Cambi ASA ($CAMBI)

Good morning, and welcome to Cambi's First Quarter 2026 Results Webcast. Dragos Talvescu speaking, Senior Corporate Relations Manager. During the next 30 minutes or so, CEO, Per Lillebo; and CFO, Mats Tristan Tjemsland, will present the main developments for the quarter, including operational progress, financial performance and relevant updates. A Q&A session will follow the presentation. Questions may be submitted at any time by scanning the QR code displayed on the screen. Questions received during the silent period and therefore, not addressed in the past 30 days will also be taken. Please note that the presentation may contain forward-looking statements based on current expectations and assumptions. Actual results may differ as a consequence of risks and uncertainties. With that, it is a pleasure to hand over to Cambi's CEO, Per Lillebo.

Good morning, everyone, and welcome to Cambi's presentation of the first quarter 2026 results. Let me start with the key highlights for the quarter. We have reported lower revenue. This is mainly a reflection of larger contracts now nearing completion. We have signed 2 THP contracts in the U.K. with United Utilities. This was the main event of the first quarter. We have entered into a THP leasing contract of our B2 systems with Thames Water at the Oxford wastewater treatment plant. We have seen a stronger Norwegian currency that has impacted our financial results and turnover. Gronn Vekst has finally started to restore profitability. The annual general meeting has approved a cash dividend of NOK 0.30 per share, and the Board was authorized to declare additional dividends during 2026. These are the main highlights in the first quarter. Let me move on to the order intake for the quarter. We've had a good start in 2026 with several new contracts in the first quarter. I've already mentioned the twin contracts for United Utilities in the U.K. These are part of AMP 8 investment cycle that will last until 2030. The main driver, as we see it, is to reduce methane emissions and to meet the requirements of the industrial emissions directive. Already -- as I already mentioned, we have entered into a 1-year lease with Thames Water at the Oxford plant with another 2-year extension options. Gronn Vekst as through its joint venture with the intermunicipal company, IVAR in Stavanger in Norway entered into a 5-year operational contracts to handle their garden and biosolids waste. There is another 4-year options. So the contract may last for 9 years. Several of Gronn Vekst contracts lately have a long duration, which is good and provides visibility for the future for both Gronn Vekst and the customers. Let me move on to the Technology segment. The focus has been on project deliveries, and there have been high activity across all disciplines. We have been doing commissioning at Frevar. Frevar is the plant, the EPC project we are doing in Fredrikstad in Norway. We are doing commissioning at Safi in Morocco. We are ready to do commissioning in Perth and in Wellington in Australia. Installation has progressed well at several sites in San Francisco, in Louisville, and Tuas in Singapore, and Veas in Norway. And all these 4 projects are very big projects, extensive and requires a lot of resources from the organization. We are working on 3 projects with manufacturing at the workshop in the U.K., and that is Palma de Mallorca and Santiago de Compostela, both for the Spanish market. We have also started production for the Versova plant in Mumbai. This is partly the split production between the U.K. in our workshop and production in India. And this is absolutely very exciting for Cambi to gain experience of production in India. There's clearly a lower production cost level in India, and we are absolutely dependent on production in India to stay competitive in that market. But so far, the experiences are good. But the final result, we will see when the plant is in operation, but we're following it very thoroughly up with supervision, et cetera, on a daily basis. We have started engineering for 2 U.K. projects, that is Blackburn and Ellesmere Port, that I've talked about already. The next slide, that illustrates Cambi's geographical spread and how we are using our organization. We're working all over the world from -- yes, this is nearly extreme from Hawaii to New Zealand. I have to say that I'm impressed myself for how we are working together 28 nationalities. We are working at 15 projects in total at various stages. And in addition, we are executing works at several plants in connection with upgrades and services. To illustrate how we are working, we have Chinese project managers that are doing projects in Hong Kong and in Singapore and New Zealand and in Australia. We have people from China that are doing commissioning works in the United States and in Norway. So this is how we are using our organization to be able to cope with projects all over the world. To say a few words about our Technology segment under CNP CYCLES. CNP CYCLES has been busy with commissioning at their, let's say, their -- the main product, which is a, what we call it, inDENSE. It improves how sewage sludge settles in wastewater treatment plants as it increases capacity. So this is a standardized product that they have delivered to several plants that are on the limits when it comes to emissions from the plant to meet the requirement in order to stay within the limits. They are doing digester mixing commissioning in a project in Jordan As-Salt. They are doing the same. They've just delivered equipment to another project in Jordan in the capital city of Amman. It will also be in digester mixing in Vicenza in Italy, they have delivered a low heat chemical hydrolysis plant ready for commissioning. Now we are waiting for the customer to be ready to start to let us start the commissioning. The main -- one of the main advantages by acquiring CNP was to broaden Cambi's customer base. You see that they are working in several countries, not just Germany. The main argument for Cambi was, of course, to enter the German market and also to have access to more products to sell through our extensive sales organization. We are working together and helping each other. That is the key. So cross-sales opportunities appear. We are trying to use their products in all the projects that we are involved in. And as I mentioned, it broadens Cambi's customer network. Let me say a few words around the Solutions segment and Services. We have entered into operational support assignment at the site in the U.K. lasted for a bit more than a month or so. This is maybe a sign that there will be more of these assignments in the time to come. We have seen that the market for heat exchanger cleaning is there. We see more and more requests for that new offering from Cambi Services. Winter and the first quarter is normally a more quiet period where we are preparing for the spring season and for the rest of the year. We see a relatively strong growth in Services, and that's a clear investment area for Cambi, where we need to increase our organization even further. We have done 4 smaller upgrades where we are replacing the legacy gamma-based level measurement systems at older THP plants with more modern instrumentation. We have done feasibility study for a large upgrade project in U.K. Plus continues to be adopted and very often introduced in connection with performance guarantees. We see more and more request for Plus, and we are confident that this is a very important tool for Cambi going forward, especially towards services, but also as a tool for Cambi an opportunity to learn from operations in all plants. Plus means process live update support. This means that we have received continuous system or continuous update of how the process plant is developing. It has also been extended beyond just the THP plant. So now we are able to surveil how dewatering, the digester, et cetera, is operating. So this will continue to grow. I will say a few words around the Gronn Vekst. Bulk soil sales are stable, more or less at the same level as the same quarter in '25. Organic resourcing is working as planned. This is the most stable part of Gronn Vekst. Organic resourcing means the sludge handling, the sludge disposal, et cetera, for the company. This is a very -- relatively very stable operation. The operational efficiency is in focus, and they have managed to lower their cost. They've been able to increase profitability. So we clearly see a financial improvement. We are about to restore profitability in Gronn Vekst. The soil bagging facility is still an issue for us to execute, but we are working on it. Events after reporting period, we have entered into now a firm contract with NCC, an Indian company, not to be mixed with the Swedish NCC. This is an Indian company, nothing to do with a huge Swedish company. We will deliver 2 THP B6 systems to Malad. We have also entered into a contract with Watercare for the Rosedale plant in Auckland. We have -- so far, it is an engineering contract. We expect notice to proceed in 2027. Last week, we also entered into an engineering contract in a South American project. This is below the threshold for reporting to the stock exchange, but it is a very important sign that we seem to be competitive also in emerging markets. Regarding outlook, I would say that the strongest near-term activity will continue to be in the U.K. This is an important and strong investment cycle that the U.K. water and sewage companies are in now. It will last until 2030. So it will continue. There are still more projects to be done in that market. The U.S. imports have been done. We are now, as I mentioned, in the middle of installation. We have been able to recover most of the tariffs. Some of the tariffs are still disputed, but it is nothing that we are particularly worried about. We believe that we will be paid for all the tariffs that have been imposed on Cambi that we cannot guarantee. But even the numbers will not be huge. It will not have a big impact on our financials. In India, the focus is now gradually shifting to other cities away from Mumbai. There are several projects under development in India, but really difficult to say how fast they will move. I think what is important now is to see the outcome of how well our plants in Mumbai is working, and that will probably be the key issue going forward. We are extremely important -- extremely interested in seeing and helping our customers to -- with operational excellency in those plants. Production in India is going on. And so far, has been -- we're satisfied with the result and the quality, but a bit too early to tell. As I mentioned, Gronn Vekst continues to improve profitability. The annual general meeting in Cambi approved an ordinary cash dividend of NOK 0.30 per share and authorized the Board to declare additional dividends based on the 2025 results. Mats will cover the details in his presentation. Based on the current visibility, Cambi maintained our estimate that operating profit in 2026 will be lower than in 2025. The company remains confident on its long-term growth outlook. Thank you. With this, I would leave the floor to Mats.

Thank you, Per. Good morning, everyone. I'll now take you through the financials for the first quarter. Let me start with some financial highlights. Revenue in Q1 was NOK 179 million, reflecting good progress across our project portfolio, combined with the expected seasonal slowdown in the Solutions segment in Q1. EBITDA came in at NOK 23 million, up from NOK 14 million in Q1 last year. Operating cash flow was slightly negative at minus NOK 4 million. This is an improvement from Q1 last year, although it is lower than previous quarters. Order intake was NOK 348 million, driven by the 2 large construction contracts in the U.K., as Per mentioned. The order backlog ended at NOK 1.2 billion, which is broadly at the same level as last year, and the backlog continues to provide good visibility on the future activity levels for Cambi going forward. Finally, as was just mentioned, the annual general meeting approved an ordinary dividend of NOK 0.30 and has also been authorized to approve additional dividends going forward. Let's have a look at the consolidated income statement. Revenue for the quarter was down 21% from 2025 and from 2025, where it was NOK 225 million. The decrease mainly reflects that several large construction contracts are now nearing completion, as Per mentioned, while newly awarded contracts are still in an early execution phase. Gross margin was 62% compared to 47% in Q1 2025. The improvement mainly reflects the revenue mix during the quarter. We had lower costs for materials, goods and services relative to revenue, driven by higher share of core technology deliveries and a lower share of EPC-type projects. OpEx was NOK 88 million, down from NOK 92 million in the same quarter last year. This reduction comes despite the full quarter consolidation of CNP CYCLES, and the decrease is mainly explained by the exit of the soil retail business, Gronn Vekst and the positive effects from a stronger look on operating expenses in the quarter. EBITDA was NOK 23 million, corresponding to a margin of 13% compared to NOK 14 million and a 6% margin in Q1 last year. The improvement was mainly driven by stronger gross margins in the Technology segment and better performance in the Solutions segment. Depreciation and amortization were lower than in the same quarter last year, and this mainly reflects the fully amortized IP portfolio from Veolia and was partly offset by new amortization of the CNP transaction. Net financial items were negative NOK 11 million, mainly due to a stronger Norwegian krone against euro and U.S. dollar. Profit before tax was NOK 8 million, while net profit for the quarter was NOK 7 million, both slightly higher than the same period last year. Let's have a look at the Technology segment. Revenue was NOK 119 million in Q1, down from NOK 176 million in the same quarter last year. The decrease reflects that several large THP construction contracts are now nearing completion and new contracts are starting to ramp up. And project execution continued according to client schedules and the 2 U.K. contracts that were announced in the U.K. only contributed limited in this quarter because it's still in an early execution phase. Gross margin was 77%, representing a strong improvement compared to previous quarters. This was mainly driven by a favorable revenue mix with fewer EPC projects and a higher share of core technology deliveries. In addition, the release of accrued project contingencies on projects nearing completion further supported the strong margin in the quarter. OpEx were NOK 70 million, broadly in line with Q1 last year. However, as mentioned earlier, this quarter includes CNP CYCLES, which was not a part of the group in Q1 last year. EBITDA was NOK 21 million, slightly above Q1 last year despite the lower revenue level. At quarter end, Cambi had 19 ongoing construction contracts, up from 17, 1 year earlier, mainly due to the inclusion of the project portfolio of CNP CYCLES equipment delivery contracts. Now let's take a look at the Solutions segment. Revenue was NOK 60 million, up 23% from NOK 49 million in Q1 last year. The increase was mainly driven by higher activity in the recycling subsegment where Gronn Vekst delivered according to plan on a historically high order backlog. Gross margin was 32%, broadly in line with the same level last year, reflecting seasonality and the revenue mix in the quarter. OpEx were NOK 80 million, down from NOK 22 million in Q1 last year. This reflects the phaseout of the soil retail activities, together with the broader profit improvement program in Gronn Vekst, as Per mentioned earlier. EBITDA was NOK 2 million compared to negative NOK 5 million in Q1 last year. The first quarter remains a seasonally quieter quarter for both soil sales and on-site services. And Gronn Vekst continues to focus on improving profitability through more efficient bulk soil production and lower underlying cost base. And as was mentioned, the company also continues to seek a solution for the soil bagging facility and the associated land lease agreements, which currently have an annual cost of around NOK 2.5 million. Let's move over to the order intake. Order intake was NOK 348 million in Q1 compared to NOK 170 million in the same quarter last year. The main contributors were the 2 equipment delivery contracts in the U.K. already mentioned, and Cambi also signed a 3-year leasing agreement for a smaller THP system in the U.K. The order intake also includes sale of spare parts, bulk soil and VOs for ongoing construction contracts in addition to smaller contracts below the stock exchange announcement threshold. Due to the strong NOK at quarter end, the backlog includes a negative foreign exchange effect of NOK 32 million compared to the previous quarter. This is reflected in the order intake and the order backlog. Now moving over to the order backlog. The backlog ended at NOK 1.2 billion at quarter end, which is broadly unchanged from Q1 last year. The Technology backlog was 20% lower than 1 year ago, reflecting progress across the THP construction portfolio. This was partly offset by the inclusion of CNP CYCLES project portfolio, which was not included last year. The Solutions backlog was 90% higher than Q1 last year, mainly due to the major biosolids handling contract awarded to Gronn Vekst in September last year. Please also note that the contract that was announced by Gronn Vekst in Q1 this year relating to the garden waste and biosolids handling in Western Norway is not included in the reported order backlog. The reason is that the company awarded the contract is jointly managed rather than controlled by Cambi. It is, therefore, accounted for using the equity method, meaning that the financial performance will not be consolidated into Cambi's financial figures. Instead, it will be recognized in our share of the net result. And Gronn Vekst's share of the total contract value, including options for this contract is exceeding NOK 100 million. Overall, the backlog continues to provide good visibility for future activity levels for Cambi. Let's take a look at the order backlog distribution. Approximately 40% of the order backlog is expected to be delivered during the remainder of 2026, and is mainly related to ongoing Technology construction projects. The longer-term backlog mainly relates to Gronn Vekst's biosolids and garden waste contracts, including the extension options, which historically have been executed. Around half of the backlog is denominated in NOK, while the remainder share is mainly in euros, British pounds and U.S. dollars. And as we have seen this quarter, currency movements will continue to affect reported figures in NOK for Cambi. Let's move over to the balance sheet. Cash and cash equivalents were NOK 282 million at quarter end compared to NOK 100 million 1 year earlier. This mainly reflects milestone payments received from ongoing construction contracts during recent quarters. Accounts receivable were NOK 80 million, down from NOK 189 million in Q1 last year, reflecting receipt of milestone payments during this period. Earned but not invoiced project revenue was NOK 244 million, broadly in line with Q1 last year and reflects the timing differences between revenue recognition and invoicing milestones. Inventories were reduced to NOK 92 million, down from NOK 154 million 1 year earlier, mainly due to lower work in progress for ongoing construction projects. Cambi continues to have a strong balance sheet with no long-term debt, and we remain well positioned for future growth. Let's take a look at the cash flow statement. As mentioned, operating cash flow was negative NOK 4 million in Q1 compared with negative NOK 53 million in the same quarter last year. The cash flow reflects the milestone payments from customers together with normal timing differences in project accruals. Changes in project accruals mainly reflect recognized profits that have not been received in cash. Investment cash flow during the quarter was limited, and there were no financing cash flow in the quarter as well. At the end of Q1, the cash stood at NOK 282 million, as mentioned earlier. Before moving to the Q&A, a short comment on dividends. The annual general meeting approved an ordinary dividend of NOK 0.30 per share for the 2025 financial year. The Board has also been authorized to declare additional dividends based on the 2025 results. Any additional payments will depend on continued achievement of project milestones and the financial position and outlook for Cambi. This approach is similar to last year, and it is intended to balance shareholder returns with prudent liquidity management. With that, we are ready to move over to the Q&A session. Thank you.

Thank you, Per and Mats for the quarterly update.

Thank you, everyone, for remaining with the webcast for the Q&A session. A brief reminder that you can still submit your questions via the QR code on the screen. We've received already a couple of them. So I will start with the first one. This may be addressed to you, Per. I understand that Cambi has grown and prepared the organization in recent quarters to handle potentially significant future profitable growth. If Cambi achieves significant profitable growth in the future, can we -- given that the organization has already grown, expect payroll and other OpEx to remain at about the current level, adjusted just for normal wage and price increases? Or should we expect an increase more in line with the percentage growth?

Yes. Thank you. It's a good question. We normally -- we do present Cambi as a scalable company. And that is -- that still remains. Cambi is scalable. But if turnover and activity level increases by 50% to 100%, we will have higher cost levels, but not in a linear way. It will increase, will have to increase. That is for sure. But higher turnover normally leads to a higher profitability for Cambi. But an area that I do think will continue to grow also cost-wise, but also income-wise, turnover, et cetera, that is within services. That part of Cambi has been undermanned. So we are increasing our capacity to do services, to do yearly shutdown to follow up our customers all over the world, but that cost increase also creates revenues. So I'm not worried about that part of Cambi. We do also need more for upgrade projects. These projects are the most complicated we can do in Cambi, and it requires a lot of competent manpower in order to do the upgrade project that they are also profitable. So we will continue to do that. I mean, I hope I answered your good question in a good way, but this is what I can say for the time being.

Thank you, Per. We have one more question. This one is probably better addressed to Mats. In 2024, the gross margin was approximately 55% and in 2025, approximately 50%. Do you have an expectation for the total gross margin for the coming years?

Yes. Thank you for the question. We don't provide guidance on the gross margin level going forward. However, I can say that it will depend on the segment mix. So we are -- we want to grow the Solutions segment. This typically has a lower gross margin than the Technology segment. So it will depend on how many projects we execute and how big our installed base will be and Gronn Vekst. But also within the segments, it is a quite a big variation between the gross margins. For instance, in Solutions, we do upgrade projects, which when they are successful, have gross margins very close to the Technology segment, but also lower type of gross margins related to organic resourcing, for instance. So we have a kind of quite broad range between activities within Solutions segment. And within the Technology segment, as we have touched upon earlier, also depending on core THP deliveries versus more broader EPC type of projects. So it will depend on the mix. So this is what I can say around kind of understanding the gross margin levels. And I think a good proxy is to look in the reported historical gross margins.

Thank you, Mats. Right now, it does not look as we have any further questions. So I think that just brings the Q1 2026 results webcast and the Q&A session to a close. A recording and transcript will be published on the investor portal later. Any further inquiries may be directed to the Investor Relations team. I think -- yes, there's just one more question, but I think we'll take that separately that just came in. So thank you for following Cambi, and have a good day. Bye-bye.