues from these orders to be recognized in 2018 and 2019.
  • Second quarter 2018 net income was $(0.3 million), which included $0.3 million of cost related to the development of the company's recently launched Mark 6 filtration system.
  • The Company expects to achieve operating profitability in 2018.
  • Recent capital raise, efficient working capital structure on marine scrubber units, and achievement of breakeven operating results provide company with a strong balance sheet to meet growth plans.

Management Commentary

"Our results for the second quarter were in line with our expectations, as we begin to ramp up shipments of our water filtration systems in our marine segment following the recent IMO decision to implement a new lower global cap on sulphur emissions from international shipping. This growth, which we expect to accelerate in the coming quarters, will put us on track to becoming profitable on an operating basis in 2018, a significant accomplishment for the Company," commented Sune Mathiesen, CEO of LiqTech International.

Mr. Mathiesen continued, "While it is still early in the marine scrubber adoption cycle, we are continuing to see increased activity in shipyards and orders placed with scrubber manufacturers that will ultimately drive utilization of our water filtration technology. Based on conversations with shipowners, shipyard operators, and scrubber manufacturers, we are anticipating substantial new orders received from the marine scrubber industry before the end of the year. Importantly, we think 2019 has the opportunity to demonstrate significant growth due to recent scrubber orders and shipyard reservations that will likely culminate in order intake next year. While we expect order intake and delivery to be uneven and challenging to predict on a quarterly basis due to the infancy of the industry, we are excited about our opportunity within this rapidly growing market where we maintain a leadership position."

"While we are spending considerable time and effort capitalizing on the growth within the marine market, we are finding new applications for growth within our legacy diesel particulate filters (DPF) business. Although this business has historically focused on traditional buses and trucks, we are now witnessing increased demand for applications in new and growth areas such as luxury yachts and off-road vehicles as well as power generators. We expect revenues within our legacy operations to stabilize in 2018, providing us a platform to grow from as the marine scrubber business accelerates."

"Based on our results to date in 2018 and outlook for the remainder of the year, which includes strong demand within the marine segment as well as new applications within our legacy diesel particulate filters (DPF) business, we expect to achieve operating profitability in 2018. These improved operating results, coupled with our solid balance sheet benefiting from the successful $6 million offering in April 2018, efficient working capital structure, improving gross margins due to the launch of our new Mark 6 filtration system, and increased order visibility, provide us confidence that we have positioned the company for historic growth," expanded Mr. Mathiesen.

Board and Management Appointments

As part of the LiqTech's long-term strategy moving forward, the Company recently announced Mark Vernon as its new Chairman of the Board of Directors, replacing Aldo Peterson. Mr. Vernon has been a Board member since May 2013 and has been serving as the Chairman of the Compensation, Nominating and Governance Committees as well as a member of the Audit Committee. 

Additionally, effective August 15, 2018, Claus Toftegaard will become LiqTech's new Chief Financial Officer following Soren Degn's retirement. Mr. Toftegaard most recently served as the Chief Financial Officer of Gabriel Holding A/S, a publicly traded fabric supply company in Denmark, since October of 2014, and as its Financial Manager from June of 2011 until his appointment as Chief Financial Officer. Mr. Toftegaard previously served as the CFO of RTX A/S, a publicly traded wireless solutions company in Denmark, from August of 2006 to March of 2011, as the Financial Manager of Glenco A/S, a HVAC solutions company in Denmark, from January of 2005 to July of 2006 and as the Financial Manager of Intego (f.k.a. Thomas Pedersen A/S and Siemens Technology Services A/S), an electrical infrastructure technology company in Denmark, from November of 2000 to December of 2004. Mr. Toftegaard also previously worked as an auditor at Ernst and Young in Denmark for U.S. GAAP reporting. Mr. Toftegaard holds a MSc. in Business Economics and Auditing from Aalborg University.

Second Quarter 2018 Financial Results
Net sales for the three months ended June 30, 2018 were $3.6 million compared to $2.9 million for the same period in 2017, representing an increase of $0.7 million, or 23%. The increase in sales was due to the continued growth in our marine segment, which had revenues of $1.9M in the second quarter, or a 100% increase compared to the prior-year period. Sales in our legacy DPF business were $1.7 million, a decline of $0.3 million compared to the second quarter of 2017, reflecting a decrease in market activity in the Company's traditional bus and truck industries.

Gross profit for the three months ended June 30, 2018 was $0.7 million compared to $0.2 million for the same period in 2017. Gross margin increased 1,180 bps to 18.3% compared to 6.5% for the same period in 2017, reflecting strong sales of higher-margin marine products as well as positive operating leverage related to fixed costs. We expect gross margins to further improve as marine products become a larger part of the sales mix and further operating leverage is achieved.

Included in gross profit is depreciation of $0.2 million and $0.2 million for the three months ended June 30, 2018 and 2017, respectively.

Total operating expenses for the three months ended June 30, 2018 were $1.2 million, an increase of 4.5% compared to the prior-year quarter. Selling expenses declined $70,361, or 13.2%, compared to the same period of 2017 due to a centralization of the sales structure. General and administrative expenses increased $81,118, or 146.5%, compared to the prior-year quarter, reflecting an increase in general costs, some timing issues and the general ramp-up of our business. Non-cash compensation expenses decreased $20,619, or 69.2%, compared to the prior-year period as a result of lower non-cash compensation expense for options, shares and warrants for employees. Research and development expenses increased $62,271, or 54.6%, compared to the same period of 2017 due to elevated costs to support the commercialization of our scrubber solution.

Net income for the three months ended June 30, 2018 was $(0.3 million) versus $(0.7 million) for the same period in 2017. Net income for the three months ended June 30, 2018 included $0.3 million of incremental costs related to the development of the Mark 6 system. Excluding these costs, net income for the second quarter of 2018 would have been approximately breakeven.

Cash on hand and restricted cash for the period ended June 30, 2018 was $4.5 million compared to $2.5 million for the year ended December 31, 2017, due to improved financial results and the $6 million capital raise in April 2018.

"We are pleased to note the positive development in our business. We have invested significant resources in the development of our new standardized Mark 6 water treatment system. The system is now ready for sale and will be marketed for treatment of scrubber water from marine and power plant applications. The system offers significant cost reductions as well as performance improvements. We believe that we are well positioned in the marine scrubber industry and that we are on track to meet our expectation of achieving operating profitability in 2018," Mr. Mathiesen concluded.

Conference Call Details

Date and Time: Tuesday, August 14, 2018 at 11:00am ET

Call-in Information: Interested parties can access the conference call by dialing (877) 270-2148 or (412) 902-6510.

To Ask a Question: Questions can be asked live during the call-in portion of the conference call or submitted in advance to LIQT@lythampartners.com.

Replay: A teleconference replay of the call will be available until August 21, 2018 at (877) 344-7529 or (412) 317-0088, confirmation #10122766.

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 membranes which facilitate new applications and improve existing technologies. In particular, Provital Solutions A/S (www.provital.dk), the Company's subsidiary, has developed a new standard of water filtration technology to meet the ever-increasing demand for higher water quality. By incorporating LiqTech's SiC liquid membrane technology with its long-standing systems design experience and capabilities, it offers solutions to the most difficult water pollution problems.

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 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:
Lytham Partners, LLC
liqt@lythampartners.com
www.lythampartners.com

Phoenix
Robert Blum     
602-889-9700

New York
Ben Shamsian
646-829-9701

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF OPERATIONS



For the Three Months
Ended


For the Six Months
Ended


June 30,


June 30,


2018


2017


2018


2017

Net Sales

$

3,598,028


$

2,926,200


$

5,989,410


$

5,894,274













Cost of Goods Sold


2,938,206



2,733,526



5,389,180



5,430,183













Gross Profit


659,822



192,674



600,230



464,091













Operating Expenses:












Selling expenses


463,998



534,359



873,790



984,742

General and administrative expenses


573,047



491,929



1,257,213



1,085,567

Non-cash compensation expenses


9,161



29,780



87,434



125,958

Research and development expenses


176,281



114,010



345,677



253,346













Total Operating Expense


1,222,487



1,170,078



2,564,114



2,449,613













Loss from Operations


(562,665)



(977,404)



(1,963,884)



(1,985,522)













Other Income (Expense)












Interest and other income


7,173



77



10,457



303

Interest expense


(4,174)



(8,706)



(60,474)



(19,527)

Gain (Loss) on currency transactions


296,140



(206,362)



217,086



(27,687)

Gain on sale of fixed assets


-



-



-



6,768













Total Other Income (Expense)


299,139



(214,991)



167,069



(40,143)













Loss Before (Income) Taxes


(263,526)



(1,192,395)



(1,796,815)



(2,025,665)













Income Tax Expense (Income)


-



-



-



-













Net Loss

$

(263,526)


$

(1,192,395)


$

(1,796,815)


$

(2,025,665)













Basic Loss Per Share

$

(0.004)


$

(0.03)


$

(0.03)


$

(0.05)













Weighted Average Common Shares Outstanding


64,859,333



40,667,107



54,729,618



38,761,647













Diluted Loss Per Share

$

(0.004)


$

(0.03)


$

(0.03)


$

(0.05)













Weighted Average Common Shares Outstanding Assuming Dilution


64,859,333



40,667,107



54,729,618



38,761,647

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



As of


As of


June 30,


December 31,


2018


2017


Unaudited




Current Assets:





Cash

$

4,491,500


$

2,486,199

Accounts receivable, net


1,444,794



1,124,842

Other receivables


314,025



636,539

Contract assets


1,320,938



490,100

Inventories


4,494,522



4,661,866

Prepaid expenses


66,323



28,151







Total Current Assets


12,132,102



9,427,697







Property and Equipment, net accumulated depreciation


1,633,984



1,959,205







Other Assets:






Investments at costs


5,827



6,001

Other intangible assets


1,978



3,349

Deposits


353,833



283,686







Total Other Assets


361,638



293,036







Total Assets

$

14,127,724


$

11,679,938

Current Liabilities:





Current portion of capital lease obligations

$

11,476


$

26,186

Accounts payable


1,524,403



1,775,230

Accrued expenses


1,098,876



1,724,986

Contract liabilities


454,863



306,845

Accrued income taxes payable


580



580

Deferred revenue / customers deposits


428,271



933,994







Total Current Liabilities


3,518,469



4,767,821







Total Liabilities


3,518,469



4,767,821







Agreements and Contingencies See Note 9












Stockholders' Equity:






Series A Convertible Preferred stock; par value $0.001, 10,000,000 shares authorized, 2,200,837 and 2,200,837 shares issued and 0 and 2,200,837 outstanding at June 30, 2018 and December 31, 2017 respectively


-



2,201

Common stock; par value $0,001, 100,000,000 shares authorized and 72,740,547 and 44,429,264 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively


72,741



44,430

Additional paid-in capital


46,356,874



40,457,907

Accumulated deficit


(30,268,509)



(28,471,696)

Deferred compensation


(52,499)



(79,933)

Other comprehensive income, net


(5,499,352)



(5,040,792)







Total Stockholders' Equity


10,609,255



6,912,117







Total Liabilities and Stockholders' Equity

$

14,127,724


$

11,679,938

 

LIQTECH INTERNATIONAL, INC. AND SUBSIDIARIES

(UNAUDITED) CONSOLIDATED STATEMENTS OF CASH FLOWS

Increase (Decrease) in Cash and Cash Equivalents



For the six months ended


June 30,


2018


2017

Cash Flows from Operating Activities:






Net Loss

$

(1,796,815)


$

(2,025,665)

Adjustments to reconcile net (loss) to net cash provided (used) by operations:






Depreciation and amortization


430,081



503,276

Non-cash compensation


87,434



125,958

Reserve for obsolete inventory


(76,867)



-

Loss on sale of equipment


-



(6,768)

Changes in assets and liabilities:






Accounts receivable


2,562



(479,496)

Inventory


166,621



(13,972)

Prepaid expenses/deposits


(78,882)



(77,275)

Accounts payable


(250,828)



(195,763)

Accrued expenses


(1,131,833)



515,928

Long-term contracts


(682,820)



(175,982)







Total Adjustments


(1,534,532)



195,906







Net Cash Used in Operating Activities


(3,331,347)



(1,829,759)







Cash Flows from Investing Activities:






Purchase of property and equipment


(82,992)



(70,679)

Proceeds from sale/recovery of property and equipment


-



10,349







Net Cash Used by Investing Activities


(82,992)



(60,330)







Cash Flows from Financing Activities:






Net payments on capital lease obligation


(14,710)



(109,007)

Payments on loans payable


-



(4,153)

Proceeds from issuance of common stock and warrants


6,612,500



1,825,000

Payment of stock offering costs


(747,423)



-







Net Cash Provided by Financing Activities


5,850,367



1,711,840







Gain (Loss) on Currency Translation


(430,727)



250,269







Net in Cash and Cash Equivalents


2,005,301



72,020







Cash and Cash Equivalents at Beginning of Period


2,486,199



1,208,650







Cash and Cash Equivalents at End of Period

$

4,491,500


$

1,280,670

 

Cision View original content:http://www.prnewswire.com/news-releases/liqtech-international-inc-announces-second-quarter-2018-financial-results-300696395.html

SOURCE LiqTech International, Inc.

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