Good morning, and welcome to Cambi's presentation of its 2023 third quarter results. I am Dragos Talvescu, Director of Corporate Relations at Cambi. In the following half hour or so, Cambi's CEO, Eirik Fadnes, and the CFO, Mats Tristan Tjemsland, will walk you through the company's operational highlights and financial performance in the third quarter. For the first time, the results are presented within two new segments: technology and solutions. At the end, we will take questions received at our investor relations email address, which is investor@cambi.com. Before we proceed, please note that in this presentation, we may make forward-looking statements. These statements are subject to risks and uncertainties that could potentially result in material differences between our actual results and expressed or implied information. And now, without further ado, I will give the floor to Cambi's CEO, Eirik Fadnes.
Thank you, Dragos. Good morning, everyone, and thank you for joining us. Before we start, let me recap what you learned during our capital markets update in September. You learned that Cambi is a global leader in wastewater sludge treatment solutions with a solid track record. Our proven thermal hydrolysis technology comes with a unique value proposition. We're strongly positioned in an attractive market, supported by macro trends. We've built a scalable platform positioned for future development, and our robust financial performance is enabling dividend distribution to our shareholders. I will use these dimensions as a basis for discussing Cambi's third quarter performance. So first, looking at the highlights, I must say that I'm very pleased with our performance in the first nine months of this year, as we continue to make excellent progress and meet our commitments to our customers in the third quarter.
As we maintained the operational momentum going into the quarter, we delivered significant year-over-year growth in revenue, EBITDA, profit, and cash generation, while also expanding our EBITDA margin. As you saw in this morning's press release, revenue ended at NOK 235 million, up 115% from last year and in line with the last quarter. EBITDA for the third quarter was a record NOK 70 million, up NOK 72 million year-over-year and up NOK 6 million sequentially. The EBITDA margin ended at a solid 30% in the third quarter. Year to date, revenue ended at NOK 682 million, up 241% compared to the same period last year. EBITDA ended at NOK 191 million, up NOK 217 million from last year.
In the first three quarters, the cash conversion ratio was 80%, and at the closing of the third quarter, the total cash and financial assets position was NOK 384 million. Following the changes in strategic priorities, a dividend of NOK 0. 6 per share was paid at the beginning of the fourth quarter, bringing the total dividend payment this year to NOK 0.75 per share. As you've seen from the last quarters, Cambi has a scalable platform, which is well-positioned for growth going forward. And as part of this, I would like to talk about the new business segments introduced during the quarter. As Dragos already mentioned, this is the first quarter where we will report on the two new segments: technology and solutions. The technology segment covers all activities up to when a new Cambi THP plant is commissioned and handed over to a new site.
The technology segment covers the entire scope of delivery, from just supplying the THP technology as a subcontractor, to taking the role of the main contractor, covering most of the disciplines within engineering, procurement, and construction for a sludge line investment project. Also, within the technology segment is Cambi's technology development and innovation through in-house R&D. Our knowledgeable engineers are continuously appraising opportunities for making the thermal hydrolysis process ever more effective and efficient and adapting it to evolving market trends and drivers with different configurations, applications, and products. These innovations contribute to maintaining Cambi's strong patent portfolio, protecting our competitive advantages and market position. Finally, the technology segment also includes acquired complementary technologies, such as those purchased in 2022.
Due to the uncertain timing of order intake for new THP projects and the risk of delays in project execution, the technology segment's financial performance will continue to vary from quarter to quarter and year to year. However, I'm confident in the segment's medium- and long-term growth potential from today's record-high level. The solution segment consists of value services for customers after the first delivery of our thermal hydrolysis technology at a new site. The segment will better illustrate the revenues and profits generated from Cambi's increasing base of customers using our technology. The solution segment will include essential services, making sure the THP system runs smoothly over its entire useful life. Within this category, Cambi offers consumables and spare parts, predictive maintenance, and planned annual shutdowns, and operations support.
In addition, Cambi THP users have the opportunity to purchase upgrades and modifications of their assets to take advantage of the latest improvements to Cambi's technology platform. When such refurbishment is not sufficient to cover a site's growing needs, the modular system from Cambi can easily be expanded with additional capacity. In addition to the THP-related solutions, this segment also includes Cambi's business of recycling biosolids, garden waste, and stone meal into renewable soil products. During the capital markets update last month, you could see how our portfolio company, Grønn Vekst, transforms large waste streams into high-quality soil products for different uses, contributing to the conservation of Norway's peat bogs. In this way, Grønn Vekst makes a considerable contribution to nature, conservation, and biodiversity, while reducing methane emissions from land use change.
Grønn Vekst is investing in research and development of new soil blends for the consumer market, and has this year opened a brand-new packaging plant to increase its production flexibility, shorten delivery times, and reduce costs for bringing peat-free soil products to Norwegian retailers each season. The potential for growth is considerable in the medium and long term. We expect the solution segment to be more stable and predictable than the technology segment when it comes to financial performance. Mats will go through the financial performance of each segment, but first, let me take you through the operational update of each segment. Our revenue and activity level across engineering, in-house manufacturing, through to installation and commissioning, have increased substantially compared to last year.
As previously mentioned, our current lead time for a standard delivery has increased over the past year by approximately six months compared to previous years, both due to the activity level and lead time of raw material. The execution schedules reflect this, and we are on good track to meet our customer obligations. We made good progress across all projects under execution, with several reaching this installation and commissioning phase in the third quarter. Now, let's turn to the solutions segment. In the solutions segment, we've been dedicated to increasing our capacity to follow up and support our growing THP client base in all geographies. One significant achievement is the successful start of operations of the second THP system near Athens, Greece.
This expansion means that the THP plant now processes all secondary solids from the site, compared to only half earlier, demonstrating our commitment to efficiency and sustainability. Moreover, our upgrade project in Hengelo, the Netherlands, and Dublin, Ireland, have progressed as planned. Our services team has carried out many annual shutdowns before the season ended in October and started to plan for next year's season, together with a growing number of customers. Additionally, Grønn Vekst, in the third quarter, sold 66,000 tons of soil, up from 59,000 tons in the same quarter last year. The new soil packaging plant has also achieved steady and effective operations, and production is now shifting its focus to volumes for 2024. In summary, both segments are contributing to the sound results this quarter with excellent operational achievements.
We are taking significant steps in building a solid sales pipeline of sustainable projects to secure long-term growth. The tender activity remains high, with projects at various stages of maturity being discussed with clients and consultants. In the meantime, we've achieved a book-to-bill ratio of 2.1 so far this year, driven by a record quarterly order intake of nearly NOK 1 billion in the third quarter. The order backlog closed this quarter at a staggering NOK 1.8 billion, up 189% year-over-year and 72% sequentially. This was achieved through the signing of six new projects on three continents and in two new markets. We have talked about some of these projects as part of the second quarter results presentation, so let me now focus on the two projects signed in September.
Cambi has secured a landmark contract for a project at Woodman Point in Perth, Australia. It's the largest wastewater treatment plant in Western Australia. What sets this project apart is our use of THP to revolutionize sludge treatment without the need for costly additional digesters. The goal? To recover 100% of biosolids for beneficial reuse, contributing to a sustainable future. We're committed to helping our customer, Water Corporation, become one of the most efficient wastewater treatment facilities. THP will significantly increase sludge treatment capacity, boost renewable energy production, and improve the energy balance. Beyond wastewater treatment, the biosolids will be used in agriculture and forestry, and the biogas generated will become a valuable energy source. Now, let's turn to yet another exciting project that exemplifies our commitment to innovation and sustainability.
At the end of the third quarter, we signed a contract with the largest wastewater treatment plant in the state of Kentucky, USA. This project introduces Cambi THP to increase the volume of wastewater solids the site's existing anaerobic digesters can process. Our solution, in tandem with additional improvements, allows our customers, Louisville MSD, to process not only the solids from this plant, but also solids from some of its other locations, all while producing renewable energy and a smaller volume of high-quality biosolids. These two projects, one in Perth and the other in Kentucky, represents just a glimpse of the transformative impact Cambi is making in the field of wastewater treatment. We're very excited about the journey ahead. So now look, now look at the recent developments. As we entered the last quarter of 2023, the team has delivered excellent operational progress.
A good example of this is the recent ISO 45001 certification for our commitment to workplace health and safety. Congratulations to the team for their continued improvements and excellence. One of our projects, Beersheba, is located close to the ongoing conflict in Gaza. We currently do not have any Cambi employees in the area, and on-site work is only scheduled to commence in mid-2025. The project is currently progressing through the engineering stage. As already mentioned, a dividend payment of NOK 0.6 per share was made at the beginning of the fourth quarter. Let us now look at the outlook. Several macro trends are shaping the future of wastewater treatment and Cambi's role and position as the world leader in thermal hydrolysis. These trends include urbanization, tightening regulations, the drive for circular economy, and a significant wave of infrastructure investment.
On urbanization, projections show that 6.5 billion people will live in cities in 2050, up from about 4 billion today. Densely populated areas produce substantial amounts of waste and strain local ecosystems. Wealthier and better-educated citizens increasingly expect clean, urban environments and hold their political leaders accountable for it. As a result, politicians are tightening regulations on what can be discharged into seas and rivers, deposited in landfills, or applied to land. Consequently, wastewater treatment plants produce more difficult-to-treat sludge and face more expensive options to eliminate it. Waste incineration with resource recovery is complex, while biosolids recycling to land faces new restrictions that also increase costs. The drive for circular economy plays in as well. Organic waste recycling aligns with organic farming and the imperative to recover nitrogen and phosphorus nutrients from sludge biosolids.
There's a growing market for technologies that ensure biosolids can be used safely on crops, in forestry, and for landscaping. Lastly, wastewater treatment infrastructure in developing countries is aging and needs refurbishment. While in emerging markets, it's often built for the first time. Infrastructure investments are rising to meet the imperatives of reliability, energy efficiency, and nutrient recovery. With the strong macro drivers, good progress on our strategic initiatives, building on a solid and growing project pipeline, and the foundation of a large installed base and order backlog, Cambi is aiming at paying a dividend of 60%-80% of net profits in the coming two years. With that, I will hand it over to Mats, who will provide more color on the third quarter financial performance.
Thank you, Eirik, and good morning to you all. I'm very happy that we can put another strong quarter behind us. This quarter, we again have demonstrated solid revenue generation, coming mainly from our high number of ongoing construction projects. We have strong EBITDA performance, which is unlocking profitability from our operational leverage, and a high cash conversion, illustrating our financial robustness. In addition, we met our communicated target of signing equipment contracts worth NOK 1.2 billion this quarter, and the dividend of NOK 96 million was approved, corresponding to NOK 0.6 per share. This year, we have distributed dividends totaling NOK 0.75 per share. Finally, we have made changes to our reporting segments and established the technology and solutions segments, as Eirik mentioned earlier. We believe that the new reporting structure will result in better alignment between company strategy, operations, and financials.
I will now go through some of the key elements of the quarterly results. I'm very pleased to report yet another quarter with a very strong financial performance. Operating income in Q3 came in at NOK 235 million, which is up NOK 126 million versus the same quarter last year, and on level with the previous quarter. The main driver for this is the continued momentum in project execution of our construction projects. A weak Norwegian krone also provides uplift in revenues from projects in foreign currencies. Gross margins came in at 49%, which is slightly up from the same quarter last year, but down from pre-previous quarters. This is mainly a result of segment and product mix, which I will comment on more in a little bit.
EBITDA came in at NOK 70 million in Q3, which is up NOK 72 million versus the same quarter last year and higher than the previous quarter. The increase is primarily driven by higher contribution from construction projects. This is illustrating our scalability, which enables profitability when project activity level is high. The EBITDA margin was 27% for the quarter and is 25% on average so far this year, significantly up from 22% levels. Let's have a look at the financial performance from our newly established segments. Now, let's have a look at the new technology segment. The segment includes sales activities, R&D, manufacturing, and the delivery of technology for sludge treatment. It covers all phases leading up to the equipment starts operating for the first time. It consists of the previously reported equipment sub-segment, in addition to allocated overhead costs.
At the end of the quarter, there were 15 ongoing construction projects in the segment. Operating income came in at NOK 169 million in Q3, which is up NOK 109 million versus the same quarter last year, and slightly up sequentially. We are pleased to see a strong performance, which is driven by the good momentum that we see on the ongoing construction projects. Gross margins were reported at 54%, up from the same quarter last year, but down from previous quarters. Generally speaking, the gross margin will vary depending on price and the type of project. For example, for projects where we only deliver the core THP equipment as a subcontractor, we achieve higher gross margins compared to projects where we are the main contractor and subcontract other parts of the investment scope.
In an environment with very high inflationary pressure, we have been able to protect our gross margins through indexation and price escalation mechanisms, but we expect to see increased pressure in gross margins going forward. In addition, the gross margin this quarter is influenced by a change in classification of some cost categories, which are moved from OpEx to COGS for the year 2023. The average year-to-date gross margin is 60%. OpEx was reported at NOK 34 million in Q3, which is NOK 10 million lower than the same quarter last year and significantly lower than the previous quarter. This is impacted by the cost category classification I just mentioned, and reversal of some project-related accruals, which I will comment on in more detail later. The EBITDA was reported at NOK 58 million, which is NOK 71 million higher than the same quarter last year.
The EBITDA margin was 31% for the quarter and 27% on average so far this year. The segment has operational leverage, which unlocks profitability when the order backlog is solid and the activity level is high. Now, looking at the newly established solutions segment. It consists of our broad portfolio of value-adding services that we offer our clients after the delivered equipment starts operating for the first time. It consists of the previously reported sub-segments, recycling and services, in addition to allocated overhead costs. The financial performance of the segment is expected to be more stable and predictable, which is highly attractive and increases the financial robustness of the company. The operating income was reported at NOK 66 million in Q3, which is NOK 16 million up from NOK 50 million in the same quarter last year, but lower than the previous quarter.
On a rolling last 12-month basis, the operating income is 25% higher than the last twelve months measured in the same quarter last year. Out of the total ongoing construction projects, three projects are ongoing in the solution segments as of the end of Q3. The operating expenses were NOK 12 million in the quarter, and is expected to increase going forward due to our ambition of serving a growing customer base. The EBITDA was NOK 13 million, up from NOK 10 million the same quarter last year, but down sequentially. On the rolling last twelve-month basis, the EBITDA is up 48%. Gross margins is reported at 37%, slightly down versus the same quarter last year and down versus the previous quarter. The reduction in margin is due to more progress on some larger equipment delivery projects in previous quarters.
Generally speaking, the gross margin is influenced by the product mix and expected to fluctuate between quarters depending on this. For example, the gross margin on essential services, such as spare part, maintenance, and so on, is lower than the gross margin on additional equipment deliveries. In addition, we expect the financial performance can have variations from quarter to quarter. For example, the sale of soil products are higher during the spring and summer months. Annual shutdowns are also normally done during the spring and summer months. And upgrade projects or new equipment deliveries are unevenly distributed. However, with a growing installed base, as more and more references are being delivered, we expect these effects to gradually even out. And we remain focused on continuing to grow this segment going forward. Now, let's take a look at the order intake development.
The order intake this quarter is mostly in the technology segment, and we have been awarded six contracts during the quarter. These are in Norway, Singapore, Israel, New Zealand, Australia, and in the U.S. And we are also entering into two new markets, Israel and New Zealand. We classify contract sizes, and the signed contracts are a mix of medium, large, and major contracts. And the total order intake in Q3 was almost NOK 1 billion, which is an all-time high. The order intake is significantly up versus the same quarter last year and previous quarters. So far in Q4, no contracts have been announced. Now, let's turn our attention to the order backlog. With the all-time high order intake I just mentioned, the order backlog has also reached record high levels. As of end of Q3, we have a total backlog of NOK 1.8 billion.
As you can see, the majority of the backlog is related to construction projects in the technology segment. This order backlog provides a solid financial foundation for us going forward. Let's have a closer look at the backlog distribution. Based on our estimates, we have indicated the order backlog distribution by execution year on the left-hand side. As you can see, the backlog provides good financial visibility for us going forward, and we estimate that around half of the backlog will be converted to revenue by the end of next year. If we look at the backlog currency distribution, we see that around one third of the backlog is in NOK and two thirds being in other currencies, mainly euros, followed by U.S. dollars. Right now, a very weak NOK contributes to lifting the value of the reported backlog.
We expect, to a larger extent, that the currency rates will fluctuate in our reported financials and impact these going forward. Let's have a look at the consolidated profit and loss statement. Operating income uplift is mainly from progress on the 18 ongoing equipment delivery projects, as mentioned earlier. Payroll expenses for the quarter is NOK 9 million higher than the same quarter last year. The increase is in line with our expectation due to a growing size and scope for the Cambi organization. The reported other operating expenses is impacted by the reversal of project-related accruals. The background here is that when establishing the new segments, we have reviewed some of the project-related costs in our OpEx and made some adjustments. Firstly, some cost categories have been reclassified to being a part of COGS and thus been lifted from OpEx to COGS.
This has no impact on EBITDA, but will slightly increase COGS and reduce other operational expenses. Secondly, we have reviewed other project-related costs that are a part of OpEx. And all costs that are a part of COGS will follow the percentage-of-completion method. Historically, some costs in OpEx have also followed this, and going forward, only COGS will follow this method, meaning that other project-related costs that are a part of OpEx will not follow the percentage-of-completion method. This has led to reviewing and reversing some accruals that we have made on our projects. The accrual reversal has a positive impact of NOK 20 million in Q3, reducing other operational costs. And out of this impact, around half is related to 2022, and the remaining effect is from the first half this year. Let's take a look at the balance sheet.
Total assets of NOK 780 million were, by the end of Q3, up from NOK 512 million in the same quarter last year. Bank deposits and financial assets, which are mainly money market funds, are in total NOK 384 million. Dividends of NOK 96 million were distributed in the beginning of Q4, reducing bank deposits. Debtors increase is mainly from more recognized project revenue, not yet billed. The increase in current liabilities is from increase on progress in the projects, which is not yet paid. The balance sheet provides a solid financial position for Cambi. Let's briefly take a look at our cash flow statement before switching over to the Q&A. We had a very solid operational cash flow of NOK 115 million in Q3.
So far this year, operating cash flow is NOK 154 million, which is a cash conversion ratio of EBITDA of more than 80%. And the timing of project milestone payments from customers will vary from quarter to quarter. As mentioned, dividend payments of NOK 96 million was made in the beginning of Q4, reducing our cash and cash equivalents position. And with this, we are ready to move over to the Q&A session. Thank you. Okay, so have you received any questions, Dragos?
Yes, we have several questions now. Remember, everyone, that you can still send in your questions to investor@cambi.com. I think the first question can be addressed to you, Eirik. In the outlook, you mentioned that the business is highly scalable. Can you explain the key features that make the business scalable?
We have a fixed cost base in Cambi that includes our in-house manufacturing capabilities in Congleton, outside of Manchester. We also have our employees spanning 18 different disciplines. And with that, and together with a standardized product portfolio, you will see that an additional project will trickle down at gross margin level, more or less, down to the bottom line.
Okay, the next question, I think, could also be addressed by you, Eirik. Is it correct to understand that the technology section feeds the solution section with business? If so, should we expect to see a similar growth in the solution section as we have seen recently in the technology section?
Yeah, the short answer to that is yes. The solutions segment, especially the services part of that segment, is dependent on the installed base. And with a growing installed base, more projects being delivered by the technology segment, with some lag, we expect to see that resulting in higher turnover also in the solution segment.
Thank you, Eirik. Next question. Mats, maybe you could elaborate on the EBITDA growth, and how this is split between foreign exchange and revenue growth.
Yes, so we have had a good EBITDA growth, and I think the key takeaway here is that the growth is coming from more progress being done on our construction projects. But we do see that a weak NOK has provided an additional uplift, and I think right now, the currency towards our main currency pairs, dollars and euros, the NOK is around 15% weaker. So that gives you an indication of the uplift that we have seen. But of course, you would have to adjust also for the share of revenue in foreign currencies between last year and this year. But definitely, we do see a positive growth from FX effects as well.
We have currently one more question left. So if everyone please send in any additional questions that you have to investor@cambi.com. Meanwhile, Mats, maybe you can answer the following. Cambi has had a solid result so far in 2023. What are your expectations for financial performance for next year?
Yes, so, it's difficult to be precise on this, but we do have a backlog distribution that shows you what we do expect to convert to revenue over the next years. So that gives a good starting point. Of course, you would have to add in revenue expectations outside the backlog from the solutions segment. And also an expectation on order intake as well. But if you apply some assumptions on gross margin and so on, I think that will give you a good indication on our performance for the next years.
Thank you, Mats. Maybe we wait a few seconds to see whether there's anything ticking in our inbox. I don't think we have any more questions, so thank you. Back to you for the final words.
All right. Thank you, everyone, for joining our third quarter results presentation. Have a great, great day.