Good morning and welcome to HydrogenPro's third quarter presentation. As usual, I'm accompanied by my excellent CFO, Martin Holter, who will present the financial results. I will take you through the highlights and our recent developments, market updates, and our partnership strategy. For those of you who do not know us yet, HydrogenPro is an OEM company focusing on core technology, which is well suited for renewable energy sources. Our products are pressurized alkaline electrolyzers and a gas separation unit skid. Addressing market for decarbonization of selected large-scale industry segments, which are already using gray hydrogen or where decarbonization is hard to achieve through electrification. HydrogenPro is delivering to two of the largest projects in the world. Right now, a 220 megawatt project, which is starting up these days, and a 100 megawatt project, which we have delivered all the main components.
We are now producing our third generation electrodes in our new factory in Denmark. Few other electrolyzer OEMs are delivering to projects of the same scale. Of the recent highlights, our revenue last quarter ended at NOK 35 million, with a gross margin that improved to 55%. We continue our strong focus on technology improvement and expanding our electrode testing and development. The previously announced partnership with Thermax is on a good track. Our work to establish a foothold in the Middle East is making very good progress. Last but not least, I am very happy to announce the embarkment of a new Head of Sales and Commercial. Martin, please.
Thank you, Jarle. I will walk you through the Q3 financials. In the quarter, revenues came in at NOK 35 million, and those revenues are mainly related to deliveries on the ASUS project. On top of that, deliveries of electrodes to the SALCOS project also commenced in the quarter. Gross margin came in at 55% versus 22% in the second quarter. If you recall, in the second quarter, the gross margin was negatively impacted by some cost provisions on the SALCOS project in particular. We could say that now we are back more to normalized levels. Personnel expenses was up NOK 4 million, and that increase is due to the fact that we have made severance payments, which is related to the reduced activities at our factory in Tianjin. The number of FDs is considerably lower, with a lower payroll now going forward.
Other operating expenses increased by NOK 9 million in the quarter compared to the second quarter. The main driver behind that is, first and foremost, project deliveries, where we then accrue more costs when we make a delivery, which is then also then sort of accounted for as in our financials with revenues. We have revenues and costs simultaneously. In addition to that, we had also some lower level of grants, which means we have then a reduction in the deduction of expenses compared to the second quarter. The EBITDA came then in at minus NOK 45 million in the quarter. Let's look into the development in the liquidity position in the quarter. The cash balance at the start of the first quarter was at NOK 107 million, and it ended at NOK 121 million. The changes in the cash position were as follows.
We had an EBITDA then of minus NOK 45 million, changes in net working capital of minus NOK 3 million, NOK 6 million was spent on investments, mainly in the production line in Denmark. On the production line in Denmark, we have a total budget of NOK 60 million, where we as of end of September have spent NOK 42 million. That line now is fully operational, meaning that the remaining investments, which we are now taking, will be then related to further improvements on the line. Financing of NOK 68 million mainly reflects then LONGi's equity investment that was settled in July this year. Lastly, the backlog then decreased from NOK 284 million to NOK 252 million, a function then of revenue recognition in the quarter and no order intake.
On the cost side, at the start of the year, we set a target to reduce our cost base with NOK 40 million of annual costs, or call it roughly 20% of our cost base when we do not include project-related costs. We have now completed that cost program. The number of employees in the quarter were reduced from 147 at the end of the second quarter to 89 at the end of the third quarter. That is mainly then due to a reduction of the staff in China. Please be aware, the cost program then excludes all project-related expenses. It is important for us to keep now some competence, the core competence in the organization in order to deliver on projects. One of our competitive advantages is to maintain a low cost base.
We will, of course, assess further measures going forward in line with the market activity. Our business model with strong partnerships enables us to have a global reach, win contracts on a global scale, but at the same time remain a lean organization with a low cost base. With that, I'll give the word to Jarle to give an update on the market. We have to assert that the year has been more challenging than what we saw at this time last year. It's a slower growth than most expected. Only 30% of green hydrogen projects have advanced. However, some completions and feasibilities we do see going forward to FEED and into approvals. Again, 90% of the 2023 and 2024 CODs projects are delayed with more than a year.
We can also see that the delays are getting shorter year by year as we're coming up to 2025 and 2026. As said, we must assert that growth is slower than expected. According to Global Hydrogen Review, the underlying growth is showing strong progress. The installed capacity grew with as much as 145% from 2024 to 2025. Much of the growth is driven by China, but we also see significant growth in other parts of the world, among others, HydrogenPro's project in Utah, United States. Another positive trend is the number of countries developing a hydrogen strategy is growing, which again supports continued growth in project development. Despite a slower growth than expected, solid progress shows strong underlying fundamentals. This is a busy slide, and I do not intend to go through this in detail, but it is available for the interested reader on our website.
The table as such is not exhaustive, but it is a snapshot of some selected regulations in markets which are in focus for HydrogenPro. What we see is that more and more regulations are introduced, as well as adaptations of existing regulations, like in Europe, where not all regulations have worked according to its intent, but now being adjusted or amended. IEA just issued its annual World Energy Outlook for 2025. Here they expect the green hydrogen production to increase 70 times during the next 10 years. Their forecast is based on adopted policies, proposed measures backed by a market and infrastructure support. The train might be rolling slower than previously expected, but it is for sure rolling. The stated policies are charting the path to a large potential of green hydrogen. I am very pleased to now introduce Michael Caspersen as new CCO in HydrogenPro.
Michael has a strong background both technically and commercially. He comes from Boston Consulting Group, where he has led several projects along the hydrogen value chain. In addition to several years in Siemens, where he had a key role in starting up and commercializing their electrolyzer business. Michael holds a PhD in hydrogen technology and will, with his background and experience, bring great value to HydrogenPro's management team. His extensive technical and commercial experience will be instrumental in delivering our future growth. Eric Vaillancourt will continue assuming the role as Director of Partnerships and Key Account according to our strategy. The commissioning of the ASUS project is progressing well. All trains have been through the initial startup. A train here means two electrolyzers connected to one gas separation unit. The electrolyzers are doing their job as the project goes into the next phase of operation.
On the SALCOS project, we are now delivering the generation three electrodes from our new production line in Denmark. I was recently, a few weeks back in India, and I met with several potential customers. We are now building up a pipeline by submitting firm quotations to project owners, having won in India's hydrogen auctions. Also on the technology side, we are supporting Thermax in developing their gas separation assembly station. We are progressing well on the Indian market rollout. Based on our strategy, we are also progressing on establishing a foothold in the Middle East. We see that Middle East, together with India, having the lowest cost for producing green hydrogen and are expected to have the lowest costs in 2030. On the way of getting a foothold, we are working together with selected partners and governments, where we are building good relations.
As an example, we have appointed now Sheikh Rashid Al-Mahmoud's sustainability advisor, Claudia Pinto, as also advisor to HydrogenPro. The market is driving more and more in the direction of customers requesting total EPC and complete solutions from power in one end of the plant to direct compressed gas in the other end. This is much driven by strong industrial project developers. HydrogenPro is focusing on core hydrogen equipment. The customers, they are also occupied with hydrogen equipment and its performance, but then bundled in a total EPC. Together with partners, we fulfill the scope demand meeting all customers' selection criteria. The electrode coating line in Aarhus is in full operation, producing electrodes for the SALCOS Gitter project. We have expanded our testing and development capacity and are now testing electrodes in various conditions, new enhanced materials, and long-time effects. It gives results.
As we are developing new and even better coatings combined with technology and design for reducing shunt currents, we are testing out and proving better results with lower energy consumption for producing hydrogen. The goal is to get the power consumption with as little kilowatt-hour per cubic meter produced hydrogen, with as high current density as possible. The red line in the graph, which is already very good compared to the general market, but as we can see with a shape which is common for electrolyzers. The bottom green line shows the results of our latest development, which we will now continue to develop for commercialization. The technology strategy in roadmap is to continue to reduce power consumption, commercialize the 30-bar solution, lower the costs by reducing weight of the electrolyzer, and optimize the hydrogen production train with increased current density.
We have a clear and detailed plan for development and maintaining a forefront position technologically. During the year, projects in our pipeline have been postponed with further delays. The pipeline projects, they are being very robust with high-quality company and owners. In Europe, there is strong traction together with Andritz and JHK with projects ranging from 20-200 megawatt. They have been moved from 2025 FID to 2026. Based on funding and regulatory compliance, we believe to see these materialize during next year. In India, we are now seeing a buildup of a strong pipeline, which we expect some to FID in 2026. 2025 has been a slow year, but based on the pipeline projects, we are remaining optimistic for 2026. With that, I thank you and invite Martin also for the Q&A session. Here come some questions from the audience.
The first one, why does Mr. Espeseth sell so much of his shares and stocks? We have no influence or say on shareholders buying or selling shares. Obviously, we welcome every shareholder who is buying shares and are equally saddened with those selling. There are several motivations for selling and buying shares. Obviously, we are also dependent on the volatility in the shares. To the explicit of Mr. Espeseth, that question has to be asked to him. We know that, for instance, in Norway, we are burdened with, what do you call it? Fortune tax? What do we call it? Wealth tax. Wealth tax. Thank you. Which can be one reason, but this would be speculation from our side. I do not know his personal situation. What deliveries remain to ASUS project, excluding the service agreement? Do you expect any deliveries to the project in Q4?
Martin, will you? No, so with regards to deliveries, of course, we are doing now some on-site work still. As Jarle explained earlier today, the project is now soon to start up. There will be sort of the, call it the final handover then of the project to our client from our side. With regards to equipment, everything is delivered from our side. Is it possible to disclose how much of the order backlog that consists of the service agreement with ASUS project? Yeah, we do not provide sort of a breakdown of the backlog on projects, but I think we have previously indicated some sizes of that.
The majority, the far majority of the backlog is related then to the service agreement on the ASUS project, while the other remaining part of the backlog is related now to the outstanding deliveries on or remaining deliveries on the SALCOS order, which is then the electrodes now being produced in Denmark. There are several questions regarding the LONGi partnership. How is the partnership progressing? The partnership is progressing very well. We are in good discussions and planning of consolidation of the manufacturing capacity in China. We also have discussions on the technology side and share of experience. We are also developing cooperation in other areas. Things like this do take time. We have an excellent cooperation with LONGi. One question is, with all the future optimism and growth prospect you see, why are the insiders not buying stocks to show commitment?
There are several reasons. First of all, there are some programs of options that have been running. Some have now, what do you call it, been running out in time. Expired? Expired. Thank you. Also, we are often confronted with positions of being in insider position. A small company like HydrogenPro, with the being negotiations with customers, future orders, it could be other strategic discussions, are limiting the windows for buying shares. What would you highlight as the main explanations for the delays in FIDs in Europe? It's several, and I think we have touched upon it in also previous presentations, previous quarters. Unclarity in regulations is clearly one major reason. Another reason is that it does take time to build the value chain. The offtake side, which again, also dependent on the regulation side, has also caused delay.
We have had behind us, as we know, a period with high inflation and cost increase, increases in energy prices, which has made a lot of the project owners having to recalculate their investment projections and calculations. All this together basically has caused much of the delays. How are the contract values allocated between you and Thermax for potential orders in India under your current partnership? Would your electrolyzers carry the same pricing and margin profile as in other markets? Good question. In terms of the revenue profile, I think we can say that it is a bit similar profile as you would see with our partner Andritz in Europe, where Thermax will take the full EPC and basically sell the total plant more or less in a turnkey setting. We will then sell our part of the equipment to Thermax.
Now, India is a very price competitive market, no question about it. We have yet to finalize, obviously, final contracts with customers in India, although we are in good discussions. Until then, we will see. I think we have to be realistic to also see that India is competitive. Do the recent project awards in this market represent kind of early signs of recovery or green shoots, in your opinion? Recently, there has been some, I do not know if the question refers to some of the announcements here in Norway. It is very small projects, although giving a positive sign that project owners are taking the steps toward FID. We see also the same kind of movements on larger projects in some places of Europe and also other parts of the world that we have mentioned.
I think we see that project owners are getting more confident and ready to take FID. One big news is the recruitment of CCO. What does this indicate about HydrogenPro's ability to attract strong competence? I think if you look at the recent recruitment, but also not just that, if you look at the recruitment we have done over the last one or two years, you see that it is very high quality and good competence that we have been able to attract. I am very proud that a company like HydrogenPro is able to attract competence, several people with PhD and also master's, but also on the engineering side, commissioning engineers, etc., that we have attracted over the year. It shows that we are attractive.
I think it also shows that a lot of people are still looking into going into sustainable energy and the green sector and wanting to make a better world and therefore coming to companies like HydrogenPro. There are some detailed questions about the projects. How many projects with LONGi and Thermax are in FID, if you are able to disclose? No, we do not disclose details of our pipeline. We will announce projects that are being awarded in due course.