Thank you, Zoe, and welcome to all of you on the line. Good afternoon and evening to those calling from the U.S. Good morning to those in Australia, New Zealand and Asia. A pleasure to be able to bring you our third quarter activities report. As you've been hearing now from me for a long time it seems, too long, we continue to experience COVID headwinds in the business. What I mean by that is the quarantines that our teams have to go through, particularly in Asia, is a major obstacle to face-to-face meetings and does tend to slow down business. It slowed down the execution of some projects, et cetera.
Nevertheless, through a tremendous amount of persistence on the part of our team, we are delivering as expected on the business so far this year, as evidenced by the numbers. I think you are seeing strong revenue growth. You're seeing strong bookings and backlog on smart products. So it's really confirming the shift to smart products is happening. We're seeing continued cost down improvement despite the fact that we already had cut a lot last year. We're continuing to see good progress there, and we're looking forward to a pretty strong Q4 for the current quarter. I mean, the quick summary there would be revenue growth up 46% over the same quarter last year.
Smart product revenues in the quarter bring us to a total for the year to date through the end of September of $18.9 million. Now, when you combine that with smart products backlog of $16.2 million, which includes the recent Cambodia order, and the amount of that that's gonna turn into revenue this quarter, you can see that we're already very close to our guidance range of $35 million-$50 million for smart products for the year, which is what gives us confidence that we will achieve that.
We're also continuing to see strong adoption of our MABR technology for wastewater treatment, not just the distributed or decentralized plants that are smaller in scale, but now with the very large plant that we just won in Cambodia, which will be the largest MABR plant from any vendor in the world, when it's complete, next year. We're very pleased with that recognition, which came to us as a result of the strong success of the first two plants that we built there. Between those three plants, when that new one is finished, we'll be able to treat wastewater for over a quarter of a million people, just in that one city with those three plants. We're very pleased with that.
44 MABR plants, so year to date brings the total to 290 so far this year. We cautiously say that we're optimistic about passing the 300 mark by the end of the year. Backlog generally looking strong. Looking at costs down, what we've been able to take out of our operating expenses, seeing a 14% improvement in Q3 versus the prior year and year to date, also seeing operating costs down 11%. Continued very good progress. Feeling very good about all of that, as well as some of the non-numerical achievements of the quarter.
Talk about these in the release, but let me just say, winning our initial MABR wastewater treatment project contract in Dubai is a very important one for us, even though it's a relatively small order. It's with a partner. We signed an MoU with a large industrial group, Al Shirawi, that we signed some months ago. The UAE and the Gulf for us is very important because they recycle about 40% of their wastewater, and there is a trend toward decentralization. That's a very good, should we say, beachhead for us in that region. Also, very importantly, winning an MABR sale in Saint Lucia in the Caribbean.
As we've said many times, winning recurring revenue projects in the Caribbean, particularly around wastewater reuse as a service, is a very important priority for the company. Having that local reference will help to accelerate orders in that area. Finally, although we didn't announce it on ASX because there weren't any specific numbers associated with it, we're extremely pleased to have signed a joint development agreement with Beijing Enterprises Water Group out of China. BEWG operates 1,115 wastewater treatment plants. You can imagine they have tremendous reach, not just within China but internationally. We're talking about a joint development that does not in any way compromise any of our core intellectual property. Feeling very, very positive about that indeed.
With no further ado, I'd like to hand it over to Francesco, who can fill you in a little bit more detail of the numbers. Again, I think just to summarize, we're feeling just very, I think very positive about the business, despite, as I say, continued COVID headwinds just slowing our business down more than otherwise. Francesco.
Thank you, Richard. In the third quarter of 2021, we had an audited revenue of $20 million, 46% on Q3 2020. For the first nine months of 2021, the unaudited revenue was $59.7 million. Underlying EBITDA is expected to be positive for the 2021 financial year. Revenue from Smart Products Solutions are tracking in line with our expectations. SPS revenue are $7.4 million in Q3 2021, bringing the 2021 year-to-date SPS revenue to $18.9 million. Our partners in China are continuing to help us grow our business in the region, and we expect they, as well as other customers, will help us meet our guidance. The booked revenue and the backlog of orders give us confidence to achieve our guidance in the Smart Products Solutions segment in 2021.
We continue to focus on improving operating efficiency and managing expenses. Our operating expenses were down another 14% in Q3 compared to the prior quarter, and down 11% for the first nine months of 2021 compared to the same period of 2020. We are pleased that after reducing operating expenses in 2020 as part of the response to COVID-19, we continue to be able to reduce our fixed costs and improve efficiency further. This is mainly due to the continued shift towards selling SPS products, which are pre-engineered and therefore can be sold with better margin and less SG&A expense. Fluence has a strong cash position with cash and cash equivalents of $16.3 million at the end of September 2021. In addition, the company holds $35.7 million in short-term and long-term liquid investments that provide adequate operating reserves.
Net cash used in operation in Q3 was $2 million, down from the $5.9 million in Q3 2020. Fluence has a contract backlog of $158.5 million, which $119 million related to the Ivory Coast project and $16.2 million to Smart Products Solutions. We expect to deliver Smart Products Solutions revenue in 2021 of $35 million-$50 million, and to achieve another year of positive underlying EBITDA. I will now hand back the call to Richard. Richard? Richard, think you're on mute.
Oh, I'm sorry, Francesco. I was on mute. Thank you for the reminder. Yes, just as a reminder for the audience, we're going to Q&A now, and please submit questions via the web interface, and we'll get to as many of those as we have time for. I see the first one pertains to how much of the $26 million we received this quarter in operating receipts, how much was Ivory Coast? Well, I don't know, Francesco, in terms of receipts-
No, I can.
Certainly in revenues, it's about $13.2.
Yes, we collected in Q4 about $15 million on Ivory Coast. That was also matched with significant payment.
In Q3, right?
That was matched with significant.
Yeah.
15. $115 million collection on Ivory Coast. But that was to match with payment to subcontractor. As we said in the past, we have back-to-back terms with our main subcontractor on the project. We don't expect any additional payment before the end of the year at this point.
Great. I see a question, a couple of questions on the BEWG partnership. This is not in any way going to touch our MABR core intellectual property. The purpose of this partnership is to take the Aspiral product family and apply more localization expertise for that in specific geographical areas or specific applications. It's really about mixing and matching the non-Fluence components that would go inside that Aspiral unit. It's really the way I would see it is, it's a way for BEWG to create some, should we say, ownership in the outcome of not just the product itself, but of selling that product within their target geographies, which as I've mentioned, extend well beyond China.
As to the timing of introducing a product, configuring an Aspiral system doesn't take a very long time. I certainly would look for something to happen next year, but we don't have any definite timeframes or commitments from them, for introduction of a product.
Richard, I see two questions, a couple of questions on Ivory Coast, on the impact of the delay. First let me say that the reason of the delay is just part of the evolution of the project. As the execution is unfolded, with the client and subcontractor, there are more efficient engineering solutions that result also in the extension of the schedule. This is the main reason for the delay. In terms of impact on profit and revenue, this might impact revenue, might defer some revenue from 2022 to 2023. With a related deferral of some gross margin. Overall, there is no impact on the profitability of the project.
Great. I see a question on the new MABR contract in Cambodia. The contract, as you'll recall from the announcement, was for $8.5 million. That was the booking we achieved this month. We do anticipate approximately half of that will be recognized as revenue during the current quarter, in other words, during calendar 2021. That does help us get to our guidance range. I think there's also a question in regards to our cash position in the Ivory Coast payment. I think the thing that's really important to bear in mind in regards to the Ivory Coast project is that, as Francesco mentioned, for the prior quarter, Q3, you know, we tend to get payments in.
A good portion of those payments go back out again, but we don't find ourselves in a situation where we have huge outlays, and then there isn't some, you know, something being received to more than offset those. They're pretty lined up back to back. In other words, we subcontract a lot of the work that's going on there, a lot of the heavy lifting, on the ground EPC work, to our partner. We basically pay them out of what we receive, rather than us taking a financial lift. We, you know, we're comfortable with our current cash position with the current level of orders. There's also a question about the Philippines, and how our progress is moving there.
We are in the process, we're in the final stages actually, of opening a subsidiary in the Philippines. This is very important for our pipeline of projects there, because so far we've only been a rep office where you have to work with a local partner, and the local partner is the one that bids directly on the project. Once the subsidiary is up and running, which we anticipate is in the very near future, we can now pursue projects directly and bid directly on those projects. That certainly will expand our pipeline and build on the 10 plants that we've already implemented in the Philippines, including eight MABR plants there.
We see a lot of demand for decentralized wastewater treatment, also wastewater reuse for irrigation purposes, particularly at resorts, and indeed for fresh water, where extra drinking water is required. There's also a question in regards to quarantine conditions in China in 2022. All I can say is your guess is as good as mine. I think there's been a tremendous amount of concern in China, should we say at the city and provincial level, of not wanting to have outbreaks get out of control, not surprisingly. Which has tended to make people err on the side of being conservative with lockdowns and so on. These things we've seen go into place and then get removed relatively quickly.
We have a substantial team in China, more than 60 people now, including quite a few salespeople, so we can basically move people around within the country to some extent to get around quarantine requirements if they are in place. We're also doing more business via video conferencing and online, which was unthinkable before COVID but been forced by necessity to happen.
Rich, there is a question on what is the typical margin on SPS versus Ivory Coast. We've reported this in the past corporate presentation, but SPS products have a range of margin that goes from 25% on desalination, up to 35%, sometimes 40% on MABR-based product. While Ivory Coast, let's say the typical EPC project or customized engineered solution has an average margin of 15%. In the case of our project margin, right now is expected to be in the high teens.
Yeah. There's also a question about the Ivory Coast delays creating a situation of penalties. That's not something that we currently anticipate. As Francesco said, the reason for the delay is finding ways to do value engineering, which actually improves the gross margins of the product of the project. But that sometimes means that it takes a little longer to complete because you're spending a bit more time getting the engineering optimized upfront before actually executing that particular phase. You know, I would take this as just something that's very much in the normal course of executing a project of this size. Also a question about development of water as a service or selling water in the U.S. and the Caribbean. We have a good pipeline of projects.
These do take a little longer to close than a typical plant order because of the fact that you're typically looking for something on the order of a 10-year take-or-pay contract. The contract tends to be quite complex. Since we've hired Dario Perez, who's based in Miami, to head that effort, he's covering the region very effectively. We think we have built a very meaningful pipeline. We hope to have news on that in the not-too-distant future.
There is one more question in relation to the delay on Ivory Coast, more specifically on 2021, if there is any material impact on the revenue for this year. There is no material impact on Ivory Coast revenue in 2021. As I said, this delay on the schedule will defer some revenue from 2022- 2023.
Excellent. I think, yes, there's also a question about, are we looking at offering Cambodian-style MABR plants to the U.S. market? Absolutely. Not just those, but also Aspiral. We see, I think, in the U.S. with commercial customers where we would be selling reused or recycled water as a service, better fit with the Aspiral unit. But we believe that China and Asia generally have proven our MABR technology abundantly well, given the 250+ plants that we have there of size ranges all the way down from a cluster of homes to treating 100,000 people's wastewater and also in equatorial climates all the way to the frozen north of China, even at different altitudes, which is a major factor in wastewater treatment. That becomes a tremendous asset.
That operating data we've collected over the last four or five years that we can leverage internationally. We very much are looking for the right partners to enter the U.S. and Europe. Really, again, think about how we've built the business in Asia. It's been with customers who've come to us and said, "We don't want one, you know, plant. We don't even want ten. We want lots." Either lots of small plants or a handful of very large ones. One customer relationship can be grown into a lot of repeat business over time. We need to pursue that same model, whether we're selling recycled water on take-or-pay contracts or whether we're selling equipment.
We need those kinds of partners, and so those are some of the discussions that we have going on at the moment in preparation for entering the North American and other markets. I think that looks like about all of the questions that we have time for at the moment. Really appreciate everybody joining and look forward to if any of you didn't get your questions answered, we will endeavor to follow up via email with some of those. I'm also happy to set calls as appropriate to explore things in more detail. We're very appreciative of your continued support and belief in the company. We believe that the picture is turning out well for us.
We anticipate hitting our guidance again this year as we did last year, and therefore remain optimistic for the future, not just in China and Asia, but globally. Thank you all very much for joining.
Thank you.