Earnings call transcript: Lamor's Q3 2025 revenue miss, stock edges higher

Lamor Corporation reported its third-quarter earnings, revealing a revenue of $22.1 million, which fell short of the forecasted $25.49 million. Despite the revenue miss, the company's stock price rose by 2.8% to $1.10, reflecting investor optimism driven by operational improvements and strategic initiatives.

Key Takeaways

• Revenue fell short of expectations at $22.1 million.
• Stock price increased by 2.8%, indicating positive investor sentiment.
• Adjusted EBIT improved to $4.4 million from last year's $3.9 million.
• Significant reduction in working capital by 45%.

Company Performance

Lamor Corporation experienced a challenging third quarter, with revenue declining from the previous year. However, the company demonstrated resilience with improved adjusted EBIT and a substantial reduction in working capital. The environmental protection market remains robust, though geopolitical risks and economic volatility have delayed service orders.

Financial Highlights

• Revenue: $22.1 million, down from the previous year.
• Adjusted EBIT: $4.4 million, up from $3.9 million last year.
• Adjusted EBIT Margin: 7.0% for the first three quarters.
• Order Backlog: $82.6 million.

Market Reaction

Despite the revenue miss, Lamor's stock price increased by 2.8% to $1.10, illustrating investor confidence in the company's strategic direction and operational efficiencies. The stock remains within its 52-week range, suggesting stability amid broader market trends.

Outlook & Guidance

Lamor maintains its adjusted operating profit target for 2025, with no expected revenue from the plastic recycling plant this year. The company is focusing on sales efficiency and delivery, with stronger project possibilities anticipated in 2026-2027.

Executive Commentary

CEO Johan Grön stated, "We are now happy to say that we are in the installation phase" regarding the Kilpilahti project. CFO Nalle Stenman highlighted the company's financial efficiency, saying, "We have been able to release about 45% of the working capital."

Risks and Challenges

• Continued geopolitical risks affecting market dynamics.
• Delays in larger service orders due to global economic volatility.
• Potential challenges in scaling the Kilpilahti Chemical Recycling Plant.
• Uncertainty in generating revenue from new projects in the short term.

Q&A

During the earnings call, analysts inquired about the Kilpilahti plant's ramp-up and financing negotiations. The management expressed confidence in meeting financial covenants and gradually implementing cost-saving initiatives.

Full transcript - Lamor Corporation Oyj (LAMOR) Q3 2025:

Tapio Pesola, Moderator/Host, Lamor: Good morning and welcome to Lamor's Q3 webinar. My name is Tapio Pesola, and with me today I have, as usual, CEO Johan Grön and CFO Nalle Stenman. Next, they will be going through the key takeaways from our quarter results, and then Johan will also give an update on the strategy execution and then the Kilpilahti project. We'll top it off with a Q&A, as usual. Without further ado, Johan,

Johan Grön, CEO, Lamor: Thank you.

Tapio Pesola, Moderator/Host, Lamor: There you go.

Johan Grön, CEO, Lamor: Welcome to the Q3 results webinar, also from my point of view. I would like first to start off with giving the Q3 situation brief. Starting with the first one that is focusing on solid profitability and improved cash flow in Q3. This has been one of the items that we have been working on since the second half of last year. Now it's showing also that we are progressing quite well in respect to the profitability part. This is, of course, supported by the quite strong equipment delivery and accelerated efficiency initiatives in the company, and showing up with a year-to-date adjusted EBIT that has improved quite significantly year on year. The efficiency initiatives include, as we talked about last time, that we are looking through the whole organization and streamlining and making sure that we have the right type of resources in different areas.

That has been going on since the beginning of this year and is part of the initiatives that we will continue to push through during this year and also throughout next year. Other savings are in, for example, external services and general cost efficiency improvements. This is a total review of the cost structure and the efficiency throughout the organization that is in our focus. A continued important area that I'm quite proud of, what we've done during this year and also during last year, is the cash flow, a focus on the cash flow. We've continued to improve the cash flow situation in the company by reducing the working capital. This is continuing, but this is something that is now on top of our minds going forward.

The strategy implementation, the circular oil concept plant that we have been working on in Kilpilahti, the first concept plant and the first phase of that concept plant, that is the ramp-up aiming for the ramp-up of the first line as a proof of concept. We are now happy to say that we are in, you could say, the installation phase at the moment. The commissioning is expected to be completed around the year end, with starting off with the ramp-up during Q1 in 2026. A great achievement compared to the early stages of this year. Happy to say that we are now in a very good situation, but we will come back to that later on in the presentation. Middle East expansion continues.

The service center is one of the steps that we are taking in the Middle East. I am happy to say that, for example, the Saudi energy company acquired equipment from us to support their water intake around both the energy production plants along the coast of Saudi Arabia, but also the desalination plants are also impacted by this part. We have now proven that we have localized the technology that will be a large share of the delivery to the Saudi energy sector in Saudi Arabia. The importance of the localized technologies is increasing, especially in the Middle East and in Saudi Arabia, as an example. This is a good example of how we have progressed with the strategy, step by step, and the service center is one of those steps. We will come back to that later on too.

I am especially happy about the port protection with the MARPOL-certified treatment facilities and the activities around those in larger ports. We have now completed the Bangladesh Mongla Port project, which is again a landmark reference for us and why not also for the industry. That has led to the situation that we are now being invited to do pre-feasibility studies for customers in respect to similar types of projects in the Middle East and also in other areas. There are two significant pre-feasibility studies that we have been involved in at the moment. This is a big step forward for us that we are in the very early stage discussing with the customer, speccing the port protection for the ports. That means that our technology, of course, will be in the focus for the bidding phase starting. The environmental protection market remains strong.

We do have delays in the larger service orders. In the larger service orders, the decision making is impacted by the volatility in the global economy at the moment, and that has caused uncertainties. A good example is that we are involved in the pre-feasibility studies for many customers. That means that we are speccing in our technology, but the final decision has been delaying. As an example, there we have South America with restlessness in several countries that has also impacted our business, especially when we are talking about larger orders. The demand also. Our execution in respect to equipment orders, and especially in environmental protection, has remained strong. Historically strong.

That's something that we pointed out also in the beginning of the year, that we will focus on making sure that we have an efficient sales approach, especially on the equipment side, to make sure that we maintain and can build on the strong reputation that Lamor has in this area. Here, the elevated geopolitical risks are also playing in our favor. Countries, organizations, and the interest around certain areas. A recent example of that is the Caspian Sea, where Kazakhstan is taking a large role in protecting the water bodies in the Caspian Sea. That's why we signed the MOU. That's why we are involved in making sure that the equipment side is a starting point of starting to build up that capability. There are other examples, but just a recent example of how we have been progressing in this area.

Just to give you a refresher of what are the cornerstones on the profitable growth that we are aiming for, with underlining the profitability in our growth. The first area, the environmental protection business, it's been progressing well in the sense of the equipment sales. We are on a historical level in respect to sales in this area. The larger service orders, we are in discussions with several countries. We have a strong reference base, and the most recent one is Saudi Arabia. That is spilling over to many other countries, and countries are taking, and organizations are taking this as an example. This is a reference business if we are talking about the service side in the environmental protection side. If we're taking the remediation material recycling, we don't have the 30 years' knowledge and competence in this area.

Now we've built up very strong references that are world-leading references. We are talking about soil remediation and also in material recycling where the MARPOL is, and also the drill cut references that we have in the company. Very important topics in many parts of the world at the moment, and especially for our industry. References are built. Now, strengthening our organization to focus on these areas too, that we can proceed and living up to the, let's say. When we are building up the expectations around the pre-feasibility studies in this area, we are sure that we can execute on the activities when we are going into the next stage of the projects. The last area is the chemical recycling plants, scaling up of that. We are now in the stage where we are doing the final installations in the plant.

We are getting ready for the cold commissioning and hot commissioning, and by the year-end, first drops of oil out of the plant, and then getting ready for the ramp-up of the production. This is for the first proof of concept line in Kilpilahti, and then we can make a decision regarding the next steps with three additional lines. Going forward towards developing the market and looking for two additional plants together with partners. As a basis for all of this is the efficiency, enhancing the efficiency throughout the company. That during the growth phase of the company has not perhaps been in the focus, and that's why we are now looking through the whole organization, the whole cost structure of the company and making sure that we are efficient in going forward.

An example, when I was talking about the environmental protection, this is, I'm really happy about what we've now been able to achieve in India. Together with the Indian Coast Guard, we have entered into equipment sales, but it's not only the equipment sales. We will be close to the Indian Coast Guard for the next 10 years, and that means that we will make sure that this equipment. Why should they do that kind of a service agreement just for a certain equipment. We are continuing to develop this close relationship, and it will be covering most of the Coast Guard stations around the coastline of India. We will be present at all the Coast Guard stations around the Indian coastline.

Not constantly, but we will have access to those and be able to evaluate, be close by the customer, and making sure that we are the one that is supporting them in oil spill response equipment and also expertise going forward. This is driven by the high geopolitical risk along the coastline of India. This is something that is still accelerating. This would not have been possible without the sales efforts and also strong partners, building up these kinds of strong partners in respect to customers. It's partnership. It's not just one-off sale and we are gone. No, we stay. We develop it together with the customer.

Woodside Energy, a unique offshore deep-sea drilling operation on the, let's say, outside the coast of Mexico, and where we are close to the customer, building up a similar type of relationship, staying with them for a long time and making sure that they are ready to attack if there are emergencies elevating in their operations. The Saudi service center is not just a service center. We are making sure that we are supporting the Kingdom of Saudi Arabia and, why not, also the GCC countries with locally made equipment. We are a part of the infrastructure in the country, and we are there to stay. That's an important signal to the customers, to the organizations, and to the Kingdom itself. That is something that has been a lagging thing for us at the moment.

We had the opening ceremony of the Saudi service center with all of the most important customers, organizations, and also government representatives taking part in the technical seminar afterwards together with the Ambassador of Finland that were supporting us. In that event, we gave an overview of the full offering that Lamor can provide to the country, and there were representatives from the other GCC countries also in the audience. A very important event, not only the opening of the service center, but an event where we cemented our presence in the region and closeness to the customers. I mentioned about Mongla Port. This is a landmark, international global landmark in respect to port protection that we built in Bangladesh. This will serve as an example for international operators of large ports.

The MARPOL certification of the ports with a number of points that are lifted out that need to be dealt with in the port. This is something that the logistical companies are requesting for when utilizing the ports. We built up the treatment facility together with our strategic partner, GreenFlow, and again, an example of how we are building up our path forward, that we are partnering up with a strategic partner, building up a long-term relationship where we can together build up a solution that is not just covering one specific part. It's a total solution for protecting the port with the treatment facility where we collect with the vessels, go out and collect liquid and the solid type of wastes that are oily wastes that are taken care of in this treatment facility. Again, one of the MARPOL requirements is tackled.

Another thing is that we are also providing vessels, oil spill response vessels that are equipped, fit-for-purpose vessels. These are vessel designs that are a propriety of Lamor that are built to serve oil spill response in this respect in the harbor area. There is a station with other equipment, personnel that are trained to take care of the treatment facility and also doing the oil spill response. A total solution around the port protection. This reference has led to the point that we can do pre-engineering and consultancy around projects, and this is now ongoing in two paid projects, and there are several that we are looking into. Targeting new deliveries of port protection projects that are aiming at dealing with the MARPOL certification for the ports. A landmark reference. Now I would like to give you an insight into the chemical recycling of plastics and our concept plant.

This is an animation that will show you the, let's say, the flow through the, let's say, from the resource, the feedstock that comes into the plant, give you a view of what the market looks like, and then going into the treatment facility and towards having the oil that is going out of the plant. What does the market look like for the offtake also of the oil itself. It gives you a vision of how we want to expand this when we have started up the first proof of concept plant, and we have verified the capacity and also the, let's say, the quality of the oil in full scale. You have to remember that we have done this exercise in lab scale.

Now we are starting up the pilot plant today that will give us the opportunity to test different raw material mixes together with chemicals required, so the catalysts. We are doing the startup recipe for the first plant, and that's ongoing right now. With no further words, I would like to give you an opportunity to see this animation and give you a sense of what is happening throughout the process. The process parts are not real technology itself, but it gives you a view, it gives you an idea of the process. That's the idea with the animation that we are showing you right now. Let's take a look at it. Okay. I hope that this gave you a better insight into the, let's say, the different steps that are involved in the chemical recycling of plastics with a slow pyrolysis process.

That word, the slow pyrolysis process, is one thing that is very essential for this process. There are several plants operating with this kind of technology throughout, mostly in Europe and then in North America at the moment. Where we are at the moment, we are in the final installations of the oil processing technology. The final phase of receiving the major technologies to the site has now started. Monday, Tuesday, we will have the major technologies on the site, and the installation work will continue towards the first oil around the year end. That will allow us to start the production ramp-up in Q1 2026 and deliveries to the customer start. This is very important to point out, that the ramp-up means that this is a continuous process. When we start the ramp-up, the process will not be starting, stopping, starting, stopping. It's a continuous work from that on.

That means we are optimizing the full production line during that phase towards reaching the highest possible efficiency and yield throughout the process. This is something that is now ongoing to get the first proof of concept line in Kilpilahti to full production and with a certified circular oil. We've also revised the investment estimate for the complete plant with four production lines. When we ramp up the first production line, then we can make the decision about going ahead and investing in the remaining three production lines. That estimate is now corrected to be around €60 to €70 million instead of the €50 to €60 million that we've had in our reports earlier. That is due to improvements related to the final quality of the oil, safeguarding that the quality will be the highest possible for our offtake. That is according to the requirements of our offtake customer, Shell.

There is also, due to environmental and other requirements for this in Finland, first of its kind type of this scale of a production unit, some requirements for additional things that we have tackled. That is the situation at the moment regarding the first proof of concept line and where we are. We are happy to see that now the cooperation together with the technology supplier is at its peak, and it's one team that is working with a common goal of having this plant producing certified circular oil for Shell in this case. With these different examples, I would like to point out that the portfolio that we have now with the environmental protection, remediation, restoration, material recycling, environmental protection. In all cases, it's a question about the reference business.

We have a strong brand in all these areas at the moment since we have the references, and we have shown the proof of the concepts and that we are a reliable supplier. That is an important step for us that we can rely on the portfolio that we have here and then continue to build up the capabilities around the global capabilities around the remediation and restoration and also the material recycling part. The efficiency initiatives to support this, a couple of points that I would like to make, that the target by end of 2026 is to save $8 million annual savings by end of 2026 compared to the 2024 level. We keep the profitability guidance for 2025 unchanged. That's an important thing, an important point that we want to make. We are focusing on reducing the use of external services.

This is looking through the whole operations of Lamor at the moment. We have not done that before. That's something that is now very important. Sourcing delivery efficiencies, that's an interesting area for us to now streamline and make sure that it's taken into account in a professional way. Optimizing the organization, we have seen that there are certain areas where we are still weak to be able to make sure that we are driving sales, for example, in the new areas and getting ink on paper in those areas. Support the customers that even in these restless geopolitical situations that they can trust us and also make their own plans and go forward. Overall improvements in the cost efficiency is also in a major focus also in this path forward in respect to enhancing the efficiency inside of the company.

Now I would like to invite Nalle to give us an update on the financials. Thank you, Johan. Good morning to everybody and welcome to our Q3 financial update section. We start by talking a little bit about our revenue and our profitability. Our revenue in the Q3 was $22.1 million and in the first nine months, $62.12 million. This was a little bit less than last year, but we are happy to say that we were still able to keep our adjusted EBIT level on a level of $4.4 million compared to the last year's $3.9 million, which is. Good in a situation where we have turnover less than $20 million. This left us with 7.0% margin for the first three quarters and the last quarter, 7.4% margin. Profitability remains solid on our three first quarters, but our turnover was a little bit lower.

Then how we like to show you the split of our turnover. If we look at the different product portfolio, our environmental protection and OSR is up compared to last year. Our remediation restoration was a little bit down because of not new orders yet, as Johan was telling during this year. Material recycling has diminished a little bit because of two things. Our Bangladesh project, the Mongla that Johan was mentioning, was finalized in the beginning of the year, and our recycling plant has not yet started. That's the reason why that is so low, or low portion of the business. From the equipment and the services side, the equipment has been going quite well and increasing its share of our product portfolio, whereas the services, especially from the bigger contracts, have gone down a little bit since we are waiting for new orders on that area.

If you look at the areas, we split them into our Americas, our Europe, Asia, and our Middle East and Africa. Here the Americas and Europe and Asia have increased this part, and Middle East and Asia decreased a little bit of its share, mainly because of the big service agreements that we are still negotiating and hoping to get in the coming months. The order intake for us was on the same level as last year for the full nine months, but for the last quarter, the orders were $17.3 million. This was also the reason why we adjusted our guidance for the full year turnover because we didn't reach what we were hoping for Q3, and they were moved to Q4 and forward, so the big orders. That's why it was necessary to change the guidance. Our order backlog was in the end of the quarter $82.6 million.

It is much less than in the previous Q3, but it's in a similar level than the end of the year or the beginning of the year. We are, of course, then expecting to have a strong Q4 in this, or at least hoping that. Now to maybe one of the most important slides of this financial update, our focus on working capital and cash flow. Compared to the last Q3 last year, we have been able to release about 45% of the working capital, which is on the left side of the slide, which is, of course, a big effort. That main part of it happened during Q4 last year, mainly because of increased focus on our Kuwait and our Bangladesh projects. We have also been able to continue this year, especially in Q3, to release some additional.

We have much work still to be done, but because we have been able to do this, I'm happy to tell that in Q3 we were able to get net cash flow from operations $6.2 million, and from the whole year, $2 million, whereas last year we had minus figures in both Q3 and the first three quarters. Our financial position is quite solid. Equity ratio is 35.7%, a little bit better than the last year's corresponding period. Net gearing was 86.8%, which is considerably lower than last year's Q3. Our investments on this last quarter were on the same level as last year. For the first three quarters, we have invested quite much more than last year. These investments are mainly going to our Kilpilahti factory. I think I'll hand back to Johan for the outlook and key focuses for Q4. Thank you.

Let's take a look at the outlook and key focuses for the remaining part of this year. We updated the guidance for 2025 on 19th of September in respect to the revenue. We keep the adjusted operating profit target at the same level as earlier in that update. The main reason here is that the revenue for the final quarter will be at or above the comparison period. A couple of things to notice here is that the revenue for the large service project in Kuwait is expected to be at a lower level than the previous year, and the growth of the other revenue outside of the large service project is expected to continue. The plastic recycling will not produce any revenue during 2025. The revenue is at or above the comparison period of last year.

What I also pointed out earlier in the presentation is that we are continuing to be strong in respect to the sales of the equipment part of our small service projects. That is continuing quite well, and this has an impact on the total business in this year. If we're talking about the medium-sized service projects and then the large, especially the larger service projects, the reference base is very strong. We are involved in pre-feasibility studies in several areas in the business lines that we have, and that is then. Something that we have not been earlier. This is then strengthening our possibility in the competition about these projects that we are showing the knowledge and also the strength of Lamor as a supplier in today's cases.

That is something that will now not give an impact in this year, but this is something that we'll see as a huge possibility then for 2026 and 2027. Focuses for the remaining part of the year: sales and efficient delivery. This is something that we have now been focusing on since the summer to make sure that we get the throughput and can recognize the revenue in this year and also at a strong profitability level. This is a focus on finalizing the tenders that we are out in at the moment and also the negotiations to be able to start deliveries. We will accelerate the efficiency initiatives and continue focus on the cash flow. That is something that is in place, and that is something that will continue throughout the year. It will, of course, be a focus also for next year.

The circular oil production, we are now progressing fast track towards a production phase. That, of course, is something that we are putting all hands on the deck to make sure that this will happen and the organization that has been built up around the project together with our partners in the value chain. We go to the next step, the questions and answers. Thank you, Johan. I'd like to welcome Nalle here as well with us to join us at the Q&A. You've sent a lot of questions, so we'll try to summarize them a bit because there's some questions from the same topics. I suppose we could start off with the Kilpilahti project, actually, because that's probably one of the things that investors are interested about. First of all, there are questions about starting the production ramp-up. Maybe Johan can comment on this.

When do you expect deliveries to customers start now? Maybe you could also comment on the length of the ramp-up process from start to then full production. What can we say about it at this stage? Yeah, as I said, really happy to see that we are in this stage now and we have a clear plan for finalizing the installation, going into hot commissioning, having the first oil by the year end. That means that we have completed the testing and producing the first drops of oil by the end of the year. We go into the ramp-up phase where we are optimizing.

Different stages throughout the whole process from receiving material with a certain mix, then being put into the production line and then optimizing everything from automation for the process to run it efficiently and, stage by stage, getting up in production efficiency, yield, and then also to improve the quality of the oil. We have a staged, let's say, contract structure also with the off-taker that is taken into account that there will be a start-up quality, there will be an improved quality step, and then there will be the target level that we will reach at a certain point. This is something that we have tested in lab scale, how to reach the, let's say, from the start-up quality till the final quality level.

Now we are optimizing then with the help of the pilot unit, we are optimizing the start-up recipe, what will be the, let's say, the process parameters to be able to reach the level that we are targeting. With the wrong mix put into the process, you will not get the right quality out. That is now what we are optimizing. In the ramp-up stage, we will then start to feed that recipe into the process, and then we are adjusting the process parameters throughout the process and then reaching the level that we can, let's say, deliver the start-up quality to the customer and then improving the quality and getting up to the level. The ramp-up period within Q1, this will stage-wise then go forward.

It's in a controlled way, planned way that we are testing and making sure that we are reaching the next level and the next level. Okay, thank you. That hopefully clarifies that. Obviously, we are waiting for the next steps there. About the investments, there's a couple of questions about those. Obviously, we in our report updated the overall cost estimate for the whole production plant with four lines. Now we are concentrating on the first production line, first phase. What are the investments now? Could you talk about what are the investments now required for this first phase to be completed? Thomas is asking about are you going to wait and see how the first production line performs and then may commit to further investments with further production lines? Requirements for this first phase and then decisions about the future.

I think that the second, if we take the second question first regarding the first production line, this has been the plan all the time that we start up the proof of concept of the first line. To make sure that we reach, we know the process parameters and the input to the process to reach the target level and also quality before we make investment decisions about the following lines. That's the point of the ramp-up period also. Regarding the, do you want to take that? It was about the full line. Yeah, the first line. Obviously, we mentioned in the report what kind of things that we are investing in. As Johan Grön mentioned, we are investing first and ramping up the first line. It doesn't mean that we haven't built the facilities mainly for all four lines.

Basically, now we have built the facilities and making the first production line. When it's working, like Johan said, we will then decide on the three following lines. From that amount that you said that we had updated a little bit the range, that of course considers the whole facility and the four lines. The biggest part of the full facility is already done. The first line is, as Johan said, in the next half a year, hopefully up and running. Yes. The final question about Kilpilahti, maybe more operationally, was then about that do we have anything, Nalle, that we want to comment on or can comment on the expected cash flows and earnings next year? Obviously, we haven't given any guidance for next year overall, but any comments? This is the first line, and it has the whole facility there.

We are hoping that it will bring some profit already next year. Yes, thank you. We'll obviously get back to that when, Johan, did you have something? I think it's very important to point out here that we are not talking about unique technology in that sense. We've looked through references out there and here also our, let's say, when we're talking about the oil production part where we have Promeko as the process supplier with connections throughout the industry, what is happening there. We've looked through a long list of investments that are ongoing in the construction phase, in the commissioning phase, and have been operating for years with the slow pyrolysis process. That means that you can change, let's say, temperature, the retention time, and also the use of catalysts. That is not possible in the fast pyrolysis process.

That should be forgotten if you're talking about the Kilpilahti case. It's quite rigid, the process itself. That means that if you are designing for a certain raw material with certain process parameters, you will for sure get the quality out that is required. In that sense, this is, wrong to say, but compared to many other petrochemical processes, this is quite, I would say, a rigid process. There are references around. Yes, thank you. I think we could pivot to, there were a couple of questions about financing, so maybe they are for Nalle as well. Can you comment on the financing needs and plans for Kilpilahti? I think there's a couple of angles here that are mentioned. Obviously, Kilpilahti financing, then there's the green bond mentioned. That's something that we have. There was a question also on covenants. We mentioned that in our report as well.

What was the situation in Q3 and how do you see them developing in Q4? Kilpilahti investments, green bond, and then covenants. I'll put it this way that we discussed already actually in Q2. We are actually discussing and negotiating with a lot of financial institutions about our full scope of loans as well as the required extra money still for the Kilpilahti first line. I want to highlight first line because we will do the first line first and then we will do the second to fourth later. We are concentrating on Kilpilahti one, getting it up and running. We have the bond, of course, which is due in August next year. We have, of course, our existing loans and the need still to finalize. As I said, the need to finalize Kilpilahti is for the first line.

We are in the, like Johan said, by end of the year or around end of the year, we are thinking that the first oil will come. The ramp-up phase is in Q1. It starts to generate also cash towards the end of the year. This is part of the full financial planning which we are doing together with financial institutions and negotiate. For the other part, for the covenants, yes, we had Q3, we had a little bit discussed with the bank because of our investments that we will increase to 3.75. We were under it, so that's fine. At the end of the year, it's back to the 3.5, which would be okay based on, as we said, the Q4 will be above or at the level or above in revenue for Q4 in 2024. Last year, if I remember correctly, it was about $32 million plus.

We hope to keep our relative profitability as well. Having a $10 million higher turnover will certainly give us a better EBITDA or operating profit for Q4 to help out there. We are confident with the covenants also at the end of the year. Of course, anything can happen, but as it looks now, we are quite confident. Thank you, Nalle. I think there were a couple of questions here still. Let's take the cost efficiency actually next. We announced obviously in Q2 that we were accelerating our cost efficiency initiatives. Mentioned the $8 million overall cost savings target until the end of next year or by the end of next year. What would you say about, do you want to comment on, Nalle, on the progress with those initiatives so far? I'm quite happy with the progress so far.

We've looked through the whole organization, as I said earlier in the presentation. We have pinpointed certain areas where we are digging deeper. This is a way to make sure that we take out the inefficient parts of the organization. With, let's say, a fast growth that we've gone through during the years, let's say, since 2021 till today, that is required. It's nothing extraordinary in that sense. You want to add something? No, I think that is good. Like Johan said, we are on the way, only one quarter, basically one effective quarter, we have been able to do this. If we look towards the end of the year, we're looking that we are going to reach probably the target set for this year.

We are well on the way then to keep these and implement more initiatives and more actions to reach the $8 million then on the full year level in 2026. This is a step by step. You cannot implement $8 million in savings in a quarter, but you can lay the foundation for it in two quarters and then start realizing in the next year. I agree with Johan that we are on a good way to reaching them. We haven't done it yet, but we are on the way. Yes. Thank you. Certainly that work also continues, and we look forward to telling you more about it in the upcoming quarter reports as well. I think we are now approaching a time when we need to conclude this, but maybe there was obviously, we discussed the Q4 expectations and also there was the profit warning earlier in September.

Questions about, and Johan also discussed the market and the uncertainties. Maybe we could conclude with a question about orders having been shifting this year and now from Q3 forward. How would you, you already discussed this a bit, but could you elaborate a bit on these orders which have been moving? What are we talking about? I'm really happy with what has happened in respect to the equipment sales. That is then mostly in the oil spill response. If you're talking about the larger scope type of orders that are requiring, let's say, the pre-feasibility going into feasibility, it's a process that is quite different and requires decisions throughout this process. We are very aligned with the customers, but with the situation, the global situation at the moment, there is a tendency towards moving the decision point in this process. That is something that we've experienced.

That's why we also did the, let's say, where we revised the guidance regarding the revenue for this year. That's why we also see that this will push into next year. As I said, the market overall is very interested in all the different areas. The decision making, if we're talking about larger orders, that's a challenge at the moment. We obviously will continue working with our customers on that. At this time, I think we've almost used the hour that we had. I would conclude this Q&A. Thank you for joining us today and look forward to talking to you again. Thank you.

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