Earnings call transcript: Cambi ASA Q1 2025 misses revenue forecast, stock drops

Cambi ASA reported its Q1 2025 earnings, revealing a revenue shortfall against forecasts and a substantial drop in EBITDA. The company’s stock fell 8.4%, reflecting investor concerns over the performance metrics. The revenue reached NOK 225 million, a 4% increase year-over-year, yet it was below the projected 257.32 million USD. The EBITDA saw a 62% decrease, raising alarms about profitability. According to InvestingPro data, the company maintains impressive gross profit margins of 55.36% and offers a significant dividend yield of 7.05%, suggesting underlying financial strength despite current challenges.

Key Takeaways

• Cambi ASA missed its revenue forecast for Q1 2025.
• The company’s stock dropped by 8.4% following the earnings announcement.
• Secured new contracts in India and Spain, expanding its market presence.
• EBITDA decreased by 62% YoY, indicating profitability challenges.
• Strong order backlog of nearly NOK 1.2 billion suggests future revenue streams.

Company Performance

Cambi ASA’s Q1 2025 performance showed a mixed picture. While revenue increased by 4% year-over-year to NOK 225 million, the company faced a significant 62% drop in EBITDA. This decline in profitability is a concern amidst rising operating expenses, which grew from NOK 78 million to NOK 92 million. The company continues to expand its global footprint, securing new contracts in India and Spain, and maintaining a strong order backlog.

Financial Highlights

• Revenue: NOK 225 million, up 4% YoY
• EBITDA: NOK 14 million, down 62% YoY
• Gross Margin: 47%, weaker than previous quarters
• Operating Expenses: NOK 92 million, up from NOK 78 million last year
• Order Backlog: Nearly NOK 1.2 billion

Earnings vs. Forecast

Cambi ASA’s revenue was significantly below the forecast of 257.32 million USD, translating to approximately 25.7 million USD based on the NOK revenue reported. This miss contributes to the negative market reaction, as investors expected stronger performance.

Market Reaction

Following the earnings release, Cambi ASA’s stock fell by 8.4%, dropping 1.55 USD to a new price of 16.90 USD. This decline reflects investor disappointment with the earnings results, particularly the revenue miss and the steep drop in EBITDA. According to InvestingPro Fair Value analysis, the stock appears undervalued at current levels, presenting a potential opportunity for value investors. The company’s strong financial health score and analysts’ positive sales growth forecasts for the current year suggest resilience despite near-term challenges. Visit our Most Undervalued Stocks list for more investment opportunities.

Outlook & Guidance

The company expects to convert more than 50% of its Q1 backlog into revenue in 2025, although a potential revenue dip is anticipated in 2026 due to limited new contract intake. Cambi ASA continues to invest in sales, marketing, and innovation while monitoring the impact of US tariffs on project execution.

Executive Commentary

CEO Per Lillebeau emphasized the company’s strategy to broaden its scope beyond core thermal hydrolysis, while CFO Mats Tristan Tiemsland noted that approximately two-thirds of the company’s revenue is in foreign currencies. Lillebeau also highlighted India’s long-term market potential.

Risks and Challenges

• Revenue miss and declining EBITDA raise concerns about profitability.
• Negative operating cash flow due to delayed milestone payments.
• Weaker gross margin suggests cost pressures.
• Potential revenue dip in 2026 due to limited new contract intake.
• Impact of US tariffs on project execution.

Q&A

During the earnings call, analysts inquired about the company’s operating expenses, which are expected to remain stable around NOK 100 million. R&D expenses were reported at NOK 29 million for 2024, with no cost capitalization. The company acknowledged seasonal variations in the garden waste and services segments, maintaining a cautiously optimistic outlook on market opportunities.

Full transcript - Cambi ASA (CAMBI) Q1 2025:

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Good morning and welcome to Canby’s presentation of our first quarter results for 2025. My name is Drago Stalvescu, Senior Corporate Relations Manager at Canby. Over the next half hour or so, our CEO, Perlile Be and CFO, Mats Tristan Tiemsland, will present highlights from the quarter, covering both operational achievements and financial performance. We will open for questions after the presentation. You may submit your questions at any time by scanning the QR code shown on your screen or by sending them to investorscambi dot com.

We’ll do our best to answer all questions received before the session ends. Please note that today’s presentation may include forward looking statements. These are based on current expectations and assumptions and are subject to risks and uncertainties that could cause actual outcomes to differ. With that, I’m pleased to hand over to CEO, Per Lillebeau.

Per Lillebeau, CEO, Canby: Good morning, everyone, and welcome to the presentation of Canby’s first quarter results for 2025. Revenue for the quarter was NOK225 million, a 4% increase compared to quarter one twenty twenty four. EBITDA stood at NOK14 million, 60 2 percent lower than a year before. The weaker margin at similar activity level is due to several factors: An increase in operational costs of NOK 13,000,000 from the first quarter of twenty twenty four to the first quarter of twenty twenty five reflects a strategic decision to strengthen Combi’s organization to bid for larger, more complex projects, increased R and D spending and investing in sales and marketing in key geographies with promising growth potential. The weaker EBITDA performance in the first quarter is also explained by slower progress on ongoing projects and negative currency effects.

We do, however, expect the delays in project execution in quarter one to be recovered in the coming quarters of 2025. Order intake in the quarter totaled million and the order backlog stood at billion at the March, providing good visibility for activity levels for the rest of the year and into 2026. We secured four new contracts in the first quarter. In January, we signed Combi’s first THP contract in India, marking our market entry with a medium sized project in Mumbai for the city’s municipal corporation. I spoke about the potential and complexity of the Indian market for Combi during our last quarterly presentation, and I encourage you to revisit the webcast, recording or transcript on our investor portal for more details.

In February, we signed a new THP contract in Spain for the greenfield Silvuto wastewater treatment plant in Santiago De Compostela. This project is at the lower scale of our THB delivery, but marks the third project in Galicia, a region in Northwestern Spain. It is a good illustration of the potential for recurring THP purchases in regions with strong drivers and water utility companies emphasizing holistic long term thinking in sludge treatment infrastructure investments. In March, Combi got awarded a medium sized contract expansion for the VEES project next to our headquarters in Oskar in Norway. Medium sized refers to a contract value between NOK 50,000,000 and NOK 100,000,000.

The additional scope improves nitrogen recovery and provides for a backup steam boiler on the client’s request. The contract shows Combi’s ability to take on additional scope beyond core THP delivery when capacity and risk levels allow. We have done this successfully on several recent projects, especially in Scandinavia, and plan to continue where it adds value. Combi will purchase the equipment from third parties, so margins for this change order are lower than on a typical THP project. Finally, at the end of the quarter, the services team entered a five year service agreement to support with maintenance and operations of the THP system at the Dummy Soe And Wastewater Treatment Plant in Copenhagen, Denmark.

Combi continues to grow its footprint as a partner for public utilities with 92 reference plants in 28 countries, serving one hundred and twenty five one hundred and twenty one million people. Our track record reflects long standing customer relationships. Over the years, Combi has built a strong and competent organization. Several of our key employees have been with Cambi for ten to twenty five years and some even longer. This enables us to be close to our customers with competent people on all continents.

We do not have to fly project managers and operational supervisors from continent to continent. They are already present both in Asia, Europe and North America. Our installations are infrastructure investments and intended to last for several decades, with good maintenance and upgrading when needed. Project execution and engineering progressed well during the quarter. Although several projects did not register progress, pending client site readiness for project work streams outside of Combi’s scope.

We completed the commissioning of the two THP systems for Sasol at the Secunda plant in South Africa. In Singapore, we dispatched the two THP systems for the Tuas facility. In Norway, installation advanced well for the Fredrikstra project with most THP equipment in place. Several other projects that are nearing completion did not register progress in the first quarter, as they are pending client site readiness, a situation that is common in our industry. These include Kansas City, Hong Kong, Antwerp, Lille Lesturam and Saffo in Morocco.

Manufacturing continued in for San Francisco, Louisville, Perth, Wellington and Lviv. For The U. S. Projects, part of the scope is manufactured locally to avoid the recently introduced tariffs. The Beersheba project in Israel remains delayed.

Combi has moved the THP system under manufacturing to a project with timely delivery to free up working capital. Engineering activities continued as planned for the projects in Honolulu, Oslo and Palma De Mallorca. We also began engineering for the two newly awarded projects in Mumbai and Santiago De Compostela. In March, Peda Lilleberg, who has managed the development of Combi’s digital service, Combi plus was appointed to the newly established position as Managing Director of the Solutions segment, which includes both services and recycling operations. At the same time, Todd Finsta transitioned to the key role of Project Director within the Technology segment.

Within the Services sub segment, we used the quieter winter months to prepare for the upcoming maintenance season, including manufacturing combi parts, stocking up and completing required regulatory training. We delivered a minor upgrade to the Mopocho plant in Santiago De Chile and completed commissioning of the processed gas units at the Gao Baidian plant in Beijing. We were also awarded a feasibility study for future upgrade options at the THP plant in Europe. Most notably, we signed a five year service agreement for the Damusoan THP plant in Denmark. This marks Combi’s first long term O and M contract outside The UK.

In Gurnvext, bulk soy sales reached 22,900 tonnes in the first quarter compared to 20,000 tonnes in the first quarter of twenty twenty four. The company continued to deliver on its contractual commitments within organic resourcing, handling biosolids and garden waste for many Norwegian municipalities. There were no contract awards in this part of the business during the first quarter. Bulk soil and biosolids handling is where Grundwech’s core strength and expertise lies and where we want to focus our efforts going forward. Grundwech’s will continue to produce high quality peat free soil in bulk.

As announced last quarter, we have decided to terminate operations at our bagging facility and exit the soil retail business, which was not a core business area. The company will serve existing retail customers this season and plans to end production of bagged products in June. Grundwechst is negotiating with several interested parties exploring different opportunities for the bagging facility. Going forward, Combia remains well positioned to support the growing global demand for sustainable sludge treatment. Long term market drivers in key markets remain intact, including high energy prices, regulatory pressure and growing importance of nutrient recovery.

Combi’s strategic direction is developing. We are broadening our scope gradually beyond core thermal hydrolysis, building on our recognized expertise in advanced anaerobic digestion for the entire sludge line. These efforts will focus first on nearby markets where we already have a strong presence and good track record. At the same time, we continue to invest in marketing, sales, innovation and project execution capabilities to prepare the organization for larger and more complex future projects. In The UK, the new AMP8 cycle is beginning to take shape.

We remain in active dialogue with key stakeholders and stand ready to support clients, even though the timing of the new THP project awards remains uncertain. The financial outlook continues to be shaped by the timing of project execution and external factors, including exchange rates and geopolitical developments. Project milestone delays are still deferring some revenue recognition. We do, however, expect delays in project execution in quarter one to end and progress to be resumed in the coming quarters of 2025. In The U.

S, the introduction of tariffs in April has created additional uncertainty. The latest announcement has waived steel tariffs while keeping a 10% tariff for UK origin. Combi’s main concern was related to the steel tariffs, which affected three ongoing U. S. Projects with shipments scheduled from The UK in the near future.

It is important to mention that all ongoing U. S. Contracts exclude tariffs from the base price and cost recovery mechanisms are available. However, there are risks tied to approval processes and the timing of milestone payments. Parts of our U.

S. Projects will be produced in The U. S. And thereby avoiding tariffs. Combi is closely monitoring the situation and has initiated mitigating actions, including a review of local manufacturing options for future projects.

At the same time, Combi continues to prioritize trust based constructive dialogue with clients to manage cost, exposure and maintain project continuity. Grundwex continues its efforts to restore profitability, exiting the retail soil market and focusing on its core activities. Biosolids and garden waste composting and bulk soil deliveries in Norway. We maintain a solid financial position, supported by an order backlog that provides revenue coverage through twenty twenty five and into 2026. With current project schedules combined with limited order intake of new contracts in the next quarters, Combi may experience a revenue dip during 2026.

We are, however, working with several bids and are confident that revenue will pick up in the time to come. With that, I will hand over to Mats, who will walk us through the financial performance and plan for capital repayment and dividend payments approved at last week’s Annual General Meeting.

Mats Tristan Tiemsland, CFO, Canby: Good morning, everyone. I will now take you through the financials for the first quarter of twenty twenty five. First, let’s take a look at some of the financial highlights. We report a weak financial performance in the first quarter. This is primarily driven by slower progress across our portfolio of ongoing construction projects this quarter.

This progress slowdown is temporary, and we expect a catch up over the coming quarters in 2025. Also, this quarter includes negative currency effects from a stronger NOK at the end of Q1. I will comment this in more detail later. We are pleased that the order backlog remains solid, and at the end of the quarter, the order backlog is reported at billion, providing visibility for the activity levels going forward. The process of exiting the retail SOL business is progressing as planned, and the outcome will be communicated to the market in due course.

We report a negative operating cash flow in Q1, which is due to timing of receiving milestone payments from clients. We expect significant milestone payments in the following quarters. A dividend of NOK0.30 per share was approved by the Annual General Meeting on 05/08/2025. The share is trading ex dividend since yesterday. The board has also been authorized to approve additional dividends of up to NOK 0.7 per share, and additional dividends are subject to the achievement of key project milestones.

As mentioned before, a key reason for its dividend approach is to balance shareholder interest with prudent cash management. Let’s take a look at the consolidated income statement. We report revenue of $225,000,000 for the quarter, up from $216,000,000 in the same quarter last year and slightly down from the previous quarter. Combi continues to steadily deliver on its portfolio of ongoing construction projects. However, there was slower progress than anticipated in the quarter.

We expect the delay in progress to be recovered in the following quarters as indicated in our guiding for the backlog distribution. In Q1, we report a gross margin of 47%, which is weaker than levels reported in previous quarters. A key driver for the lower gross margin is the currency effect from a stronger NOK, mainly impacting the technology segment, which I will comment on shortly. Operating expenses were 92,000,000, up from 78,000,000 1 year earlier. As Per mentioned, the increase is due to conscious, targeted investments in growing the size and the capabilities of the organization.

We believe these investments reflect our high ambitions for the future. And as a result, EBITDA came in at NOK14 million in Q1, which is down from the same quarter last year and previous quarters. Depreciation and amortization expenses include amortization of the previously acquired technology portfolio. This will be fully amortized during Q2, which will reduce our amortization expenses by $4,000,000 per quarter from Q3. Let’s now take a closer look at the financial performance of the technology segment.

Revenue was reported at 176,000,000 in the quarter, which is slightly higher than the same quarter last year and at the same level as the previous quarter. Combi continues to steadily deliver on its portfolio of 17 ongoing construction projects. For five projects, there was no progress in the quarter, as Combi is awaiting client site readiness before commissioning. Delays towards the end of projects are not uncommon. However, it is causing a timing effect where revenue recognition and milestone payments are pushed forward.

As mentioned, there were large negative FX effects in Q1. The majority of Combi’s revenues are in foreign currencies, and reported figures in NOK will be exposed to fluctuations in exchange rates. The average NOK rate in the quarter was slightly weaker towards currencies such as US dollars, British pounds, and euros compared to Q1 last year. This, in isolation, has a slight positive impact on our reported financials. However, the closing NOK rates were significantly stronger at the end of the quarter compared to the end of twenty twenty four.

For example, the NOK to USD closing rate was 7.5% higher at the end of Q1 than at the end of the year. This influences the reported value of recognized revenue not yet invoiced on our balance sheet, impacting margins in the quarter. It is important to mention that there are no material changes to the underlying project margins. EBITDA came in at 19,000,000 in Q1, down from 30,000,000 in the same quarter last year, and down from previous quarters. Let’s look at the financials for the solutions segment.

In Q1, we report revenues of 49,000,000, down from 55,000,000 in the same quarter last year and the previous quarters. We report an EBITDA of negative 5 million in Q1, down from 6,000,000 in the same quarter last year, but better than the previous quarter. I’ll provide an explanation for the negative performance. As expected, there are lower soil sales and fewer services deliveries such as annual shutdowns during winter months. Also, there were only smaller upgrade projects ongoing in Q1, all below the threshold for market announcement.

The profitability in the Recycling sub segment was negative in Q1, and it was mainly explained by the seasonal low soil sales in addition to the ongoing process of exiting the retail soil market. Grenvext will deliver on volume commitments for a 2025 season, meaning that the plant will run until the end of Q2. ’6 positions have been affected by the decision to exit retail. Some of these resources have been reallocated to other roles in the company to support growth in other business areas. We are committed to reestablishing the profitability in Grannbechst.

Discussions on the future of the soil bagging facility are progressing, and we expect to be able to communicate something more concrete to the market soon. Let’s look at the order intake, which includes the total value of newly signed contracts eligible for inclusion in the order backlog, as well as revenue outside the backlog, such as revenue from spare parts, services, bulk, soil sales, etcetera. The reported order intake is calculated as a residual based on the difference in the order backlog between this and the previous quarter, plus the reported revenue in this quarter. Order intake was reported at 170,000,000 in Q1, down from $4.00 1,000,000 in Q1 last year. As Per mentioned, two new THP contracts in India and Spain were awarded during the quarter, in addition to a large contract expansion in Norway.

Two of the three contracts are categorized as medium, which means that their contract value is between 50,000,000 and 100,000,000. The contract in Spain was categorized as small, meaning a contract size between 15,000,000 and 50,000,000. The announced five year service agreement for the THB system at Dammesund, Copenhagen is not reported in the order backlog. Towards the end of this quarter, we experienced a strong NOK, which led to a negative FX impact of NOK39 million in the reported order backlog compared to the previous quarter. As mentioned, changes in the order backlog are included in the reported order intake.

Let’s take a look at the order backlog. The order backlog represents the value of the total remaining amount of work that Combi has committed to complete in the future on project scope qualified to be included. The backlog provides for a good indication of the activity level for Combi going forward, and it is an important indicator for Combi’s financial health. Combi will gradually convert the backlog into revenues reported in the P and L, as indicated in our backlog distribution. The order backlog was just shy of 1,200,000,000.0 in Q1, slightly down from last quarter.

The backlog mainly consists of the remaining work to be carried out for the technology segment. The reported solutions segment backlog in Q1 includes the remaining value of biosolids and garden waste handling contracts for Grundwechst, including extension options. There were no upgrade projects in the backlog at the end of Q1. Combi had 17 ongoing construction projects at the end of the first quarter, all in the technology segment, which is at the same level as Q1 last year. As always, we provide guiding on the expected order backlog distribution.

Our latest guiding shows that we expect to convert more than half of the reported Q1 backlog into revenue within 2025. And we expect to convert around one third of the backlog next year. I would like to mention that the entire technology backlog is expected to be converted within 2026. To summarize, the backlog as of Q1 provides good activity coverage for the rest of 2025 in addition to activity coverage going into 2026 as well. On the right, we see that almost 40% of the backlog is in euro and around one third is in NOK and the rest is in U.

S. Dollars. Let’s move over to the balance sheet. Bank deposits are reported at 100,000,000 in Q1. The increase is mainly driven by timing of milestone payments as some expected milestone payments were deferred into the following quarters.

At the end of Q1, accrued project revenue recorded as current assets in the balance sheet reached $246,000,000, up from 169,000,000 same quarter last year. This increase is a large contributor to the previously mentioned FX impact included in our P and L. Other receivables, mainly customer receivables, stood at 214,000,000, up from 100,000,000 in the same quarter last year, and in line with the previous quarter. Combi has no long term debt. Now let’s turn our attention to the cash flow statement.

The negative cash flow from operating activities is driven by lower total milestone payments from customers received in the quarter. We expect to receive several client milestone payments over the next few quarters. The trade agreement between The U. S. And The UK recently announced reduces the uncertainty regarding tariffs for projects in The U.

S. There were only small investments and no cash flow from financing in the quarter. Before we round off, I would like to do a refresher on Combi’s project delivery approach and revenue recognition methodology. As Per mentioned, thermal hydrolysis is at the core of Combi’s offering, but we increasingly see opportunities to broaden our activities in adjacent areas, exemplified with the recent contract expansion for the ongoing VEAS project in Norway. For construction projects, Combi has a flexible delivery model.

Combi can be a subcontractor delivering the THP and auxiliary equipment to a main contractor, as marked in blue in the figure. Most of our existing project references are delivered in this way. Prefers to remain technology neutral, so that we can offer our technology solution to any main contractor that wants to bid with our technology. We believe this strategy benefits Combi in the long run. However, if the project risk is acceptable, Combi can also take the main contractor scope, which also includes mechanical and electrical engineering in addition to core scope.

In Scandinavia, we have several project references where Combi holds the main contractor scope. Taking a main contractor scope can provide an an attractive base workload for the organization, although margins are on average lower than core scope deliveries. Let’s also take a look at the different project phases and how we recognize revenue in our p and l. Our project execution typically spans two to three years from contract award to client handover, moving through stages such as basic engineering design, detailed engineering design, manufacturing, installation, commissioning, and performance testing before the THP system is handed over to the client. Revenue from construction contracts is recognized in the in the p and l based on the percentage of completion method.

This percentage or progress is determined as our latest estimate considering the level of completion of different activities, incurred costs, and hours spent relative to the total project estimate. Total project costs are recognized using the same progress. On the right, to illustrate this, I have provided the actual progress for two recently completed CAMBIA projects, one with the core scope delivery and another with the main contractor scope delivery. The progress for the main contractor project almost perfectly follows a s curve, with slower progress at the beginning and at the end of the project. The project with the core scope has a faster revenue recognition, and in this example, after one year more than half of the project profit was recognized in the P and L.

Combis equipment deliveries often come towards the end of the total project, and although we may be able to install our equipment on-site, commissioning and ramp up typically requires all elements of the sludge line to be ready for start up. This means that it’s not uncommon that the progress slows down towards the end of the project, as can also be seen on the graph on the right. In some extreme cases, it has taken more than one year to fully finalize after Combi had installed its equipment on-site. Before the Q and A, I would like to provide a short comment regarding dividends. The Annual General Meeting approved an ordinary dividend payment of 0.30 NOK per share.

The dividend will be distributed as repayment of paid in capital on May 20, and the share is trading ex dividend since May 12. In addition, the annual general meeting gave the board of directors an authorization to approve additional dividend payments up to 0.70 NOK per share. Additional dividends are subject to the achievement of key project milestones, and in its assessment, the board will consider Combi’s liquidity, investment needs, and overall financial position. And with this, we are ready to move over to the Q and A session. Okay.

So, Andreas, have we received any questions?

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Yes. Thank you, Madsberg, for the presentation. We have received received several questions. There’s still time to submit your questions using the QR code. Maybe, Per, the first question is for you.

Thank you for the wonderful work that you’re doing. I would appreciate to hear your thoughts as to how you see the cost structure developing in the future particularly with regards to CapEx?

Per Lillebeau, CEO, Canby: Combi as you probably understand has a very capital light business model. We do not invest and own in the plants that we are supplying, billing and constructing for our clients. There could be some CapEx needed in connection with M and A, but generally, Combi has been very careful with extensive M and A. I think it’s even more relevant maybe to look at Combi’s OpEx. The OpEx has now come to a level where I think we are able to serve the markets where we are in.

I do not foresee a large increase in our OpEx level going forward.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. Next question maybe for Mats this time. Can you comment in more detail on the currency effects in the quarter on revenue, COGS and EBITDA? And can you comment more generally on the currency effect?

Mats Tristan Tiemsland, CFO, Canby: Yes. So maybe I can start with the second part first in more general. So what I would say is that we report the figures in Norwegian Groen and we are part of Norway is a small economy, and we’re going to be exposed to the fluctuation in currency rates. That’s also impacting our reported figures. Revenue, I would say, is around two thirds is in foreign currencies in general.

I think we provide the backlog breakdown that also shows that. There are some revenues in foreign exchange outside backlog as well, but let’s say north of two thirds is in foreign exchange, mostly USD and also euro. And with the AMP8, of course, there will be some British pounds there as well. On the COGS side, we have our manufacturing site in Cognizant, so it’s mostly in British pounds. We do also source in Euros and as also was mentioned in the presentation, for instance, in The U.

S. Projects, do also do source locally in The U. S. So that kind of gives a general picture on revenue and the COGS. When it comes to the OpEx, payroll around 40% is in foreign exchange.

We have employees all over the world, but it’s more in British pounds and euros. And I think on also on the other OpEx, it’s just a mix of various currencies, depending on where we have offices and so on. And when it comes to the first question, I think it was a detailed question on the currency effects. It of course depends on what period you are comparing against. So I mean, what we say is that the currency rates now on average in Q1, they are a bit weaker.

The NOK is a bit weaker than Q1 last year. So in this isolation, it has a positive effect on our figures. But especially the closing rates, when we close the quarter, it will be one single day, the rate of that day, closing rate will impact also our P and L. And we have earned not yet invoiced revenue on our balance sheet, and that is kind of reevaluated with the currency rates on the closing of the quarter. And as you saw in the balance sheet, we have a quite high portion that is now earned not yet invoiced.

So that kind of gives a catch up effect in our P and L. So I think that gives that’s what I would like to say on the details on FX impact.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats, for a thorough detailed answer. I think there’s one follow-up question that’s very related than this. Could you share a bit about how much OpEx is R and D related?

Mats Tristan Tiemsland, CFO, Canby: Yes, sure. We published our annual report. There we have a lot of details. R and D expenses in 2024 were SEK 29,000,000 and the year before around SEK 20 So we are investing in R and D, that’s also what we’ve been communicating. Just like to mention also that we’re not capitalizing these costs.

So these costs are going straight on our EBITDA and part of OpEx.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Next question, I think we’ve already maybe touched upon it already. Per, maybe you can see whether you have anything to add. Can we still expect the quarterly OpEx level at around NOK100 million going forward?

Per Lillebeau, CEO, Canby: Yes. I think this is a fairly good assumption that we will be able to do the business and the developments that we are now working on with the present cost level. We have developed Humvee into a level now where we’re able to take on much bigger scope on projects and this has been a very a clear strategy from our side, not just to be dependent on our THP products, but also to use our expertise to do entire sludge lines in markets where we are comfortable doing that. And we have done that successfully over several projects now and that’s why we are continue to move in this direction. But we will do it carefully knowing the risks that could be connected to bigger scopes.

But with the present cost level, we should be able to handle a higher turnover than we are presently doing. So no bigger cost increases will be seen probably in the time to come.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you. Moving on. Meanwhile, we are still receiving questions and you can still send your questions by using the QR code. We get them in real time. The next question may be for you, Mats.

Could you say anything about the seasonality effects in garden waste in Gundvext and THP services through the year? How large are the variations from the summer to the winter months?

Mats Tristan Tiemsland, CFO, Canby: So both of these questions part of the solutions segment. It’s quite seasonal. Obviously, depending a little bit on when the spring arrives in terms of garden waste and soil sales. I would say that the seasonality for Grenveig is probably bigger than for services. So you would expect more in Q2 and Q3 in terms of the activity level, less in the winter months.

On services to THPs, it’s also impacted by less activity in the winter months, but the effect is much less, the seasonality effect is much less. You know it’s more related to working outside and general working conditions that is more demanding in the winter months. So typically our clients also prefer to have the annual shutdowns or services done, at least when they’re planned more on the summer months. Of course, we now start to get plants all over the world, but most of our references part of the Northern Hemisphere, So that’s also what we why we currently have a seasonality due to that.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats. Moving on a question for Per maybe on outlook. Could you comment more on the market outlook and how projects are progressing in the pipeline towards potential awards?

Per Lillebeau, CEO, Canby: Yes. I could mention that if I look a year back, I think our pipeline consisted of about 400 projects. If we look at it now, it’s around four fifty. And when we talk about pipeline, we define that as a project that are either approached us and they have received a price indication, a budget offer, etcetera. There is an active dialogue with the project.

And this has been the development over quite some time now that it continued to develop, both in markets where we are really have a strong foothold, but also in more emerging markets. So on that part, we are confident that the interest and demand for our technology is increasing. And this goes both for a number of projects, but also when it comes to values.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. And maybe a follow-up question on that is any near term potential in India or The UK specifically?

Per Lillebeau, CEO, Canby: The market potential, yes.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Yes. And contracts in the near term. Yes.

Per Lillebeau, CEO, Canby: What I like to say about India, India is most likely a more long term prospect. It’s a huge market. The need is substantial, and we already do have a pipeline list of projects that we are working with in several Indian states. But I think we have to be aware that most of these projects, we have to be prepared that they will take time to develop. So longer term, it will have a big impact in Combi.

But shorter term, I do not expect the India market to have a huge impact on Combi’s earnings. When it comes to The UK, the present AMP8 cycle, investment cycle that we are in now is when it comes to the budget available for the water and sewage companies are bigger than I’ve ever seen. And there is it’s a very active period where we are involved in discussions with several of the companies. But as usual, it’s really hard to predict or to say when contracts award may be given, but we are in active discussions with several of them. But and we do expect The UK market to be active, to repeat myself.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you. I think moving again back to Mats on a question about the Solutions segment. We have no upgrade projects, no projects in the backlog there. And the question is, is this normal at the current time or is it indicating lower activity in the maintenance season?

Mats Tristan Tiemsland, CFO, Canby: I would say it’s not normal. We have a growing installed base. We are working on a lot of leads. Per and I talked about the opportunity pipeline for brand new projects. We also have a pipeline for upgrades and of course the aging installed base and the more projects we deliver.

There’s a big potential there. So the team is actively working on several interesting prospects there. And typically, what you see in the past that upgrade project has contributed to the profitability in the Solutions segment. And we, of course, hope that they will continue to do so in the future as well. The team has been staffed up.

So I’m confident that we’re going to sign an upgrade project in the future as well.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: Thank you. We’re getting close to the end of our question list so far. You still have a chance to send your questions if you’re typing them now. But otherwise, one more question to you maybe Mats. How much of the R and D are you activating on the balance?

Mats Tristan Tiemsland, CFO, Canby: Yes. So that one I addressed a little bit earlier. So the number is zero. So we are not activating any of the R and D expenses when not on it in the past few years either.

Drago Stalvescu, Senior Corporate Relations Manager, Canby: I think that is it. Thank you for answering all the questions. Thank you for sending very good questions. That concludes today’s presentation. A recording and transcript will be made available later today on Canbe’s investor portal.

We appreciate your interest and engagement. And if you have any follow-up questions, feel free to reach out. Have a great day and goodbye for now.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.