Q3 2025 LiqTech International Inc Earnings Call

November 13, 2025

There will be an opportunity to ask question.

Inflation, there will be an opportunity to ask questions.

To submit a question you may typing into the ask a question box on the webcast screen.

To submit a question you might open into the ask a question box on the webcast screen.

Please note this event is being recorded.

I would now like to turn the conference overdue to overcome the lights.

I would now like to turn the conference over to Robert Blum with Lights and partners. Please go ahead.

<unk> partners. Please go ahead.

Alright, Thank you very much and good morning, everyone as the operator indicated thank you for joining us today to discuss <unk> International's third quarter 2025 financial results for the period ended September 32025, joining us on today's call from the company are Fei Chen the Companys Chief Executive Officer.

And David call check the company's Chief financial and Chief operating Officer before I turn it over to management I do want to remind everyone that there will be a Q&A session at the end to ask a question through the webcast portal again simply type your question into the ask a question feature in the webcast player.

David Qual check the company's chief financial and Chief operating Officer before I turn it over to management I do want to remind everyone that there will be a Q&A session at the end to ask a question through the webcast portal again simply type your question into the ask a question feature in the webcast player.

Before we begin with prepared remarks, we submit for the record the following statement.

Before we begin with prepared remarks, we submit for the record the following statements.

This conference call may contain forward looking statements, although the forward looking statements reflect the good faith and judgment of management forward looking statements are.

Are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the conference call. The company. Therefore urge all listeners to carefully review and consider the various disclosures made in the reports filed with the Securities Exchange Commission, including risk factors that attempt to advise.

Are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the conference call. The company. Therefore urge all listeners to carefully review and consider the various disclosures made in the reports filed with Securities and Exchange Commission, including risk factors that attempt to advice.

Interested parties of the risks that may affect our business financial condition operations and cash flows.

If one or more of these risks or uncertainties materialize or if the underlying assumptions prove incorrect. The companys actual results may vary materially from those expected or projected the company. Therefore encourages all listeners not to place undue reliance on these forward looking statements, which pertained only as of the date of the release and the conference call.

If one or more of these risks or uncertainties materialize or if the underlying assumptions prove incorrect. The company's actual results may vary materially from those expected or projected the company. Therefore encourages all listeners not to place undue reliance on these forward looking statements, which pertain only as of the date of the release and the conference call.

The company assumes no obligation to update any forward looking statements to reflect any events or circumstances that may arise. After the date of the release and conference call.

With that I'd like to turn the call over to Fei Chen Chief Executive Officer of <unk> International say please proceed.

With that I'd like to turn the call over to Fei Chen Chief Executive Officer of <unk> International Fe. Please proceed.

Thank you Robert and good day to everyone on the call.

Thank you Robert and good day to everyone on.

On the call.

Darius and not optimism for the future based on execution.

And that optimism for the future.

The sound execution.

Yes.

Okay.

Not simply because of the growth in revenues improvement in gross margins and reduction.

<unk> expenses at <unk>.

Due to the strong order books.

Due to their strong order books.

To set the stage for a nice quarter.

Going to set the stage for a nice quarter.

Uh huh.

Sure.

A key driver during the Clinton Master strengths, we've seen our water treatment systems business.

A key driver during the Clinton less the strengths, we're seeing our water treatment systems business.

Our swimming pool political.

And Steve its highest quarterly revenue to date.

Really important is that the new bookings received during the quarter indicate and country and an Asian updates plus as you change.

Really important is that the new bookings received during the quarter indicates and countries in Asia of these plus as you change.

It is clear that the market is.

Increasingly recognizing the unique attributes of our clear flow filtration system and the competing and 10-Q is offers to traditional media filtration systems used in commercial pools.

Increasingly recognizing the unique attributes of our claris flow filtration system and the competing and 10-Q is offers to traditional media situations systems used in commercial pools.

Beyond the swimming pool political we are making progress in a number of other applications, which leverage our robust silicon carbide membrane technology, including Linkedin for energy industry applications and the marine industry.

Increased order flow and aegis is a direct result after numerous successful pilot programs, we have implemented our past two years skewing. The success of our systems you real wood <unk>.

Increased order flow and interest you said direct results. After numerous successful pilot programs, we have implemented our past two years skewing. The success of our systems you real wood exam, Bruce we have lung emphasized that this transformation will take time.

Have lung anthracite and this transformation will take time and we now believe that we are on the verge of.

And we now believe that we are on the verge of broad adoption of our systems across multiple market verticals.

Adoption of our systems across multiple market verticals.

Whereas system sales at ultimate measure of success, we have spent considerable effort right sizing the business and electing operational efficiencies to drive down costs, both from an opex perspective, as well as from a manufacturing site.

During the quarter, our contribution margin last one of the highest levels, we have seen over the past five years.

During the quarter, our contribution margin last one of the highest levels, we have seen on the past five years.

And the gross profit was $19 six person Oshell added an improved liver <unk>.

And the gross profit was $19 six person ocean and an improved liver <unk>.

Our operating expenses.

At their lowest levels in mining yes.

Let me circle back on a few of the key activities during the quarter, starting with the swimming pool vertical.

As mentioned, we delivered systems systems, two six customers during the quarter totally Lindland zero million revenue. This systems delivered was much larger in size than many of our historical systems and really highlights. The progress we are making we are seeing that.

As mentioned, we delivered systems systems to six customers during the quarter.

Totally lindland zero million revenue. This systems delivered was much larger in size than many of our historical systems and really highlights. The progress we are making we are seeing the larger swimming pool systems.

Larger swimming pool systems.

Orders delivered during the quarter, while fulfilled through our partners boundary and total food in the UK and Oxidyne in spend there.

<unk> delivered during the quarter, while fulfilled through our partners <unk> and total <unk> in the UK and Oxidyne in spend.

These partners have been instrumental to our success, particularly as we have strengthened our collaborations in the past three years.

During the quarter, we continued to extend our pipeline we are seeing our key markets.

Operator: Prince call. After today's presentation, there will be an opportunity to ask questions. To submit a question, you may type it into the Ask a Question box on the webcast screen. Please note this event is being recorded. I would now like to turn the conference over to Robert Blum with LiqTech International. Please go ahead.

Speaker #1: Years. Let me circle back on a few of the key activities during the quarter, starting with the swimming pool vertical. As mentioned, we delivered systems to six customers during the quarter.

Including systems in UK, Denmark and Holland.

This really shows the dips and what we have accomplished in the past few years building. These relationships, but also the internal teams slow enhancing move projects forward and steelcase lap is postponed with our solutions.

This really shows the dips and what we have accomplished in the past few years building. This relationships, but also the internal teams slow enhancing move projects forward and steelcase lots is postma with our solutions.

Speaker #1: Totally, 1.0 million in revenue. The systems delivered were much larger in size, than many of our historical systems, and really highlight the progress we are making within the larger swimming pool systems.

Robert Blum: All right. Thank you very much. Good morning, everyone. As the operator indicated, thank you for joining us today to discuss LiqTech International's third quarter 2025 financial results for the period ended 30 September 2025. Joining us on today's call from the company are Fei Chen, the company's Chief Executive Officer, and David Kowalczyk, the company's Chief Financial and Chief Operating Officer. Before I turn it over to management, I do want to remind everyone that there will be a Q&A session at the end to ask a question through the webcast portal. Again, simply type your question into the Ask a Question feature in the webcast player. Before we begin with prepared remarks, we submit for the record the following statement: This conference call may contain forward-looking statements.

Another key development leasing our swimming pool solutions has been the development of the modular design system, which allows for easy of deployment.

Speaker #1: The orders delivered during the quarter were fulfilled throughout our partners' boundary and total pool in the UK and Occitan in Spain. These partners have been instrumental to our success, particularly as we have strengthened our collaborations in the past three years.

Since I took our we have worked hard to move away from mending customized solutions, which often takes too long to create and cost too much money further either created too many confusion among customers. This.

Since I took our we have worked hard to move away from mending customized solutions, which often takes too long to create and cost too much money. Further is it created too many confusion among customers. This.

This team of creating a modular design system and driving driving down costs is not just applicable to our swimming pool verticals, but across other applications as well.

Speaker #1: During the quarter, we continued to expand our pipeline within our key markets. Including systems in UK, Denmark, and Holland. This really shows the depth of what we have accomplished in the past few years, building this relationship, but also the internal teams' role in helping move projects forward and showcase what is possible with our solutions.

To that point, we are working with our joint venture partners in China to reduce the cost of components and assembly of our marine water treatment systems, making them more competitive in the market.

To that point, we are working with our joint venture partners in China too.

Robert Blum: Although the forward-looking statements reflect the good faith and 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 during the conference call. The company, therefore, urges all listeners to carefully review and consider the various disclosures made in the reports filed with the Securities and Exchange Commission, including risk factors that attempt to advise interested parties of the risks that may affect our business, financial condition, operations, and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, the company's actual results may vary materially from those expected or projected. The company, therefore, encourages all listeners not to place undue reliance on these forward-looking statements, which pertain only as of the date of the release and the conference call.

Reduce the cost of components and assembly of our marine water treatment systems, making them more competitive in the market.

We will continue manufacturing the silicon carbide membrane in Denmark were also exploring the potential to leverage our Chinese at assembly and sourcing capabilities to drive cost reductions across our systems and applications.

Speaker #1: Another key development within our swimming pool solutions has been the development of the modular design system which allows for easy deployment. Since I took over, we have worked hard to move away from which often take too long to many customized solutions create and cost too much money.

Another exciting development, we are seeing our China joint venture has been the recipient up to first orders for Marine <unk> <unk>.

Another exciting development, we are seeing our China joint venture has been the recipient of two first orders for Marine <unk> <unk>.

<unk> water treatment systems.

Speaker #1: Further, it created too many confusions among customers. This theme of creating a modular design system and driving down costs is not just applicable to our swimming pool vertical, but across other applications as well.

<unk> water treatment systems.

The marine shipping industry is moving towards cleaner fewer applications with most new vessels equipped with dual fuel engines that require reliable water treatment like <unk> gas recirculation systems. According to published data approximately 400, new lasers.

The marine industry is moving towards cleaner fewer applications with most new vessels equipped with dual fuel engines that require reliable water treatment like <unk> gas recirculation systems. According to published data approximately 400, new lasers.

Robert Blum: The company assumes no obligation to update any forward-looking statements to reflect any events or circumstances that may arise after the date of the release and conference call. With that, I'd like to turn the call over to Fei Chen, Chief Executive Officer of LiqTech International. Fei, please proceed.

Speaker #1: working with our joint venture To that point, we are partners in China to reduce the cost of components and assembly of our marine water treatment systems.

And older with ISO.

On order with ISO.

ACI solutions planted between.

2024, and 2027 went after two marine fuel fuel engine orders is scheduled to be delivered here in the first quarter with the other set for delivery in early 2026.

Fei Chen: Thank you, Robert, and good day to everyone on the call. There is a lot of optimism for the future based on the execution during the third quarter, not simply because of the growth in revenues, improvement in gross margins, and reduction in operating expenses, but also due to the strong order books during the third quarter, which sets the stage for a nice fourth quarter. A key driver during the quarter was the strength within our water treatment systems business, led by our swimming pool vertical, which achieved its highest quarterly revenue to date. Equally important is that the new bookings received during the quarter indicate a continuation of this positive trend. It is clear that the market is increasingly recognizing the unique attributes of our ClearFlow Filtration System and the compelling alternative it offers to traditional media filtration systems used in commercial pools.

Speaker #1: Making them more competitive in the market. We will continue manufacturing the silicon carbon membranes in Denmark, where also exploring the potential to leverage our Chinese assembly and sourcing capabilities to drive cost reductions across our systems and applications.

2024, and 2027 went after two marine fuel fuel engine orders is scheduled to be delivered here in the first quarter with the other set for delivery in early 2026.

We believe more opportunities.

Tourism.

Transitioning from China to the U S. We have talks about this slow wire now by the water for any of the market is rapidly growing we've seen the U S. We have worked with partners such as <unk> direct and renewable resources lately to build our presence in the U S. But.

Transitioning from China to the U S. We have talks about this slow wire now by the water for any D market is rapidly growing we've seen in the U S. We have worked with partners such as <unk> direct and renewable resources lately to build our presence in the U S. But.

Speaker #1: Another exciting development within our been the recipient of China joint venture has first orders for marine dual fuel engine water treatment systems. The marine shipping industry is moving towards cleaner, fewer applications, with most new vessels equipped with dual fuel engines that require reliable water treatment, for for exotic gas recirculation systems.

This reason we have moved forward with the opening of a dedicated service center near footwork picks us.

The new facility is being launched in partnership with Hydro systems and opened a few weeks ago.

Speaker #1: According to published data, approximately 400 new vessels are on order, with ISO AGR solutions planted between 2024 and 2027. One of the two marine dual fuel engine orders is scheduled to be delivered here in the first quarter, with the other set for delivery in early 2026.

For those not familiar hydro is the industry service provider with extensive experience in energy or in the gas and industry sectors, the specialized equipment servicing maintenance and field support.

For those not familiar hydro is the industry service provider with extensive experience in energy or in the gas and industry sectors. These specialized equipment servicing <unk> and the field support.

The center, we have strengths support for our waterfront in Egypt business segment offering deployment of certified service technicians availability of critical spare parts.

The center <unk> support for our water for immediate business segment offering deployment of certified service technicians availability of critical spare parts.

Fei Chen: Beyond the swimming pool vertical, we are making progress in a number of other applications, which leverage our robust silicon carbide membrane technology, including water for energy, industry applications, and the marine industry. The increased order flow and interest is the direct result of the numerous successful pilot programs we have implemented over the past two years, showing the success of our systems in real-world examples. We have long emphasized that this transformation would take time, and we now believe that we are on the verge of broad adoption of our systems across multiple market verticals. Where system sales are the ultimate measure of success, we have spent considerable effort right-sizing the business and enacting operational efficiencies to drive down costs, both from an OPEX perspective, as well as from a manufacturing side.

Speaker #1: We believe more opportunities are on the horizon. Transitioning from China to the US, we have talked about this for a while now, but the water for energy market is rapidly growing within the US.

Mode, and onsite technical support and the system maintenance and repairs.

Speaker #1: We have worked with partners such as RIQTECH INTERNATIONAL and Renewable Resources lately, to build a presence in the US. For this reason, we have moved forward with the opening of a dedicated service center near Fort Worth, Texas.

As we scale our operations in the U S. This new service center allows us to respond faster and support customers with deep local knowledge and reflects our strategy to offer fully integrated filtration solutions from engineering and commissioning to lifetime.

Speaker #1: The new facility is being launched in partnership with Hydro Systems, and opened a few weeks ago. For those not familiar, Hydro is an industry service provider with extensive experience in energy, oil and gas, and industry sectors.

Service.

<unk> service.

And the topic of new system deployments, we are actively engaged with several end customers and hope to have updates to share soon.

Speaker #1: They specialize in equipment servicing, maintenance, and field support. The center will strengthen support for our water for energy business segment, offering deployment of certified service technicians availability of critical spare parts, remote and on-site technical support, and the system maintenance and repairs.

Taking a step back I think it is important to remind everyone of the number of the new systems that we have deployed during the past couple of years since the beginning of last year, we have deployed nine pilots.

Fei Chen: During the quarter, our contribution margin was one of the highest levels we have seen over the past five years, and the gross profit was at 19.6%, also at an improved level. Further, our operating expenses are at their lowest levels in many years. Let me circle back on a few of the key activities during the quarter, starting with the swimming pool vertical. As mentioned, we delivered systems to six customers during the quarter, totaling $1.0 million in revenue. The systems delivered were much larger in size than many of our historical systems, and really highlight the progress we are making within the larger swimming pool systems. The orders delivered during the quarter were fulfilled through our partners, Bandre and Total Pool in the UK, and Oxidine in Spain. These partners have been instrumental to our success, particularly as we have strengthened our collaborations in the past three years.

Oh commercial systems across a wide range of industry applications from multiple oriented guests industry systems to lithium brine production plastic remover from a U S petrochemical company and easy recovery tomato processing the broader marine <unk>.

Oh commercial systems across a wide range of industry applications from multiple oriented against industry systems to lithium brine production plastic remover from a U S petrochemical company and easy recovery tomato processing the broader marine <unk>.

Speaker #1: As we scale our operations in the US, this new service center allows us to respond faster and support customers with deep local knowledge and reflects our strategy to offer fully integrated filtration solutions.

<unk> and the most recent order often advanced membrane based filtration system to treat really wastewater to Nustar Blues Cook steel a major U S based steel producer.

<unk> and the most recent order often advanced membrane based filtration system to treat really wastewater to nustar blue scope steel a major U S based steel producer.

Speaker #1: From engineering and commissioning to lifetime service. On the topic of new system deployments, we are actively engaged with several end customers and hope to have updates to share soon.

We are establishing account assistant.

Yes.

Large system deliveries each quarter.

Land sites, our base business, including swimming pool, swimming pools, plastics, and Etfs theaters, bringing us closer to revenue levers that approach breakeven and profitability. This has been our goal and I'm very pleased with the progress we have.

Speaker #1: Taking a step back, I think it is important to remind everyone of the number of new systems that we have deployed during the past couple of years.

Speaker #1: Since the beginning of last year, we have deployed nine pilots or commercial systems across a wide range of industry applications. From multiple oil and gas industry systems to lithium brine production, plastic removal, from a US petrochemical company MEZ Recovery Metal Processing, the border marine industry, and most recent order of an advanced membrane-based filtration system to treat oily wastewater to North Star Blue Scope Steel, a major US-based steel producer.

Good.

Let me now turn to our two David to renewed.

The Sundance in more details.

We will then make a few closing comments and look to open the call for your questions.

Fei Chen: During the quarter, we continued to expand our pipeline within our key markets, including systems in the UK, Denmark, and Holland. This really shows the depth of what we have accomplished in the past few years building these relationships, but also the internal team's role in helping move projects forward and showcase what is possible with our solutions. Another key development within our swimming pool solutions has been the development of the modular design system, which allows for ease of deployment. Since I took over, we have worked hard to move away from many customized solutions, which often take too long to create and cost too much money. Further, it created too many confusions among customers. This theme of creating a modular design system and driving down costs is not just applicable to our swimming pool vertical, but across other applications as well.

We will then make a few closing comments and look to open the call for your questions.

There is.

Thank you Shay and good day everyone.

Let me take some time diving into the financial results in a bit more detail.

And add some color to what was in the press release.

So let's start with revenue.

Revenue for the quarter came in at $3 8 million.

Speaker #1: We are establishing a consistent cadence for large system deliveries each quarter. Alongside our base business, including swimming pools, plastics, and DPF filters, bring us closer to revenue levels that approach breakeven and profitability.

Up from $2 5 million in the year ago third quarter.

Up from $2 5 million from a year ago third quarter.

Broken down by vertical.

Sales for the third quarter were as follows.

Sales for the third quarter, whereas follows.

Water systems sales and related services of $2 million.

$2 7 million in the same period last year.

Speaker #1: This has been our goal, and I'm very pleased with the progress we have made. Let me now turn the call over to David to renew review the finance in more details.

Cts and ceramic membrane sales or.

Cts and ceramic membrane sales.

$8 million down from $1 1 million in Q3 last year.

And finally plastic revenue came in at one zero million compared $2 7 million in Q3 last year.

Speaker #1: I will then make a few closing comments and look to open the call for your questions.

Speaker #1: David, Thank you, Fei,

The key takeaways for.

Fei Chen: To that point, we are working with our joint venture partners in China to reduce the cost of components and assembly of our marine water treatment systems, making them more competitive in the market. We will continue manufacturing the silicon carbide membranes in Denmark. We are also exploring the potential to leverage our Chinese assembly and sourcing capabilities to drive cost reductions across our systems and applications. Another exciting development within our China joint venture has been the reception of two first orders for marine dual-fuel engine water treatment systems. The marine shipping industry is moving towards cleaner, fewer applications, with most new vessels equipped with dual-fuel engines that require reliable water treatment for exhaust gas recirculation systems. According to published data, approximately 400 new vessels are on order with ISO ADR solutions planned between 2024 and 2027.

For the quarter include.

Speaker #2: and good day, everyone. Let me take some time diving into the financial results in a bit more detail. And add some color to what was in the press release.

Strong year over year improvement in water systems.

Driven by a combination of multiple screen followed us.

And the remaining portion of the industrial order for the steel industry.

Speaker #2: So let's start with revenue. Revenue for the quarter came in at 3.8 million. Up from 2.5 million in the year ago third quarter. Broken down by verticals, sales for the third quarter were as follows.

And the remaining portion of the industrial order for the steel industry.

Growth in plastics.

Which was up 54% due to a strong external interest.

Then, especially food processing and the upgrade of our production facility in Q3 last year.

Speaker #2: Water system sales and related services of 2 million, compared to 0.7 million in the same period last year. DPF and ceramic membrane sales were 0.8 million down from 1.1 million in Q3 last year.

And the stabilization of TPS and ceramic membranes sequentially, but still off a year ago quarter.

Looking ahead to Q4 of 2025, we anticipate revenue to be between $4 6 million and $5 6 million.

Speaker #2: And finally, plastic revenue came in at 1.0 million, compared to 0.7 million in Q3 last year. The key takeaways for the quarter include strong year-over-year improvement in water systems, driven by a combination of multiple swimming ing pool orders, and the remaining portion of the industrial order for the steel industry.

Which would equate to a 38% to 6% to seven.

<unk> increase from Q4 2024.

For the full year 2025, we expect revenue to be between 18 and $19 million, representing a 22% to 30% increase.

For the full year 2025, we expect revenue to be between 18, and $19 million, representing a 22% to 30% increase compared to 2024.

Path to 2024.

Fei Chen: One of the two marine dual-fuel engine orders is scheduled to be delivered here in the fourth quarter, with the other set for delivery in early 2026. We believe more opportunities are on the horizon. Transitioning from China to the US, we have talked about this for a while now, but the water for energy market is rapidly growing within the US. We have worked with partners such as Risobech Direct, and Renewable Resources lately, to build a presence in the US. For this reason, we have moved forward with the opening of a dedicated service center near Fort Worth, Texas. The new facility is being launched in partnership with Hydro Systems, and opened a few weeks ago. For those not familiar, Hydro is an industry service provider with extensive experience in energy, oil and gas, and industry sectors. They specialize in equipment servicing, maintenance, and field support.

I do want to note that we do want to be cautious and provide a slight change to guidance.

Speaker #2: Growth in plastics which was up 54% due to a strong external interest within especially food processing and the upgrade of our production facility in Q3 last year.

Solar is driven by timing of purchase orders and our systems business.

Solely driven by timing of purchase orders and our systems business.

The visibility we have to receive formal purchase orders for <unk> systems. During Q4 of 2024, unlike in shifting to Q1 of 2026.

Speaker #2: And stabilization of DPF and ceramic membranes sequentially but still off the year-ago quarter. Looking ahead, to Q4 of 2025, we anticipate revenue to be between 4.6 million and 5.6 million.

Turning to gross margin as we continue to be below our optimal revenue level. We continue to our fixed production costs that are not being fully absorbed.

Lower than normalized gross margins.

Speaker #2: Which would equate to a 38% to 67% increase from Q4 2024. For the full year 2025, we expect revenue to be between 18 and 19 million.

That said.

For the third quarter gross margins were much improved from the year ago period.

Coming in at 19, 6%.

Compared to a negative margin of eight 5% in the vehicle period.

Speaker #2: Representing the 23 to 30% increase compared to 2024. We do want to note that we do want to be cautious and provide a slight change to guidance.

We have previously reported on a contribution margin basis, which excludes the impact from our fixed overhead.

This margin for the quarter was significantly higher.

The gap between gross margin and contribution margin.

Speaker #2: Solely driven by timing and purchase orders in our systems business. The visibility we have to receive formal purchase orders for two systems doing Q4 of 2024 are likely shifting to Q1 of 2026.

Fei Chen: The center will strengthen support for our water for energy business segment, offering deployment of certified service technicians, availability of critical spare parts, remote and on-site technical support, and system maintenance and repairs. As we scale our operations in the US, this new service center allows us to respond faster and support customers with deep local knowledge, and reflects our strategy to offer fully integrated filtration solutions, from engineering and commissioning to lifetime service. On the topic of new system deployments, we are actively engaged with several end customers and hope to have updates to share soon. Taking a step back, I think it is important to remind everyone of the number of new systems that we have deployed during the past couple of years.

When narrow in the coming quarters, driven by cost improvements and volume growth.

Turning to Opex.

Total operating expenses for the quarter were $2 1 million.

Compared to $2 4 million in Q3 last year.

Speaker #2: Turning to gross margin, as we continue to be below our optimal revenue level, we continue to have fixed production costs that are not being fully absorbed in those lower than normalized gross margins.

And compared to $2 6 million in Q2.

And compared to $2 6 million in Q2 of 2025.

2025.

As we look to the future our breakeven target measured on an adjusted EBITDA basis.

Speaker #2: That said, for the third quarter, gross margins were much improved from the year-ago period. Coming in at 19.6% compared to a negative margin of 8.5% in the year-ago period.

EBITDA adjusted for amortization by reduced assets and costs with stock based compensation.

EBITDA adjusted for answer session by reduced assets and cost of stock based compensation.

The level continues to be recorded revenue of approximately $6 million.

The one caveat I will state is that there's a product mix component to it.

Speaker #2: We had previously reported on a contribution margin basis which excludes the impact from our fixed overhead. This margin for the quarter was significantly higher.

Concluding on the P&L net loss was $1 5 million for the quarter.

Concluding on the P&L net loss was $1 5 million for the quarter compared to a $2 8 million loss for the comparable period of 2025.

<unk> to $2 8 million loss for the comparable period of 2025.

Speaker #2: The gap between gross margin and contribution margin will narrow in the coming quarters, driven by cost improvements and volume growth. Turning to OPEX, total operating expenses for the quarter were 2.1 million, compared to 2.4 million in Q3 last year.

A substantial improvement.

Driven by revenue growth improved gross margin and reduced operating expenses.

Fei Chen: Since the beginning of last year, we have deployed nine pilots, all commercial systems, across a wide range of industry applications, from multiple oil and gas industry systems to lithium brine production, plastic removal from a US petrochemical company, MEG recovery, metal processing, the broader marine industry, and the most recent order of an advanced membrane-based filtration system to treat oily wastewater to Northstar BlueScope Steel, a major US-based steel producer. We are establishing a consistent cadence for large system deliveries each quarter alongside our base business, including swimming pools, plastics, and DPF filters, bringing us closer to revenue levels that approach break-even and profitability. This has been our goal, and I'm very pleased with the progress we have made. Let me now turn the call over to David to review the finance in more detail.

And finally from a cash perspective, we ended the quarter with $7 $3 million in cash.

Everything else was very much in line with our normal operating procedures from a balance sheet perspective.

Speaker #2: And compared to 2.6 million in Q2 of 2025. As we look to the future, our breakeven target measured on an adjusted EBITDA basis measured at EBITDA adjusted for amortization by the views assets and cost to stock-based compensation, the level continues to be quarterly revenue of approximately 6 million.

And with that let me turn it back to say.

Thank you David.

Can you hear me.

Please proceed thank you.

Yes. Please proceed thank you.

Okay. Thank you David.

To close things out before I turn to our to the questions.

Our preparatory silicon carbon filtration technology stand Samsung Foundation element.

Our preparatory silicon carbon filtration technology stands as a.

Speaker #2: The one caveat I will state is that there's a product-mix component to it. Concluding on the P&L, net loss was 1.5 million for the quarter, compared to a 2.8 million loss for the comparable period of 2025.

Foundation element in tackling the plan is most urgent ecological issues.

In tackling the plan is most urgent ecological issues.

This cutting edge can make memories deliver exceptional results in the past water treatment scenarios spanning from produced water and oil and gas operations to pool filtration systems.

Speaker #2: A substantial improvement driven by revenue growth improved gross margin and reduced operating expenses. And finally, from a cash perspective, we ended the quarter with 7.3 million dollars in cash.

By helping industries compliant with rigorous environmental standards, we are cutting down on water and energy use we at resolving biotech purification problem and advancing to sustainability.

Speaker #2: Everything else was very much in line with our normal operating procedures, from a balance sheet perspective. And with that, let me turn it back to Fei.

Fei Chen: I will then make a few closing comments and look to open the call for your questions. David.

David Kowalczyk: Thank you, Fei, and good day, everyone. Let me take some time diving into the financial results in a bit more detail and add some color to what was in the press release. Let's start with revenue. Revenue for the quarter came in at $3.8 million, up from $2.5 million in the year-ago third quarter. Broken down by verticals, sales for the third quarter were as follows: water system sales and related services of $2 million, compared to $0.7 million in the same period last year. DPF and ceramic membrane sales were $0.8 million, down from $1.1 million in Q3 last year. Finally, plastic revenue came in at $1.0 million, compared to $0.7 million in Q3 last year.

Recent as humans like lending record orders for swimming pool systems major contracts for trading produced water marine applications and industry applications, such as that for the steel industry highlights the rising worldwide appetite for our in.

Speaker #3: Thank you, David. Can you hear

Speaker #3: me? Thank you. Okay. Thank

Speaker #4: Yes, please proceed, Yeah.

Speaker #4: Fei.

Speaker #3: you, David. To close things out, before I turn the hour to the questions, our preparatory silicon carbon filtration technology stands as a foundationary element in tackling the planet's most urgent ecological issues.

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The potential moving forward is immense.

By accident ex cat, leading water shortage and tough global regulations.

Speaker #3: This cutting-edge ceramic membranes deliver exceptional results in the toughest water treatment scenarios, spanning from produced water in oil and gas operations to pool filtration systems.

Our key client alliance, we are broadening our impact with application R&D it ready to deploy solutions such partnerships in <unk>.

Our key client alliance, we are broadening our impact with application R&D it ready to deploy solutions such partnerships enhance our capability to offer complete systems that guaranteed regulatory adherence streamline operations.

Speaker #3: By helping industries comply with rigorous environmental standards, we are cutting down on water and energy use we are resolving vital purification problems and advancing true sustainability.

Hence our capability to offer complete systems that guaranteed regulatory adherence streamline operations safeguard assets and the lower cost for our customers.

Safeguard assets and a lower cost for customers.

In the years to come we are dedicated to advancing and expanding our filtration solutions to slides six days west possibilities.

David Kowalczyk: The key takeaways for the quarter include strong year-over-year improvement in water systems, driven by a combination of multiple swimming pool orders and the remaining portion of the industrial order for the steel industry. Growth in plastics, which was up 54% due to a strong external interest within especially food processing, and the upgrade of our production facility in Q3 last year, and stabilization of DPF and ceramic membranes sequentially, but still off the year-ago quarter. Looking ahead to Q4 2025, we anticipate revenue to be between $4.6 million and 5.6 million, which would equate to a 38% to 67% increase from Q4 2024. For the full year 2025, we expect revenue to be between $18 million and 19 million, representing a 23% to 30% increase compared to 2024.

In the years to come we are dedicated to advancing and expanding our filtration solutions to slides six days west possibilities.

Speaker #3: Recent achievements like landing record orders for swimming pool systems, major contracts for trading produced water, marine applications, and industry applications such as that for the steel industry highlight the rising worldwide appetite for our innovative solutions.

Again, thanks, everyone for your support our fleet take with that robot, we would be happy to take any questions.

Again, thank everyone for your support.

With that robot, we would be happy to take any questions.

Alright fantastic. Thank you very much David for your prepared remarks again to everyone listening on the webcast player there.

Speaker #3: The potential moving forward is immense. Fueled by excalating water shortages and tough global regulations, we are key alliances we are broadening our impact with applications oriented ready to deploy solutions.

You have a question you can type it into the ask a question feature.

If you have a question you can type it into the ask a question feature.

On the player there.

We have a few questions submitted already.

We do have a few questions submitted already will begin here.

I'll begin here.

Besides swimming pool systems, which segments are seeing the most sustained order momentum.

Speaker #3: Such partnerships enhance our capability to offer complete systems that guarantee regularly adherence, streamlined operations, safeguard assets, and the lower cost for customers. In the years to come, we are dedicated to advancing and expanding our filtration solutions to sites seized as vast possibilities.

As mentioned in the speed and in my speech, we have very much moment in the waterfront media segment as well.

As mentioned in the speech and in my speech, we have very much moment in the waterfront media segment as well.

And we also start getting orders from marine industry, but I would say compare these to the marine industry is just that the water for energy is getting momentum.

We also start getting orders from marine industry, but I would say compare this to the marine industry is just that the watch of NTT is gathering momentum.

Okay very good.

Speaker #3: Again, thank everyone for your support of LIQTECH. With that, Robert, we would be happy to take any

Speaker #3: Again, thank everyone for your support of LIQTECH. With that, Robert, we would be happy to take any questions. All right,

Next question here is.

Is the uptick in gross margin sustainable.

Where do you see gross margins trending over the next few quarters.

David Kowalczyk: We do want to note that we do want to be cautious and provide a slight change to guidance, solely driven by timing and purchase orders in our systems business. The visibility we have to receive formal purchase orders for two systems during Q4 2024 is likely shifting to Q1 2026. Turning to gross margin, as we continue to be below our optimal revenue level, we continue to have fixed production costs that are not being fully absorbed, and those lower than normalized gross margins. That said, for the third quarter, gross margins were much improved from the year-ago period, coming in at 19.6% compared to a negative margin of 8.5% in the year-ago period. We had previously reported on a contribution margin basis, which excludes the impact from our fixed overhead. This margin for the quarter was significantly higher.

Speaker #4: fantastic. Thank you very much, Fei and David, for your prepared remarks. Again, to everyone listening on the webcast player there, if you have a question, you can type it into the Ask a Question feature on the player there.

David.

Yes sure. Thanks.

Thanks for the question.

I'd say, yes. This is very much sustainable.

With expected higher revenues, we will see also further increases in the gross margin.

With expected higher revenues, we will see also further increases in the <unk>.

Speaker #4: We do have a few questions submitted already. We'll begin here. Besides swimming pool systems, which segments are seeing the most sustained order momentum?

And the gross margin.

And there's a strong link between the size of revenue and raise the gross margin so talking about a defined level of things is hot but.

There is a strong link between the size of the revenue and the gross margin so talking about the.

Find level of things is hot but.

We will see increases.

The increase in revenue.

Increase in revenue.

Speaker #3: As mentioned in the speech in my speech, we have very much moment in the water energy segment as well. And we also start getting orders from marine industry, but I would say compared to the marine industry, it just started.

Okay very good next question here is how is your capacity utilization trending are there any metrics you can provide there.

Yes.

Speaker #3: The water energy is getting momentum.

Yes.

If you have you have different matrices for capacity and also different sites.

Speaker #4: Okay, very good. Next question here. Is the uptick in gross margin sustainable? Where do you see gross margins trending over the next few quarters?

But I think in general it's fair to say that we have spare capacity, which is also why we provide the insight on the difference between gross margin and contribution margin.

We have plenty of capacity to support growth with very very limited and distance.

David Kowalczyk: The gap between gross margin and contribution margin went narrow in the coming quarters, driven by cost improvements and volume growth. Turning to OPEX, total operating expenses for the quarter were $2.1 million compared to $2.4 million in Q3 last year, and compared to $2.6 million in Q2 of 2025. As we look to the future, our break-even target measured on an adjusted EBITDA basis, measured at EBITDA adjusted for amortization by the views assets and cost-to-stock-based compensation, the level continues to be a quarterly revenue of approximately $6 million. The one caveat I will state is that there's a product mix component to it. Concluding on the P&L, net loss was $1.5 million for the quarter compared to a $2.8 million loss for the comparable period of 2025, a substantial improvement driven by revenue growth, improved gross margin, and reduced operating expenses.

Speaker #2: Yeah, sure, thanks.

Speaker #2: Thanks David? for the question. I would say yes, this is very much sustainable. And with expected higher revenues, we will see also further increases in the gross margin.

Alright very good.

Again final reminder, here if you have a question or would like to submit a question through.

The webcast player. Please go ahead and submit that now.

Speaker #2: There's a strong link between the size of revenue and really the gross margin. So talking about a defined level, I think it's hard. But we will see increases with the increase in

Barring any further questions coming in the last question here is what would be a reasonable target for.

For 2026 revenue growth.

Speaker #2: revenue.

Yes.

Speaker #4: Okay, very good.

That's very good question, we actually in the process, making our budget for 2026, so we cannot say any concrete number yet, but we definitely believe and see a very strong growth trend in 2026.

Speaker #4: Next question here is, how is your capacity utilization trending? Are there any metrics you can provide there?

Speaker #2: Yeah, obviously, we have different matrices for capacity and also different sites. But I think in general, it's fair to say that we have spare capacity, which is also why we provide the insight on the difference between gross margin and contribution margin.

Okay very good I am not showing any further questions at this time so with that.

Okay very good I.

I am not showing any further questions at this time so with that.

I will turn it back over to you for any closing remarks.

Speaker #2: We have plenty of capacity to support growth with very, very limited investments.

Yeah.

Thank you everyone I would like to thank you all very much for being with US today, we look forward to communicating with you Sean again.

Thank you Irwin and woodlands. Thank you all very much for being with US today, we look forward to communicating with you. So again thank you.

Speaker #4: All right, very good. Again, final reminder here, if you have a question or would like to submit a question, through the webcast player, please go ahead and submit that now.

David Kowalczyk: Finally, from a cash perspective, we ended the quarter with $7.3 million in cash. Everything else was very much in line with our normal operating procedures from a balance sheet perspective. With that, let me turn it back to Fei.

Thank you.

Thank you the conference has now concluded.

Speaker #4: Barring any further questions coming in, the last question here is, what would be a reasonable target for 2026 revenue

<unk> has now concluded.

Thank you for attending today's presentation you may now disconnect.

You for attending today's presentation you may now disconnect.

Speaker #4: growth? That's a very good

Thank you.

Speaker #3: question. We actually, in the process, making our budget for 2026. So we cannot say any concrete number yet, but we definitely believe and see a very strong growth trend in 2026.

Fei Chen: Thank you, David. Can you hear me?

David Kowalczyk: Yes, please proceed.

Fei Chen: Thank you. Okay. Thank you, David. To close things out before I turn the hour to the questions, our preparatory silicon carbide filtration technology stands as a foundational element in tackling the planet's most urgent ecological issues. These cutting-edge ceramic membranes deliver exceptional results in the toughest water treatment scenarios, spanning from produced water in oil and gas operations to pool filtration systems. By helping industries comply with rigorous environmental standards while cutting down on water and energy use, we are resolving vital purification problems and advancing true sustainability. Recent achievements like landing record orders for swimming pool systems, major contracts for treating produced water, marine applications, and industry applications such as that for the steel industry highlight the rising worldwide appetite for our innovative solutions. The potential moving forward is immense, fueled by escalating water shortage and tough global regulations. We are key client alliance.

Speaker #4: Okay, very good. I am not showing any further questions at this time. So with that, I will turn it back over to you, Fei, for any closing

Speaker #4: remarks. Thank

Speaker #3: you, everyone. I would like to thank you all very much for being with us today. We look forward to communicating with you soon again.

Speaker #3: Thank

Speaker #3: you. Thank

Speaker #2: you. The conference has now concluded. Thank you for attending today's presentation. You may now

Speaker #2: disconnect. Thank

Fei Chen: We are broadening our impact with application-oriented, ready-to-deploy solutions. Such partnerships enhance our capability to offer complete systems that guarantee regular adherence, streamline operations, safeguard assets, and lower costs for customers. In the years to come, we are dedicated to advancing and expanding our filtration solutions to seize these vast possibilities. Again, thank everyone for your support of LiqTech. With that, Robert, we would be happy to take any questions.

David Kowalczyk: All right. Fantastic. Thank you very much, Fei and David, for your prepared remarks. Again, to everyone listening on the webcast player there, if you have a question, you can type it into the Ask a Question feature on the player there. We do have a few questions submitted already. We'll begin here. Besides swimming pool systems, which segments are seeing the most sustained order momentum?

Fei Chen: As mentioned in my speech, we have very much momentum in the water for energy segment as well. We also start getting orders from marine industry. I would say compared to the marine industry just start, the water for energy is getting momentum.

David Kowalczyk: Okay. Very good. Next question here. Is the uptick in gross margin sustainable? Where do you see gross margins trending over the next few quarters?

Fei Chen: David?

David Kowalczyk: Yes, sure. Thanks for the question. I would say yes, this is very much sustainable. With expected higher revenues, we will see also further increases in the gross margin. There's a strong link between the size of revenue and really the gross margin. Talking about a defined level, I think it's hard, but we will see increases with increase in revenue. Okay. Very good. Next question here is, how is your capacity utilization trending? Are there any metrics you can provide there?

Fei Chen: Yeah. Obviously, we have different matrices for capacity and also different sites. I think in general, it's fair to say that we have spare capacity, which is also why we provide the insight on the difference between gross margin and contribution margin. We have plenty of capacity to support growth with very, very limited investments.

David Kowalczyk: All right. Very good. Again, final reminder here, if you have a question or would like to submit a question through the webcast player, please go ahead and submit that now. Barring any further questions coming in, the last question here is, what would be a reasonable target for 2026 revenue growth?

Fei Chen: That's a very good question. We're actually in the process of making our budget for 2026. We cannot say any concrete number yet, but we definitely believe and see a very strong growth trend in 2026.

David Kowalczyk: Okay. Very good. I am not showing any further questions at this time. With that, I will turn it back over to you, Fei, for any closing remarks.

Fei Chen: Thank you, everyone. I would like to thank you all very much for being with us today. We look forward to communicating with you soon again. Thank you.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

David Kowalczyk: Thank you.

Q3 2025 LiqTech International Inc Earnings Call

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