Thank you for standing by and welcome to the Fluence Corporation 3Q FY22 business update. All participants are in a listen-only mode. If you wish to ask a question, please type your question into the Ask a Question box and click Submit on the webcast page. I would now like to hand the conference over to Mr. Tom Pokorsky, CEO. Please go ahead.
Good day. Thank all of you for calling in. We really appreciate it. As the moderator said, I am Tom Pokorsky, the CEO, and along with me are Richard Irving, our Chairman, and Natalya Medinina, our VP and Corporate Controller.
As you will hear a little bit more from Natalya later, we had a solid third quarter, and virtually every number was higher than last year year-over-year, as Natalya will get into. We had a particularly strong September from an EBITDA standpoint, and that brought us to a positive EBITDA state year-to-date. Of particular interest in the third quarter, we made an announcement earlier that we booked our first wastewater project as a service.
We sold an MABR system to a resort in Jamaica, which will be giving us, when started up, $175,000 a year recurring revenue for up to 10 years. We do continue to see some slowdowns in China, as many of our projects are being delayed due to the COVID restrictions.
We do not expect this to change much before the end of the year and are just keeping track of it. We are, however, redoubling our efforts outside of China and Southeast Asia and building a significant pipeline there. On the Ivory Coast project, we continue to progress on schedule.
While we will basically meet the revenues planned for the year in euros, due to the exchange rate of euro to dollar, our revenue will be lower in dollars as well as the EBITDA, and Natalya will detail that for you in a bit. We're pleased to announce that the board of directors has approved taking Italian assets off the for-sale list in our company.
We are going to start marketing the Italian products actively, immediately. Over the year, we found an increased interest in high strength wastewater treatment systems and waste to energy systems. The Italian products are well suited for that marketplace, and in fact, they have a significant installation list as reference. We expect some significant opportunity from that area going forward. Finally, I'd like to announce that we have hired Ben Fash as our new CFO.
Ben will be joining us around the end of the year, and Ben comes to us with significant experience both as a CFO and in the capital market sector. Ben spent over seven years as CFO for Newterra, a water company very similar to Fluence. I personally was chairman of the board while Ben was CFO, so I've had the pleasure of working with him for a number of years.
I'm pleased that he will be joining us. Before I go, I just want to point out that I wanna thank Natalya for the wonderful job she's done in the last several months, filling in for the duties of the CFO. She's done a great job, and she'll continue to do that through the end of the year and then be Ben's right-hand person to get him moving and transitioned into our company. Thank you, Natalya. With that, I will turn it over to Natalya to report the numbers.
Thank you, Tom. Let me start my section with saying that in October 2022, the company made the decision to retain its Italy high strength wastewater treatment solutions business. Accordingly, the Italy business is no longer being classified as an asset held for sale. The third quarter results, as well as the prior period results that we are reporting today, include Italy business unit results.
In the third quarter of 2022, we had unaudited revenue from continuing operations, including Italy, of $29 million, which is up 33% comparing to third quarter 2021. In third quarter year to date, the unaudited revenue from continuing operations was $93.2 million, which is 39% higher than the revenue in the same period in 2021.
The revenue from Smart Product Solutions for Q3 was $10.9 million, which is 95% higher than the prior period Smart Product Solutions revenue of $5.6 million. The year-to-date revenue is $25.1 million, which is up 22% from the $20.5 million in the prior period. We continue to focus on improving operating efficiency and prudently managing expenses while supporting the growth of the business.
Our operating expenses in Q3 year to date continue to be reduced on a percentage of revenue basis, falling to 21% of the group's revenue comparing to 25% in the prior period. The weakening of the euro relative to the US dollar exchange rates during Q3 resulted in a reduction of a reported revenue and profit from the Ivory Coast project.
Fluence continues to have a strong cash position with a cash and cash equivalent balance of $25.8 million at the end of September 2022. In addition, the company holds $13.8 million in short-term and long-term liquid investments that provide adequate operating reserves. Net cash flow used in operations in Q3 was $7.2 million.
Mainly due to Ivory Coast project lender payments being higher than Ivory Coast collections received in the current quarter according to the Ivory Coast milestones collection schedule. Fluence reported contract backlog of $62.6 million at the end of September, of which $27.4 was related to the Ivory Coast project and $23.5 was related to Smart Products Solutions projects.
Due to the negative exchange rates variations between euro and US dollars, the 2022 revenue guidance is being adjusted from $144 million to $123 million. The SPS revenue from $45 million to $38 million. The positive underlying EBITDA adjusted from $3 million to $2 million. I will now hand the call back to Tom. Thank you.
Thank you, Natalya. There are a number of questions on here regarding both the Ivory Coast exchange and the CFO and Italy. I think we've covered all those issues, so I'm gonna kinda skip by those questions. There's one question that says during the update three months ago, we said we'd have a major announcement from the Caribbean. Well, I think we covered that, too.
The major announcement was Couples Resorts. The question was, are there more to come? I can only say we are working on a number of projects in that area. A good question here is, as the company's executives and major shareholders are based in America, considering they have sufficient influence in the market, why we have made so little progress in the U.S.?
Well, we are making progress in the U.S., but there's a situation where we have to get salespeople in the U.S., and the sales cycle is quite long. It could be anywhere from six months to two years once we get a start of a project. That's just the way the U.S. market is because they design your equipment into a job.
It gets designed, put out to bid, so it takes a while. We are in the process of hiring, increasing our staff significantly in sales in the U.S., hiring new agents, and we are working diligently to get more orders coming in in the U.S. It just takes a little time. Let me see here. What are the barriers to securing contracts in the U.S.?
The barriers are basically you have to have working equipment, which is not a problem for us, but you have to get in the early stage of a project to get it designed in. Like I said, sometimes designs take 12, 18 months, so even if you get your equipment designed into a project, you may not get an order for a couple of years. We're working on that and we expect to improve on that significantly.
There's a question here, what is the interest in Taiwan at the moment, and can I provide more detail? Yeah, we have a great deal of interest in Taiwan. As our Chinese people were busy looking at places in Southeast Asia outside of China, we found that there's a significant interest in MABRs and our desal systems in Taiwan.
I think we might have mentioned in the past, one particular interest is all the chip companies there are being told they have to reuse their water instead of discharging to wastewater plants, which means each one of these places will have to put a reuse system, which is a perfect system for our MABR followed by an MBR.
So we do have a growing pipeline in Taiwan and expect some major success coming out of there in the very near future. Another question was, The Caribbean and the Couples, is that just a start, basically? Yeah, there's a lot of work in the Caribbean. We're working on a number of projects. You are correct that Couples has a number of resorts in Jamaica.
I'm not gonna speculate on the future, but we do feel we have some significant opportunity going forward in the Caribbean, in a number of areas. In particular, a lot of resorts. Okay, a question is. Has the process for the O&M relating to Ivory Coast commenced?
The process has commenced in that the ministry there in the Ministry of Hydraulics has asked us to prepare a quotation and basically a proposal on our capabilities to go after the job. So they've just started the process of going through and we are working on it. So it's moving, but it's in the early stages, yeah. Okay, the next question is. Are we still looking for a CFO and what's with the sale of the Italian operation? I think we've answered that. Okay, let me go down.
What is the strategy for penetrating the USA? The strategy is getting high qualified salespeople and agents to work with the design engineers and the state approval agencies to specify our products, in particular, the Aspiral and the SUBRE.
I think the major wastewater plants that are being upgraded is where the SUBRE would fit in, and a lot of the decentralized plants that have to be replaced is where the Aspiral. We are continually working. In fact, we just had a show in New Orleans, the WEF show, the Water Environment Federation, which is the biggest wastewater show. We had a lot of interest. In that, for example, we even had regulators from states coming and asking about our product so they could approve it for specifications on projects.
Our strategy is to penetrate the USA just like every other water company has penetrated for the last 40 years, is to get with the engineers and the regulators, show our product and get it specified into a job. There was a question about production capabilities in North America.
We are working on that very diligently. We believe we can do all the desal work in the U.S at this point. We can do steel tank manufacturing. What we don't have is the membrane operation yet, and we are gonna work with the Chinese operation to transfer the knowledge and the technology so we can build the membrane in the U.S. We are well into that path and we are working diligently on it. There's a question. When is Ivory Coast expected to be complete?
The answer to that is sometime between April and June of 2023 for the base project. The O&M cannot start until after the project's complete and some other things are done. The O&M could not possibly start before mid to late next year. I guess that covers pretty well all of the questions one way or another. Richard, do you have anything you'd like to add to this?
Just a couple of quick comments. I think that, you know, there's some questions regarding Ivory Coast. We certainly anticipate the Ivory Coast project will continue to be profitable. It has been, and it will continue to be. It's also been cash positive, cumulative to date, and that doesn't change.
Even though there's a revenue shortfall as a result of that euro-dollar exchange rate dropping, because the expenses of Ivory Coast are also in euros, there's very little cash impact from that. That's, you know, that's not as bad a situation as it might appear to be. Also, I think, Tom, when you were talking about the U.S. and the length of time it takes for orders to come through, that's particularly true in the municipal space where there are tenders and it's a lengthy process.
With the commercial customers, both in industrial and resorts, for example, the progress can be a lot quicker. I think also as Tom has articulated in various contexts over the past months since he joined us, we're very actively building the U.S. sales and support team to really get out and do a much better job of covering the market and getting the message out there. In fact, Tom, I think why don't you also give people a little update on the recent major trade show that we were exhibited at, just last week in New Orleans.
Okay. Yeah. I did allude to that. Last week or two weeks ago in New Orleans was the WEF show. This is a show that is the biggest by far in the U.S. and in fact, I believe globally for strictly wastewater treatment. It doesn't deal with water, and it doesn't deal with any other environmental, like waste removal and things like that. It's strictly wastewater.
Generally, the show gets 15,000-20,000 people attending it with hundreds of exhibitions. This year, I have to admit, I've been to a few. I've been to over 40 of them, and this was one of the biggest ones I've ever seen. I think part of it's because there was a two-year hiatus and people were anxious to get back to it.
There's also a lot of interest and a lot of activity in the wastewater market. We have made a number of contacts with reps, with partnering companies anywhere. I mean, we made meetings with regulators, and it was probably one of the most positive shows I've been to in a long time. I'm expecting some great things out of it.
We are currently working on a number of leads, some very short-term, some more long-term, and that is gonna really. One thing we did notice, and I'll say it, our name was not that well-known, but there's a lot of people that looked at our technology in the book description and sought us out to ask us questions about it.
We made a giant leap forward with our name recognition and our product recognition at that show. I was very pleased with it. Let's see. I think that's about it. So with that, thank you all for calling in. We really appreciate your interest. Until next quarter.