Earnings call transcript: Cambi ASA’s Q2 2025 revenue climbs, stock dips

Cambi ASA reported its financial results for the second quarter of 2025, revealing a 12% year-over-year increase in revenue to NOK 342 million. Despite the revenue growth, the company’s stock experienced a decline, dropping 5.99% to NOK 20.4 following the earnings announcement. The earnings per share (EPS) forecast for the quarter was NOK 0.401, but the actual EPS figures were not disclosed. According to InvestingPro data, the company maintains strong financial health with an overall score of "GREAT" and impressive gross profit margins of 54%. The market’s reaction reflects mixed investor sentiment towards the results and future outlook.

Key Takeaways

• Cambi ASA’s Q2 2025 revenue increased by 12% year-over-year to NOK 342 million.
• The stock fell by 5.99% after the earnings release, closing at NOK 20.4.
• EBITDA decreased by 8% year-over-year to NOK 75 million.
• The order backlog remains strong at NOK 938 million.
• The company acquired a 51% stake in C and P Cycles to expand its technology portfolio.

Company Performance

Cambi ASA demonstrated solid revenue growth in the second quarter of 2025, with a 12% increase compared to the same period last year. However, the company’s EBITDA declined by 8%, indicating potential challenges in managing operational costs. The order backlog remains robust at NOK 938 million, suggesting continued demand for Cambi’s solutions.

Financial Highlights

• Revenue: NOK 342 million, up 12% YoY
• EBITDA: NOK 75 million, down 8% YoY
• Gross margin: 49%, a decrease from the previous year
• Order intake: NOK 102 million
• Order backlog: NOK 938 million

Market Reaction

Following the earnings announcement, Cambi ASA’s stock price decreased by 5.99%, closing at NOK 20.4. This decline may be attributed to investor concerns over the company’s declining EBITDA and gross margin, despite the positive revenue growth. The stock’s performance was also influenced by broader market trends and sector-specific challenges.

Outlook & Guidance

Cambi ASA anticipates potential revenue challenges in 2026 due to lower order intake. Despite this, 95% of the technology segment backlog is expected to be executed within the year. The company has approved a dividend of NOK 0.3 per share, with an additional NOK 0.7 per share dividend authorized by the board.

Executive Commentary

Per Lillebeau, CEO of Cambi ASA, highlighted the company’s commitment to sustainable solutions, stating, "Our thermal hydrolysis process provides utilities with a resilient, future-proof platform." He also noted the strong global demand for sustainable sludge treatment solutions and the increasing interest from emerging markets.

Risks and Challenges

• Declining EBITDA and gross margin could impact profitability.
• Lower order intake may affect future revenue growth.
• Regulatory pressures on biosolids treatment could increase operational costs.
• Expanding into new markets like France and Saudi Arabia presents execution risks.
• Fluctuations in global economic conditions may impact demand.

Q&A

During the earnings call, analysts inquired about the impact of emerging contaminant regulations, potential U.S. production options, and the company’s expanding sales pipeline. Cambi ASA confirmed growth in its sales pipeline from 350 to 450 leads, reflecting increased interest in its solutions.

Full transcript - Cambi ASA (CAMBI) Q2 2025:

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Good morning, and welcome to Canby’s presentation of the second quarter results for 2025. My name is Dragos Talvescu, senior corporate relations manager at Canby. Over the next thirty minutes, our CEO, Perli Lebe and CFO, Mats Tristan Tiemsland, will walk you through key highlights from the quarter, covering both operational progress and financial performance. They will also address key recent developments in the third quarter. We will answer any questions after the presentation.

You may submit questions at any time by scanning the QR code visible on your screen. We will do our best to address all questions before the session ends. Please note that today’s presentation may include forward looking statements which reflect current expectations and assumptions. These statements are subject to risks and uncertainties that may cause actual outcomes to differ. With that, I’m pleased to hand over to Canby’s CEO, Per Lillebeau.

Per Lillebeau, CEO, Canby: Good morning, and welcome to Canby’s presentation of our second quarter twenty twenty five results. Revenue for the second quarter was NOK $342,000,000, a 12% increase compared to the 2024. EBITDA stood at NOK 75,000,000, 8% lower than the year before. The weaker margin reflects higher operating expenses from a larger organization and a less favorable revenue mix. Profit before tax amounted to NOK 105,000,000 driven by unrealized currency gains of NOK 24,000,000.

The gain resulted from hedging our expected U. S. Dollar cash flow by selling U. S. Dollar and purchasing euros at the 2025.

Order intake in the quarter totaled 102,000,000 with no single award above the market announcement threshold. The order backlog was NOK $938,000,000 at the June, providing visibility for activity into 2026, though new awards will be needed to rebuild the pipeline. I leave it to Mats to go into details about our financials in his part of the presentation. But first, I will provide a short overview of our operations in the second quarter. In the Technology segment, we maintained a high level of activity.

Combi made progress in delivering on more than a dozen projects after a couple of quarters where work was held back by delays in client site readiness. No new project awards were announced during the quarter. Two projects successfully completed commissioning. In Secunda, South Africa, the Sasol plant entered operation. This is company’s first full scale industrial project and the world’s first where biosludge is redirected to a gasification process.

In Vilestorum, Norway, the Krogsta plant became the first site in our portfolio to use a THP system Model e. It makes it the most energy efficient reference in Combi’s portfolio with an estimated 30% lower energy consumption than our standard plants. We look forward to seeing the performance in daily operations and using these insights to guide future innovation. Commissioning also started at Czech Vuhui in Hong Kong, Shine Port in Antwerp, and Blue River in Kansas City, Missouri. In Safi, Morocco, we are still waiting for site readiness before commissioning can begin.

In the meantime, we dispatched digester mixing equipment ordered under a smaller contract for the same site. Several other projects made solid progress in the installation phase. In Fredrikstad Norway, mechanical and electrical work advanced well. At the Thios plant in Singapore, the THP system installation is now complete with ancillary equipment to follow. In Ukraine, we commenced the digester installation in Lviv during the quarter.

Progress was slower than initially expected, mainly due to our security first approach and limited availability of local qualified personnel. Despite this, work is moving forward, and we remain cautiously optimistic about future progress. Within manufacturing, the THP workshop in Congleton, UK continued to operate at maximum capacity throughout the quarter. We advanced the production of eight THP systems for four major ongoing projects located in San Francisco, California Louisville, Kentucky Perth, Australia and Wellington, New Zealand. The Beersheba project in Israel remains on hold.

We continue to work closely with clients to avoid delays, carefully coordinating and adjusting delivery schedules to match site readiness. A positive development this quarter is the trade agreement between The U. S. And U. K, which exempts Combis products from high import duties.

This brings greater clarity and enables deliveries to proceed unhindered and on time. I will cover this in a bit more detail in the section on recent developments. Finally, in engineering, detailed design progress for five projects in Onolulu, Oslo Viaz, Palma De Mallorca, Santiago De Compostela and Mumbai. These projects are at various stages of preparation, ensuring the manufacturing pipeline for the coming quarters. Let me turn now to the Services part of the Solutions segment.

In the second quarter, activity levels in Services remained high, especially in U. K. And Europe, where the period is traditionally busy for THP site work. Scheduled maintenance was carried out at multiple sites. In addition, our teams worked closely with plant managers and operators to improve both reliability and process performance at several sites.

We saw continued strong demand for performance enhancing solutions such as upgraded pumps and other proprietary technologies developed for challenging sludge applications. Demand for spare parts remained also strong. The upgrades team completed the delivery of a small project at Henkelau, The Netherlands in June. In Aberdeen, engineering progress laid the groundwork for future upgrades designed to support long term optimization of plant operations. At the same time, we continue to develop new upgrade opportunities with a focus on improving efficiency and achieving cost savings for clients.

Moving now to Grundwechst, the recycling part of the Solutions segment. Bulk soil sales ended the second quarter at 106,000 tonnes, which is 12% lower compared to the strong performance in the same quarter last year. Deliveries of bagged soil continued in line with contractual commitments and operations at the soil bagging facility were wound down at the June. We have not yet concluded the sale of the facility, but the work continues. Gronwechst also continued its reorganization to focus on restoring profitability in its core areas of bulk soil and organic resourcing, with staffing adjusted accordingly.

There were no contract awards above Combi’s announcement threshold, but the company secured a smaller sludge management contract with Larvik municipality in June. This agreement, which continues a long standing collaboration, runs for four years with two optional one year extensions. Last quarter, we spoke about the uncertainty created by U. S. Trade tariffs.

Since then, under The UK U. S. Economic prosperity deal, a 10% base tariff now applies to most UK origin goods. While steel and aluminum are handled under tariff rate quotas for Combi, shipments from Congleton to U. S.

Projects continue to clear at zero duty under these quotas, providing temporary relief and greater predictability in an otherwise uncertain tariff landscape. We remain cautiously optimistic, noting that these arrangements depend on ongoing implementation and could change. Ongoing U. S. Projects remain contractually protected with tariffs explicitly excluded from the base price.

Combi continues to evaluate U. S.-based production to fully remove tariff exposure and comply with Buy America requirements in future federally funded projects ensuring competitiveness while meeting applicable regulations. In recent months, we have been approached by investors asking about the impact of emerging contaminants on Combi’s market position. I would like to address this and explain why, in our view, our thermal hydrolysis technology remains a sound investment for water utilities. Even though it does not destroy microplastics or PFAS, importantly, the technology continues to offer strong value, particularly for utilities that may need to divert biosolids from land application in the future.

PFAS, often called forever chemicals, are widely used in thousands of everyday products and are extremely persistent in the environment. This persistence explains the increasing public and regulatory attention they attract. It is worth noting that typical PFAS concentrations in municipal biosolids are relatively low and far below levels commonly found in items such as food packaging and paper products. However, certain industrial sludges can contain higher concentrations that exceed thresholds. Regulatory and media scrutiny is intensifying.

In The U. S, states are taking different approaches while the EPA develops national standards. In Europe, the revised urban wastewater directive requires quaternary treatment and tighter upstream controls. These developments mean that utilities and farmers in some regions face uncertainty regarding future restrictions and the timing of potential changes to land application rules. Combi closely follows these developments and actively contributes to the debate, but we are not significantly affected.

Our thermal hydrolysis process provides utilities with a resilient, future proof platform. It improves dewatering, boosts energy recovery and lowers operating costs across all outlets, where the biosolids are applied on land, landfilled, incinerated or combined with emerging PFAS destruction technologies. Notably, about 20 of our 92 references were specifically delivered to support thermal processes. The underlying reason for our confidence is straightforward: Any future regulation that drives biosolids toward thermal treatment will require a drier feedstock. THP delivers that by removing water and reducing volume, making it a natural enabler for incineration, pyrolysis and other high temperature processes.

Looking ahead, utilities need flexibility as rules evolve. New nitrogen and phosphorus recovery requirements increase treatment complexity and cost, while proven PFAS destruction typically demand very high temperatures or advanced technologies. For sites traditioning away from land application, THB helps make thermal pathways both feasible and more economical. In our long term view, eliminating PFAS at the source is the only truly sustainable solution. Nevertheless, in some regions, restrictions on land application may still emerge for the most contaminated sludges or specific land banks, further reinforcing the need for flexible, cost efficient treatment platforms like THP.

This uncertainty may result in some projects being further delayed. Let me now turn to last week’s announcement that we have required a majority stake in C and P cycles. The acquisition is a strategic step to strengthen Combi’s market position in Germany and expand our technology portfolio. I will explain briefly our rationale for this investment, and Mats will provide details about the transaction in his part of the presentation. C and P Cycles was founded in 2011 and has built a solid track record delivering projects that optimize sewage sludge treatment in both water utility and industrial clients.

In Germany and traditionally, their technology complements Combi’s existing offering, aligning well with our mission to improve operational efficiency, sustainability and cost effectiveness for clients. The local team in Germany has strong market knowledge and an established reputation. By joining forces, we can provide a stronger offering to our customers and accelerate our growth in one of Europe’s largest sludge treatment markets. Germany is Europe’s largest sludge treatment market with almost the entire population connected to wastewater network. Its regulatory framework is among the strictest in Europe, prohibiting land application and driving a strong shift toward mono incineration.

Today, nearly threefour of sludge is treated this way with phosphorus recovery as the next step. The drying requirements before incineration create significant opportunities for advanced drying and dewatering technologies. Combi has extensive experience delivering THP systems to clients obligated to incinerate their biosolids. We have a long standing reference near Munich, operational since 2015, although broader adoption of THP technology in Germany has been challenging. As the country accelerates investments in climate and energy transition infrastructure, we remain optimistic about new opportunities.

Still, success in this highly competitive and regulation driven market will depend on securing projects that fit both evolving regulations and client priorities. Over the past period, we have reinforced our sales, marketing, innovation and project execution functions. These investments are now largely in place, enabling the organization to pursue contract opportunities with confidence. Demand for sustainable sludge treatment solutions remains strong worldwide. High energy prices and resource recovery requirements continue to drive decision making in many markets.

Regulatory attention is increasing, particularly on PFAS and microplastics in biosolids, with some regions moving toward restrictions on land application. Our technologies are designed to deliver flexibility, ensuring clients have viable options regardless of outlet constraints. In The UK, a new investment cycle in the water sector has begun. Combi is advancing several well defined opportunities and is making progress in turning these into projects, although the time line for contract awards will vary. From a financial perspective, the current order backlog secures activity through 2025 and well into 2026.

That said, the combination of existing project schedules and lower order intake over the next few quarters may result in a revenue dip in 2026. Finally, the Annual General Meeting in May approved dividends of NOK 0.3 per share and Board and gave the Board authority to declare up to an additional NOK 0.7 per share. With that, I will hand over to Mats for a closer look at the financial performance.

Mats Tristan Tiemsland, CFO, Canby: Thank you, Per, and good morning, everyone. I will now present the financials for the 2025. First, let’s take a look at some of the financial highlights. We are pleased to report a strong financial performance in the second quarter. It is primarily a result of good progress across our portfolio of ongoing construction contracts, as Per mentioned earlier.

We delivered a solid operating cash flow in the second quarter, primarily reflecting milestone payments from clients that were received as expected and in line with prior communication. The order backlog remains strong, providing visibility into activity levels in the near term. A dividend of SEK 30 per share was approved and distributed during the quarter. The Board was also authorized to approve additional dividends of up to 70 per share, contingent of the achievement of key project milestones. We report large unrealized foreign exchange gains in Q2, which are a result of hedging expecting USD cash flows by securing USD to euro rates at the 2025 for a large portion of ongoing U.

S. Construction projects. First, I’d like to take you through the consolidated income statement. Revenue for the quarter was recorded at an all time high of NOK $342,000,000 compared to NOK $3.00 6,000,000 in the same quarter last year, driven by high project activity level. Combi is maintaining a high activity level, delivering on its ongoing construction projects, and solid progress was achieved during the quarter as previously communicated.

We are pleased to see that the slowdown experienced in Q1 has been caught up. In Q2, we report a gross margin of 49%, which is lower than levels reported last year, but up from the previous quarters. A key driver for the reported gross margin is the revenue mix, which I will get back to in the segment walkthrough. Operating expenses are reported at million, which is up from NOK81 million a year ago. However, compared to the previous quarters, the increase is more moderate.

As Per mentioned, this is a sign that most of our communicated organizational investments in sales, marketing, innovation and project executions are behind us. As a result, EBITDA came in at NOK 75,000,000 in Q2, which is lower than the record high performance the same quarter last year, but up from previous quarters. Depreciation and amortization expenses are reported at a lower level this quarter compared to previous quarters. As mentioned before, this is the result of the previously acquired technology portfolio from Veolia now being fully amortized in May. Net financial items are reported at a very positive 35,000,000 in Q2.

This is mainly related to unrealized gains on foreign exchange forward contracts of NOK 24,000,000 in addition to positive AGO effects. Early in the year, Combi entered into forward contracts to sell USD and buy euros in order to cover a significant portion of our net USD exposure for existing projects in The U. S. This was made to reduce currency risk and provide greater predictability on our exposure towards USD based on the expected timing of milestone payments. I will now review the financial performance of the Technologies segment in more detail.

Revenue for the quarter amounted to $43,000,000 representing an increase both compared to the same period last year and also the previous quarter. The quarterly revenue marks an all time high for the segment. Following quarters marked by delays at client sites, there was good progress in the second quarter for many construction projects, which is reflected in the financial performance. The activity level was very high in the quarter, and both our U. K.

Manufacturing facility and the site delivery teams were fully engaged in delivering on client commitments. At the end of the quarter, there were 16 ongoing construction projects, slightly down from a year ago. And for five projects, there were no there was no progress in the quarter as Combi is awaiting client site readiness before commissioning. The gross margin came in at 52% in Q2, down from 58% in the same quarter last year. It is a result of mix of projects and FX effects.

Compared to one year ago, our revenue mix this quarter consists of projects where Combi has a larger scope, which typically has a lower margin than core technology sales. As an example, the announced change order on Versus in Q1 will, in isolation, have a very low gross margin. Regarding FX, a stronger NOK versus USD has a negative impact on the reported gross margin for our ongoing projects in The U. S. However, this needs to be considered together with the positive impact from the unrealized gains from our forward positions reflected under net financial items I mentioned earlier.

Operating expenses reflect our strategy of growing the organizational capabilities, reflecting our ambitions for the future and ensuring the company is well prepared for more complex project deliveries. However, in our view, most the most substantial part of this growth in personnel costs lies behind us. EBITDA came in at SEK 50,000,000 in Q2, down from SEK 59,000,000 in the same quarter last year, but up from the previous quarter. Depreciation and amortization expenses in Q2 reflect the fully amortized technology portfolio mentioned earlier. Let’s look at the financials for the Solutions segment.

In Q2, we reported revenues of NOK 98,000,000, up from NOK 95,000,000 in the same quarter last year and almost 2x the previous quarter. Also here, the quarterly revenue marks an all time high for the segment. Gross margins were reported at 44%, slightly up from levels in the same quarter last year and up from previous quarters. There was a high activity level for both subsegments in the quarter as expected for the season. Services saw strong spare parts sales and high activity levels at many THP sites, and Grenvecht had a very busy quarter as well.

At the end of the quarter, Grenvecht discontinued its soil retail operations, and the divestment process for a soil bagging facility continued. We will provide updates to the market as appropriate. As mentioned before, we are committed to reestablishing the profitability in Grundenwegst. Operational expenses were NOK 18,000,000, in line with the same quarter last year. When the strategic exit from the Soil Retail segment is completed, we expect additional fixed costs to be taken out from the segment’s cost base.

EBITDA was reported at $25,000,000 just above the levels same quarter last year. I will now review the order intake for the quarter, which comprises of the total value of newly signed contracts qualifying for inclusion in the order backlog as well as revenue generated outside the backlog, such as sales from spare parts, services and bulk soil sales. Order intake in the quarter was 102,000,000, up from NOK 63,000,000 in the same quarter last year. There were no awards above the market announcement threshold in the quarter, but several smaller orders were secured. The reported order intake in Solutions includes a $24,000,000 positive impact from a reallocation of backlog scope from a construction contract in the Technology segment to the Solutions segment.

The reason for the reallocations is due to the scope being services related following the project’s completion. At end of the quarter, the closing NOK exchange rate caused a slight positive order backlog currency impact of positive NOK 6,000,000 in the quarter compared to the previous quarter. Let’s take a look at the order backlog. The order backlog reflects the total value of contracted project work that Combi is committed to delivering in the future, and it is an important indicator of the company’s future activity level. The order backlog was reported at nine thirty eight million dollars in Q2, down from close to $1,500,000,000 at the same time last year.

Combi had 16 ongoing construction projects in the end of the second quarter, all in the Technology segment. At the end of the second quarter in 2024, Combi had 18 ongoing construction projects, of which 16 were in the Technology segment and two in the Solutions segment. The reported Technology backlog was just shy of NOK 700,000,000 in Q2, and it provides an indication for near term activity levels. At the same time, it also illustrates the need for new contract awards going forward to maintain profitability levels. The reported Solutions segment backlog in Q2 includes the remaining value of biosolids and garden waste handling contracts for Grenvecht, including extension options and some services related backlog mentioned earlier, but no upgrade projects.

As in previous quarters, we provide guidance on the expected distribution of the order backlog. Combi will gradually convert the backlog into revenues, which is expected to be recognized in the income statement in line with the indicated backlog distribution. The updated break down shows that we expect to convert around 80% of the backlog within next year. To be a bit more specific, around 95% of the reported Technology backlog in Q2 is expected to be fully converted within 2026, which means that the majority of the backlog breakdown beyond 2026 is within Solutions. To summarize, the backlog as of Q2 provides good activity coverage for the rest of 2025 in addition to activity coverage for parts of 2026 as well.

The company needs to sign additional construction contracts to maintain current activity levels in the future. On the right, we see that around 40% of the backlog is in NOK, around 30% is in euro and another 30% is in USD. The exposure to FX poses a risk for our financial reporting in NOK due to potential exchange rate fluctuations. Let’s move over to the balance sheet. At the end of Q2, accounts receivables stood at $287,000,000, significantly up from NOK 103,000,000 in the same quarter last year and the previous quarter.

As explained earlier, many projects made good progress in the quarter, reaching invoicing triggers. This is also why the earned but not invoiced project revenue has seen a solid reduction from high levels in previous quarters. It is now reported at $142,000,000 down from $246,000,000 in the previous quarter and lower than the same quarter last year. Cash and cash equivalents were reported at million in Q2, down from same quarter last year but up from the previous quarter. The increase in cash is mainly from receiving milestone payments from ongoing construction contracts.

Accrued project costs, including contingency provisions and guarantees, was reported at million, which is at the same level as the second quarter last year and up from previous quarters. Maintains a robust balance sheet. The company has no long term debt, and for the time being, our strategy is to continue being debt free. Now let’s turn our attention to the cash flow statement. Combi generated a solid operating cash flow, driven by several milestone payments from customers received in the quarter.

We expect to receive several client milestone payments over the next quarters as well. Cash flow from financing activities relates to the dividend of SEK 30 per share, corresponding to SEK 48,000,000 in total. The Board was also authorized to approve additional dividends of up to SEK 70 per share, corresponding to SEK 112,000,000. As mentioned before, additional dividends will be contingent on the achievement of key project milestones. This approach is designed to balance shareholder returns with prudent cash management.

Before we move over to the Q and A session, I’d like to provide some more details related to last week’s announced transaction with C P Cycles. Combi will acquire a 51% equity interest in C and P Cycles. The current shareholders will continue to own 49%, and the agreement establishes a structured pathway for Combi to acquire full ownership after five years contingent upon certain conditions. The exact transaction enterprise value is not disclosed, but on a 100% basis, the enterprise value is close to the midpoint of the small range used when announcing contract awards, meaning around the midpoint between $15,000,000 and $50,000,000 The share purchase of 51% will be settled in cash during Q3. The company has 10 employees and recorded revenues of EUR 3,000,000 in 2024, operating just above breakeven EBITDA.

Combi has acquired a controlling stake in the company, which means that it will be fully consolidated into financial reporting. The financial performance of C and P Cycles will be reflected in the Technology segment. The acquisition is structured with a lockbox mechanism from 12/31/2024, which means that Canby shares the economic results since 01/01/2025. The company will be included in Combi’s consolidated accounts from the Q3 twenty twenty five report, and it will then also include the financial performance for the year to date 2025. And with this, we are ready to move over to the Q and A session.

So have we received any questions, Dragos?

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Yes, we have received already some questions. And people can still send their questions, just use the QR code and send them in while we are starting to take the first one. And I think this one is maybe best addressed to you, Pei. You have previously stated that you may be looking to submit tender bids for greater scope in the future as compared to being strictly a subcontractor. Might your recent acquisition announcement be viewed as a step in that direction?

And if so, to what extent?

Per Lillebeau, CEO, Canby: Yes. It is correct that we are interested in doing bigger scope projects, but only in a defined geographical area, and that is Scandinavian countries, maybe Poland, Northern Germany. But the acquisition of CMP Cycles has nothing to do with our ambitions of bigger, say, EPC scopes. But on the other hand, they do contribute with interesting technologies, so that we possibly in other geographies are able to deliver, for example, digestor mixing and degassing systems, etcetera. So it will provide us with a bigger scope hopefully.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you. Next question, maybe this one is for you, Mats. Could you provide more details on the backlog for 2026? Should we expect most of this to be executed on early in the year?

Mats Tristan Tiemsland, CFO, Canby: Yes. So thanks for the question. I mentioned that 95% of the Technology segment backlog is expected to be executed in 2026. And I would say that backlog in Solutions is going to be evenly distributed. And then for the Technology segment, we would expect it to be much more diminishing, I would say.

So you could expect more early in the year. And this is in line with the kind of S curve that we have that I presented, for instance, in the previous quarter. So a more diminishing profile on the technology backlog.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats. I’ll move on to the next question. This one may be better addressed to Per again. The question is, I would be curious to hear whether you view the French company Veolia as a collaborator or a competitor or perhaps both depending on the context. And the same goes for SUEZ.

How is the competitive landscape looking with different tender scopes?

Per Lillebeau, CEO, Canby: Yes. As some of you might recall, we bought Veolia’s technologies a few years ago, and they used to be a competitor, definitely. But the way I look at them now, they are mainly a partner to Combi. So we have close relationships with them on a project development level. But on the other hand, these are big companies.

They do what is in their own interests above all. But if a customer wishes and it is in all interest, they will certainly use our technologies on their projects as well. So I consider them more as partners. That’s the way I see it now.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. I will move to the next question. What will the costs for the soil bagging facility be once operations are discontinued? Mats, maybe you can address this one. Sure.

Mats Tristan Tiemsland, CFO, Canby: So obviously, the variable costs, they are now taken out, and there will be some fixed costs for the facility. It’s mostly related to the leasing of buildings and also some land leasing agreements and some other various costs. But I would say the run rate of this is around 5,000,000 to €6,000,000 a year.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you. I will ask now a question, I think, to Per again. Could you speak to how the mix between developed and developing markets looks like going forward in terms of growth prospects over the next ten years or so?

Per Lillebeau, CEO, Canby: No. That’s an interesting question because I do we are observing definitely much higher interest from emerging markets and especially from big cities. Even if they lack, say, regulatory requirements in many emerging markets, the sheer size of the cities makes combis technologies interesting to them. And this is a marked shift that I’ve seen over the last year, especially maybe even longer term since we started to see this. But it is in request from cities in The Middle East, Asia, South America, especially, I would say.

But on the other hand, markets where we really rely on, they are the traditional markets, is The U. S, The UK, Australia, New Zealand, Scandinavia. And also in addition to the markets where we have invested heavily over the last years, we’re investing in France, as I mentioned earlier, Saudi Arabia, India, and we’re also focusing a lot on some of the South American markets. But it is interesting to see. And some of these projects are seriously big.

So they will have a big impact. But our it’s too uncertain to take into our, say, sales forecast internally in order because we have to be aware of complexity and decision making in some of these countries.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. The next question, maybe again passing it to Mats. For a new typical future THP contract, Could you roughly indicate the cost resulting from the execution and delivery of the contract? How it’s distributed percentage wise between gross margin and OpEx? And how will the cost share in OpEx be distributed between payroll and other OpEx?

Mats Tristan Tiemsland, CFO, Canby: Okay. So thanks for the question. It’s going to depend on the project obviously, but also on the type of scope. I would say it’s a big factor. So I would say for projects where we have a more core technology delivery scope, we could assume around 90% of the total cost for the projects will be the material services or the COGS, with the rest being in operating expenses.

And kind of the remaining 10% in operating expenses is going to be split around fifty-fifty on payroll personnel and other costs such as travel, consultants and so on. Obviously, it’s going to vary where in the world the project is delivered, how much we hire in or how much we do ourselves. For bigger projects or bigger project scopes, I would say the materials, goods and services is going to be more towards 80% of the total cost for the project, with the remaining 20% also being split more or less fifty-fifty on type of payroll costs and other project related costs. So I think that gives you a good indication on those project economics.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats. Now we have a question that is related to our presentation on PFAS and emerging contaminants. Maybe, Peri, you could address that since you spoke about PFAS during the presentation. What impact on profitability, if any, would you expect if we assume that restrictions on land application of biosolids were to become broadly more stringent going forward?

Per Lillebeau, CEO, Canby: It’s interesting. But the the main risk as we see it is that it may delay projects because it makes the decision makers uncertain of the way forward. And they will be looking at if there are technologies that may make them absolutely certain that they will not meet this problem in the future. But the way I I see it is that there are no technologies available for the time being except for incineration if you want sludge to completely go away. And I think it’s important to remind you all of that 20 of our more than 90 references actually today deliver to incineration plants.

So incineration is the final solution to many of our references already. But I the way I see it is actually that Combi can also can also be an advantage to Combi simply because we are looked upon as a what we call a no regret technology because we reduced the volume that makes it easier for them to either go to incineration or other solutions. So it’s difficult to say, but so far, I cannot say that we have observed any difficulties or delays. But we are prepared that it could delay some decision making in the time to come.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. We have now a question about C and P cycles. Maybe Mats can address it. How much did you pay for the acquisition? And do you have any information on how much revenue it will bring and potential synergies?

Mats Tristan Tiemsland, CFO, Canby: Yeah. So as I mentioned earlier, we we do not disclose the the enterprise value of of the company. It’s close to the midpoint of the small contract range, as I mentioned, so between EUR 15,000,000 and EUR 50,000,000 on a 100% basis. However, as I mentioned, the settlement will be in cash for the 51% and it will then also be disclosed in the Q3 report for Combi. So you will find more information in our Q3 report for the exact purchase price.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats. We are now moving to The UK. Maybe I will address this one to you, Per, again. How do you assess the ongoing discussion about land bank availability in The UK? To what extent will stricter regulations impact the demand for thermal hydrolysis?

Per Lillebeau, CEO, Canby: Generally, I mean, regulations is a tailwind for Combi. And the fact that we reduced the volume by close to 50% and makes it more easily available for land application should definitely be an advantage if the land bank shrinks. And this is what we are seeing. This is the information that we are getting back from the market. It means something to reduce the volume by 50%.

You would like to go back to a situation where they are have to handle double the double number of trucks out of the out of the gates of wastewater treatment plants. And also the the restrictions, the driving distance is is also increasing due to these restrictions. Therefore, it makes makes a lot of sense to to apply companies technologies here.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. I will remind everyone once more, maybe the last time, that they can still send in their questions. And I’ll move on now to another question for Mats. Is the project mix expected to continue to weigh on the gross margin in the technology segment for the next few quarters?

Mats Tristan Tiemsland, CFO, Canby: So I mean, the backlog now consists of a project mix, which has, I would say, historically high share of project with extended scope. Extended scope projects do have a lower gross margin than core technology deliveries. So as we continue to execute on our current backlog, I would say that this is something that we expect in the periods going forward. Also FX, I mean, will influence the reported gross margins, although we have some positive effects on net financial items, for instance, on USD this quarter on the gross margin in an isolated view, and that could also influence the reported gross margin. And also in terms of what type of projects we sign going forward, if it will be extended deliveries or more type of core technology deliveries.

So that will also influence the gross margins going forward.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Mats. We’ve covered lots of different topics, but we haven’t yet spoken about The U. S. So maybe to you, Per. How do you see activity in The U.

S. Market now? And a follow-up question or an add on question on the same, what options are you exploring

Per Lillebeau, CEO, Canby: Well, we do have a very strong position in America. And we are following up several interesting projects. So we do expect this The U. S. Market to continue to be very important for Cambri.

We have, I think, it’s 10 references now, and they all seem to be very satisfied with our technology. And they are standing up at conferences and telling about the good experience they have. We put a lot of effort into servicing our American customers the best we can. When it comes to production in The U. S, I would like to say that we have done this before, and it is fully possible for us to produce in The U.

S. But I think we have to acknowledge that it will be more expensive than producing in The UK. And like it looks now, The UK seems to be in a favorable situation regarding possible export to The U. S. So where the requirement is built in America and buy American produced equipment, we will have to do that, and that is fully possible.

But I have to admit, it will be probably cheaper to produce in The UK.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. Moving on to a question about the sales pipeline, maybe Mats, you can address that. Could you comment on the value of the sales pipeline compared to one year ago? And how much of the pipeline is now at an advanced stage of discussion or negotiations compared to a year ago?

Mats Tristan Tiemsland, CFO, Canby: We don’t comment on the value of the pipeline, but I can shed some light on the number of leads. So I think right now we have surpassed four fifty leads in the pipeline and a year ago it was around three fifty. So I think this is a result of the investments that we have done in sales and marketing to build the pipeline. When it comes of distribution in different stages, I would say it’s quite normal funnel type of shape where you have more on unmature type of leads and less towards more leads that are, you know, far far advanced and quite normal type of distribution.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you. And now something about regulation in the EU. We spoke a little bit about PFAS in the presentation, but there’s also the urban wastewater treatment directive. So maybe address to you, Per, what effects do you see on demand for THB and auxiliary equipment in Europe with the new directive? And what do you expect the timing of this impact to be for CANBE?

Yes. Well, these regulations are long term.

Per Lillebeau, CEO, Canby: The ambitions and the targets are set at a national level. But the not just the ambition, but what they have agreed to is that the wastewater treatment plants above a certain size shall reach energy neutrality within I think it’s all of them should be energy neutral by 2,045. But it’s going to be increased year by year. So by already by 02/1930, I think it is a certain percentage, 20% or so, that should be energy neutral. And this should and must have an effect, an impact on CAMBI.

The process that we have just started or the plant that we just started at Lillestorm, NRVA, is the most energy efficient of all plants. And that has been developed and patented by Combi and reduced our internal energy consumption by 30%, and that is substantial. So if to become energy neutral is important in Europe, this is a system that should be widely applied. It will be demonstrated now to customers from various countries. Another thing I would like to say with quaternary treatment technologies, more sludge will be produced.

So the need for sludge treatment will just be higher and higher in the time to come. But as always, when it comes to regulation, it takes time until they will impact our market. But I see only it should go only one way, and that is a higher demand for efficient sludge treatment technologies.

Dragos Talvescu, Senior Corporate Relations Manager, Canby: Thank you, Per. Thank you, everyone. I think this was the last question for today. So with that, we will conclude today’s presentation and Q and A session. A recording and transcript will be available later today on investor portal.

So thank you for your time, your questions and continued interest in Canby. And if you have any follow-up inquiries, don’t hesitate to get in touch. We wish you a pleasant day. Goodbye.

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