Good morning, and welcome to the LiqTech International Reports First Quarter Fiscal Year 2026 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Robert Blum with Lytham Partners. Please go ahead, sir.

All right. Thank you very much, operator, and good morning, everyone. Thank you all for joining us on today's conference call as the operator indicated to discuss LiqTech International's First Quarter 2026 financial results. Joining us on today's call from the company are Fei Chen, Chief Executive Officer; and David Kowalczyk, the company's Chief Financial and Chief Operating Officer. Before I turn the call over to management, let me remind listeners that there will be a Q&A session at the end of the call. 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 inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed during the 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 their 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 this date and the date of the release and 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 this release and conference call. Now I'd like to turn the call over to Fei Chen, CEO of LiqTech International. Fei, please proceed.

Thank you, Robert, and good day to everyone on the call. The first quarter was in line with our expectations and represented a continued step forward in the transition we have been describing over the past several quarters. Our focus remains on building a more balanced, repeatable and ultimately, more profitable LiqTech by placing greater emphasis on end markets where our technology delivers clear value and where customer adoption can scale in a more predictable way. The year-over-year revenue comparison was impacted by a significant water for energy delivery in the first quarter of 2025 that did not repeat in the first quarter of 2026, as well as timing of order conversion. However, the underlying activities across the business were encouraging. Commercial Pool, Marine, DPF and Membrane all showed meaningful activity in the quarter, and the new pool and marine orders are setting the stage for improved results in the second quarter and throughout 2026. Compared to quarter 4 in 2025, revenue increased by 32%, and our gross margin expanded by roughly 1,290 basis points. The nature of our business and the sales cycle time means that all the improvements we made in 2025, we assume gradual improvements quarter-over-quarter in 2026. We are, therefore, reiterating our full year 2026 outlook for revenue of $23 million to $27 million. David will go through the financial details in a few minutes. So I will focus on operating progress, customer activity and strategic direction. The main message is that our strategy is advancing. We are building around a portfolio of opportunities where our silicon carbide membrane technology can be deployed in repeatable platforms, supported by stronger service capabilities and scaled across geographies. Our commercial pool business continues to be one of the clearest examples of this strategy. During the first quarter, pool deliveries totaled revenue of $0.8 million compared to $0.3 million in the first quarter 2025. More importantly, the order activity we have announced since the beginning of the year reinforces our confidence that QlariFlow is getting traction as a differentiated solution for modern commercial aquatic facilities. In fact, based on our order book, we expect a record quarter for commercial swimming pool in quarter 2, 2026. A key milestone was our first U.S. pool system order consisting of 3 systems to be installed at the Weston County School District #1 Aquatic Center in Newcastle, Wyoming. Entering the U.S. market has been an important objective for us because it is a large market with aging infrastructure, high water quality expectations and a growing need for more automated and space-efficient filtration solutions. We view this first U.S. order as an important proof point that can help open additional opportunities over time. We also received consecutive record-setting pool system orders internationally. One was in partnership with Lotec for new large-scale commercial pool projects in Den Helder, Netherlands. The next was the follow-on record order in partnership with Waterco Limited for 10 systems for Plumpton Aquatic and Leisure Center in Fraser Rise, Victoria, Australia. These wins demonstrate that our solution is being adopted across different geographies, project types and partner channels. QlariFlow is well suited to this market because it addresses several customer needs at the same time. Our systems are compact, modular and designed for stable water quality, automation and efficient operation. For retrofit projects, the smaller footprint can be a meaningful advantage where equipment room space is limited. For new build facilities, the modular design gives customers a flexible solution that can be planned into the project from the beginning. From a business model perspective, pools are attractive because the systems are becoming more standardized and repeatable. This is different from large one-off projects, which often require more customization and can be more difficult to forecast. As pool adoption grows, we believe this vertical can contribute to better revenue visibility, improved execution, and a stronger margin profile over time. Our marine business also continued to build momentum in the first quarter. We delivered two systems under the quarter for marine dual-fuel engine water treatment for LNG vessels, and we expect two more systems to be delivered during the second quarter. Marine revenue totaled $0.8 million in the first quarter compared to $0.2 million in the first quarter 2025. The growth in this vertical is being supported by our joint venture in China, which we believe can help drive more sustainable order flow throughout 2026. As we discussed on our last call, we have invested in local capabilities to support the marine market, including development and localization activities and regional service infrastructure. This is important because the marine market requires reliable execution, responsive service and a cost-competitive localized supply chain. We believe silicon carbide membrane technology has a strong fit in marine applications, particularly for vessels equipped with dual-fuel engines. These vessels require advanced water treatment solutions that can support onboard wastewater purification and reuse. We are meeting demanding operating requirements. Marine is also attractive because it has the potential to become more repeatable as adoption grows. Each vessel project has its own delivery schedule, but the underlying system platform can be standardized and supported through our regional presence. Turning to water for energy and industry applications, our view remains balanced and disciplined. Oil and gas continue to be an opportunity for LiqTech and our pipeline remains active. At the same time, as we have said before, the timing of larger projects can be difficult to predict. During the quarter, we commenced a new pilot program in West Texas for produced water treatment with an energy services and solutions company. This type of field activity is important because it gives customers the opportunity to validate the performance of our technology in demanding operating conditions prior to their investment decision for large-sized commercial projects. And it allows us to further demonstrate the value proposition of silicon carbide membranes in produced water treatment. We continue to believe our technology is well positioned for difficult water streams, where durability, chemical resistance and stable filtration performance are critical. Produced water and industry wastewater are both areas where customers are looking for solutions that can handle high variability, reduce operational disruptions and support environmental and water reuse objectives. At the same time, we are being careful in how we allocate resources. We are not basing our operating plan on the timing of any single large oil and gas project. We will continue to pursue attractive opportunities, but we will do so in a way that supports the broader strategy of building a more balanced business. Beyond systems, our DPF and Membrane business and our Plastic business remains an important contributor to LiqTech. In the first quarter, DPF and membrane revenue increased to $1.3 million from $1.0 million in the prior year quarter. This was driven by strong order flow from both existing and new customers following our renewed focus within this market vertical. Plastic revenue increased approximately 5% in the quarter and totaled about $1 million, driven by strong external interest, especially in food processing. Looking ahead, our priorities are clear. We are reiterating our 2026 outlook and remain focused on executing against the revenue growth and adjusted EBITDA improvement we have communicated. The path to achieving this outlook is not dependent on a single large oil and gas order. It is based on continued progress across commercial pool, marine, industry application and the components market with potential upside from water for energy as opportunities convert. The most important strategic priority is to improve the quality of our growth: markets where solutions can be standardized, partners can extend our reach, service infrastructure supports customer confidence and the volumes can support better margins. We believe the first quarter provides encouraging evidence that this transition is working. Pool orders are expanding geographically, Marine deliveries are increasing supported by the China JV, DPF and Membrane benefited from renewed commercial focus, and the water for energy remains active, but we are approaching it with appropriate discipline. Let me now turn the call over to David to review the financials in more detail. I will then make a few closing comments and look to open the call for your questions. David?

Thank you, Fei, and good day, everyone. Let me take some time to walk through our first quarter financial results in a bit more detail and add some color to what was included in the press release. As Fei noted, the quarter was generally in line with our expectations, the expectations we provided in our year-end call. My remarks today will focus primarily on the year-over-year changes for the first quarter and on how those results fit into the full year outlook that we are reiterating today. Let's start with revenue. Revenue for the first quarter of 2026 was $4.1 million compared with $4.6 million in the first quarter of 2025; this represents a decrease of 10.4%. Broken down by verticals, sales for the quarter were as follows: systems and aftermarket sales were $1.8 million compared to $2.7 million in the prior year quarter. DPF and membrane sales were $1.3 million compared to $1.0 million in the prior year quarter. And finally, plastic components revenue was $1 million compared to approximately $1 million in the first quarter of 2025. The year-over-year revenue decline was solely attributable to lower system sales, specifically the fact that we had a significant order for energy delivery in the first quarter of 2025 that did not repeat in the first quarter of 2026. That comparison is important because the underlying activity in several of our priority areas was stronger than the headline revenue number might suggest. Within systems, both Commercial Pool and Marine showed meaningful improvements. Commercial Pool revenue was approximately $0.8 million for the quarter compared with approximately $0.3 million in the prior year quarter. Marine revenue was also approximately $0.8 million compared with approximately $0.2 million in the first quarter of 2025. Those increases were offset by the non-repeat of the larger water for energy deliveries last year. Outside of systems, DPF and membrane sales increased meaningfully, driven by strong order flow from both existing and new customers, following our renewed focus within that market vertical. Components also increased during the quarter, supported by continued external interest, especially within food processing. These are important contributors because they provide a more stable base for recurring activities, while we continue to scale the high-growth system opportunities. Turning to gross margins. Gross profit for the quarter was $0.4 million, representing a gross margin of 9.5%. That compares to a gross profit of $0.1 million or a gross margin of 2.7% in the first quarter of 2025. The improvement in gross margin is an important point. Even though total revenue was lower year-over-year, our gross profit dollars actually increased, and our gross margin expanded by roughly 280 basis points. The improvement was primarily driven by mix in system sales, better utilization of our manufacturing capacity, procurement efforts on prices and lower depreciation expenses. As we have discussed before, we are still operating below the revenue level where our production platform can fully absorb fixed costs. As a result, our gross margin is not yet where we believe it can be over time. That said, the first quarter shows the benefit of improving mix, continued operating discipline and greater focus on repeatable applications where our cost structure and system design can become more efficient as volume increases. Gross margin improvement remains a key priority; scaling standardized systems in Commercial Pool and Marine, along with continued strength in our component business, should help support a better margin profile as we move through 2026. Turning to operating expenses. The total operating expenses for the first quarter were $2.7 million compared to $2.3 million in the first quarter of 2025. Approximately 60% of this increase was related to foreign exchange movements. Of course, the majority of our cost base is denominated in Danish kroner or euros; the year-over-year currency movement affected how expenses translate into U.S. dollars. Breaking operating expenses down by category, selling expenses for the first quarter were $1.0 million compared to $0.7 million in the prior year quarter. Excluding foreign exchange effects, the increase was primarily related to the full year effect of hires within our Chinese joint venture as well as continued investment in the sales organization across the United States and Europe. General and administrative expenses were $1.4 million compared to $1.4 million in the first quarter of 2025. Adjusting for foreign exchange movements, G&A expenses remained stable and below general inflation. We continue to manage overhead carefully and the filling of open positions was balanced by savings in other areas. Research and development expenses were $0.3 million compared to $0.2 million in the prior year quarter. The increase was primarily tied to membrane development costs and development work related to Marine systems. Overall, our approach to operating expenses remains disciplined. We are investing where we see clear commercial returns, particularly in sales coverage, marine development and capabilities that support the scaling of repeatable system platforms. At the same time, we are carefully managing overhead and focusing resources on the areas of the business that are most important to our path towards profitability. Other expenses for the quarter were $0.4 million compared to other expenses of $0.2 million in the comparable period for 2025. The change was primarily attributable to losses on foreign exchange transactions due to U.S. dollar movement compared to the euro, lower interest income, and accrued interest on the senior promissory note, partly balanced by lower amortization of debt discount and a decrease in net interest expenses. Net loss for the first quarter of 2026 was $2.7 million compared to a net loss of $2.4 million in the first quarter of 2025. The year-over-year change was primarily driven by the higher operating expenses and other expense levels that I just discussed, partially offset by the improvement in gross profit. For the first quarter, adjusted EBITDA was a negative $1.5 million compared to a negative $1.4 million in the first quarter of 2025. While the year-over-year comparison was relatively stable, we continue to believe the most important drivers of adjusted EBITDA improvements are revenue scale, a stronger system mix and increased utilization, and disciplined operating expense control. We are making investments in targeted areas, but our objective remains to convert revenue growth into meaningful operating leverage as the year progresses. Turning to our outlook, we are reiterating our expectations for the full year of 2026 revenue to be in the range of $23 million to $27 million. This would represent a growth of approximately 39% to 64% compared to full year 2025. As Fei discussed, the growth outlook is expected to be driven primarily by Commercial Pool, Marine and continued activity across Water for Energy and industrial applications, supported by stable contributions from DPF and Membranes and Plastic components. We expect improved pool results in the second quarter and through 2026, supported by recent order activity, including the first U.S. pool system order and additional larger international pool projects. In marine, we delivered two systems during the first quarter and expect two more systems to be delivered during the second quarter with further sustainable order flow expected through the year, supported by our Chinese joint venture. The quarterly cadence of revenue will continue to be influenced by system and delivery timing. As a result, we do not view the first quarter as a full year indicator. We remain focused on executing against backlog, converting the order pipeline and maintaining cost discipline as the business scales. And finally, from a cash perspective, we ended the first quarter with cash on hand, including restricted cash, of $2.7 million as of March 31, 2026. Our focus remains on disciplined cash management and careful allocation of resources. We are aligning spending with the verticals that we believe can support repeatable growth, improved margin performance and better revenue visibility over time. As we move through 2026, we will continue to balance investments in growth with the need to preserve flexibility and drive the business towards positive adjusted EBITDA. And with that, let me now turn the call back to Fei.

Thank you, David. Before we open the call for questions, I want to reiterate that our first quarter results were in line with our expectations and reflect continued progress against our strategic plan. We are building LiqTech around end markets that can support more predictable, repeatable growth, particularly in Commercial Pool, Marine, DPF and Membrane and Plastic components. We believe the results in this year will continue to highlight this transition. At the same time, we remain encouraged by the long-term opportunity in Water for Energy, but we are being disciplined in how we plan the business and allocate resources. Our focus is on markets where our silicon carbide technology delivers clear performance advantages and where we can scale profitably. With that, Robert, we would be happy to take any questions.

Thank you very much, Fei, and David, for your prepared remarks there. We do have a few questions already in the queue here. So Fei and David, I'll begin. First question here is, what does a "steady-state" margin structure look like for the new LiqTech? How should we model gross margins?

Yes, that's a good question. Essentially, what we have said before and what we continue to see is that on a project basis we are realizing margins between 30% and 50%, so essentially averaging about 40%. With volume increases, we should be closing in on a steady-state margin of 40%. Of course, on top of that, with volume increase you will see additional scaling effects, leaving opportunity open for lowering the production cost further for systems and membranes.

Okay. Very good. There are a few questions here regarding guidance for the year, so I'll try to combine them together. You are guiding revenue of $19 million to $23 million for the rest of the year here, which implies $6.3 million to $7.6 million per quarter. What are the major drivers of this steep revenue growth? And how much does water for energy or industry contribute to this revenue?

Robert, that's a very good question and your number is correct. In the first quarter, we did not have very much contribution from water for energy and water for industry. But we do have a pipeline with some very interesting projects with high probabilities. So we expect, in the year going forward, we will see some projects go through from these two areas, water for energy and water for industry. But very importantly, we also see significant growth in our commercial pools, marine and also DPF and membrane for the rest of the year. So this all together will contribute to the increase quarter-by-quarter.

Okay. Very good. And as a sort of extension of that, do you have any information you can provide relating to how revenue will be distributed between Q2, Q3 and Q4?

Yes. As we said in the presentation of the results, we expect the changes implemented in 2025 to show gradual improvements through 2026. So we definitely expect to see a gradual ramp-up, with Q2 increasing compared to Q1 of this year already.

I would like to add, as I mentioned earlier, if we look at our order book we already can see, for example, for marine and especially commercial pool systems, we already have a very strong order book. So we know that quarter 2 for the commercial pool will be a record quarter on revenue because there is a time difference between the commercial order and revenue conversion. That always makes it complicated when the revenues come in. But we have a very strong order book, so we can see what's happening next quarter.

All right. Very good. Next question here is regarding commercial pools. The order that you highlighted in the Netherlands is for a new pool. This person's understanding is that you focused on retrofits; is new sales a new opportunity for the company?

That's a very good question. Two years ago, our pool system was very much focused on retrofit. It very much depended on the distributors because at that time our distributor in the U.K. was Total Pool; their focus was and still is retrofit swimming pools. Now we have started building up new distributors, both in the U.K. with Binary and also Lotec. They are the ones very active both on retrofit and new projects. So now we see new projects also coming. I would like to emphasize we are actually working both on retrofit and new build pools because our system has strong advantages for both segments.

All right. Very good. I'm showing no further questions in the queue here. So with that, Fei, I will turn it back over to you for closing remarks.

Thank you, Robert. Thank you all very much for being with us today. We look forward to communicating with you soon again.