Pacific Current Group (PAC) H2 2025 Earnings Call August 25, 2025 08:00 PM ET Company ParticipantsMichael Clarke - Acting CEO & Executive DirectorAshley Killick - CFONick McGarrigle - Co-Head - ResearchMichael ClarkeThank you. Good morning, and welcome to the Pacific Current Group investor presentation call for the 2025 financial year. Again, by way of introduction, my name is Michael Clarke, and I'm an Executive Director and the Acting Chief Executive of Pacific Current Group. I joined the Board of Pacific ...

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $4,600,000, a 36% sequential increase from $3,400,000 in Q4 2024 and up from $4,200,000 in Q1 2024 [5][22] - Gross margin for Q1 2025 was 2.7%, down from 6.4% in the same period last year, but improved from negative margins in Q4 2024 [24][28] - Net loss for the quarter was $2,400,000, consistent with the loss in Q1 2024 [28] Business Line Data and Key Metrics Changes - Water Systems sales were $2,700,000, up from $1,500,000 in Q1 2024 and $1,400,000 in Q4 2024, driven by a record commercial oil and gas order [22][23] - DPF and ceramic membrane sales were $1,000,000, down from $1,800,000 in Q1 2024 and slightly down from $1,100,000 in Q4 2024 [23] - Plastics revenue was $1,000,000, up from $900,000 in both Q1 2024 and Q4 2024 [23] Market Data and Key Metrics Changes - The company is seeing growth in various markets, including swimming pools, DPFs, and plastics, with expectations for continued revenue growth in Q2 2025 [7][20] - The joint venture in China has gained traction with new orders and a framework agreement for after-sales support, indicating a positive outlook for the marine water treatment market [15][16] Company Strategy and Development Direction - The company aims to improve bottom-line profitability through better manufacturing utilization and cost-saving initiatives, targeting a revenue breakeven of $5,500,000 to $6,000,000 [28][30] - The focus remains on expanding in key markets such as oil and gas, swimming pools, and plastics, with a diversified revenue stream expected in Q2 2025 [20][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the order pipeline, indicating continuous improvement across various segments [36] - The company is committed to sustainable cash flow generation and long-term value creation, with expectations for further growth in Q2 2025 [33][34] Other Important Information - The company has implemented a comprehensive cost reduction strategy aimed at lowering the breakeven target, which is a significant improvement from previous targets [28] - The joint venture partner contributed $1,200,000 in cash, which is recognized on the consolidated balance sheet [28] Q&A Session Summary Question: Can you talk about your order pipeline? - Management indicated that the order pipeline is continuously improving, with broad-based growth across marine, pool, and water energy segments [36] Question: How do you see sales trending sequentially in Q3 and Q4? - Management expects growth across all segments, with one or two large projects also anticipated [37] Question: Is there competition in silicon carbide technology? - Management acknowledged competition from various regions, including France, Germany, and China, but emphasized the superior performance of their products [40][42] Question: Will all cost savings initiatives be in full effect in Q2? - Management confirmed that cost savings initiatives will be fully implemented, with operating expenses expected to be slightly lower than Q1 [44] Question: How much more performance data is needed for the lithium brine pilot? - Management stated that the pilot is gathering data for the next phase of the commercial project, with positive expectations for both lithium brine and oil and gas pilots [46][47] Question: Is the aftermarket agreement in China servicing only your systems? - Management clarified that the focus is on servicing their own systems, with potential for future expansion to competitor systems [49]