I'm also joined by our CFO, Mr. Morten Hilton Thomassen, who will comment on the financials and key figures later in the presentation. Also, a quick reminder that this meeting is being recorded, and the replay will be available on our website shortly after we're done. This is the agenda for today. We start with an overview of our recent highlights, followed by a presentation of the company before we walk you through the most important developments during the third quarter. If you have any questions, please use the chat function in Zoom, and we will answer as best as we can during the Q&A session at the end of the presentation. M Vest Water's recent highlights can be summarized as follows: The financials for the third quarter demonstrate strong year-over-year sales growth, with 56% compared to the same period in 2023.
Our tender portfolio continues to expand, and we are actively engaged in key sectors: oil and gas, aquaculture, and dredging. In September, two additional salmon slaughterhouses started chemical treatment of biowaste water, providing M Vest Water with a substantial growth in recurring revenues. One of these is a contract awarded by Búlandstindur, an Icelandic slaughterhouse that has chosen to implement chemical water treatment, even though EU discharge regulations have not yet been officially legislated in Iceland. In the beginning of the quarter, M Vest Water signed an exclusive agent agreement with Energy Support Trading, EST. This partnership has fast-tracked the process of being qualified to submit tenders directly to all the major oil operators in the Middle East.
The final key highlight is our technological breakthrough in August, where our newly developed NORWAFLOC product allows for a complete substitution of synthetic chemicals, not only for our clients in the dredging and municipal sectors, but also in major industries such as mining and sand and gravel washing. M Vest Water is a developer of green and biodegradable products for water and wastewater treatment, helping industries solving water pollution challenges. Our two main products are the NORWAFLOC, a green biodegradable chemical, and NORWAPOL, a high-performance filtration technology. In addition to these products, M Vest Water provides equipment and solutions, offering both chemical and technical support to our clients globally. We have established facilities here in Norway, Germany, and also operate in the U.S. and the Middle East through partnerships and agent agreements. M Vest Water targets multi-billion-dollar industries that are global, in high demand, and experiencing a solid annual growth.
Our main targeted industries are oil and gas, aquaculture, municipal wastewater, and dredging. The common denominator for these industries is that they consume large amounts of water and require water purification to reduce emissions to nature, as well as sludge treatment to ensure reuse and prevent further littering. According to the latest Sustainable Signals report from Morgan Stanley, investors' interest in sustainable investing is at an all-time high and is expected to continue. 77% of global investors show a strong preference for sustainable investments, with water solutions ranked as the number one priority. This focus on sustainable water solutions aligns perfectly with M Vest Water's technology and mission. The market is driven by critical megatrends: one, the urgent need for clean, usable water; imminent regulatory changes in Europe targeting wastewater treatment; and not the least, a growing awareness of the environmental impact of water pollution.
Together, these factors, coupled with increasing awareness and pressure from consumers, are accelerating the demand for innovative green technologies. M Vest Water's contribution is to offer eco-friendly water treatment solutions, replacing microplastic-based chemicals and enabling the sustainable reuse of valuable sludge. Sludge from salmon slaughterhouses is one example of waste that can be turned into valuable resources. With the introduction of new EU regulations, an estimated 20,000 tons of biological sludge that is currently being discharged into the sea may be available for reuse. Beyond sustainable water treatment solutions, M Vest Water contributes by enabling our customers in the aquaculture industry to make use of the valuable reuse of biological sludge. Potential applications include production of fertilizer, biogas, silage oil, and even batteries. Another potential application is landscaping. Regulatory changes in Germany are moving towards zero tolerance for synthetic chemicals in the dredging industry.
Our solution, which fully replaces synthetic chemicals, not only enables the valuable reuse of sludge in landscaping, but also in markets such as sand and gravel washing, mining, and the municipal sectors. Next, let's move on to the business updates, starting with our developments in the oil and gas industry. In July, we entered into an agreement, exclusive agent agreement with Energy Support Trading, EST, to initiate our market entry into Saudi Arabia and Kuwait. M Vest Water is impressed by the fast progress achieved together with EST. The partnership has strategically positioned M Vest Water in key tenders with several leading oil companies, and EST has expressed interest in expanding our agreement to include additional Middle Eastern countries. The qualification of our NORWAPOL technology in the U.S. in 2023 has been vital in driving our success in the Middle East.
However, due to longer decision-making timelines in the U.S., our focus has naturally shifted towards the Middle East. Both the U.S. and the Middle East are highly attractive markets for M Vest Water due to its high volumes of produced water. Major oil-producing countries in these regions rely heavily on groundwater, which is rapidly depleting. Furthermore, wastewater from oil production is polluting these groundwater reserves. Both government authorities and oil companies recognize the urgent need for action, not only to secure sufficient drinking water, but not the least to also sustain oil production. M Vest Water offers solutions across various segments within the aquaculture industry, such as fishermen factories and land-based farming.
However, over the past year, our focus has been on salmon slaughterhouses, an emerging market where M Vest Water, together with our partner Downstream Marine, is establishing ourselves as the preferred supplier of water treatment solutions and the best available technology in the industry. From December 2023, salmon slaughterhouses must comply with EU discharge regulations. There are currently 45 plants in Norway awaiting responses from the authorities to the discharge exemption requests. To our knowledge, only two plants have been mandated to implement chemical treatment, and both have adopted M Vest Water's solution. One of these plants, Holmøy, a new and modern salmon slaughterhouse by Holmøy Maritime, started production with our eco-friendly NORWAFLOC products in September. In the same month, our technology was installed at Búlandstindur slaughterhouse in Iceland. This marks an important milestone, as it is the first sale of NORWAFLOC to a salmon slaughterhouse outside of Norway.
Vest Water currently delivers green chemicals to three salmon slaughterhouses, representing a substantial growth in recurring revenue in the quarter. We expect the number of contracts to increase as more discharge exemption applications are processed. Our establishment in Germany was driven by the opportunities in dredging and municipal wastewater. After nearly two years of development and testing, we achieved a significant milestone with our NORWAFLOC product in August. We could finally announce that our green chemicals allow for a complete substitution of synthetic chemicals. To the best of our knowledge, we are the first company globally to develop a natural substitute for synthetic polymers in sludge dewatering. Moving forward, this will be a key priority. The market is large, both in Europe and worldwide, driven by the need to maintain clear waterways in major ports and rivers while tackling the urgent issue of reducing pollution in lakes, rivers, and oceans.
It is important to add that our new NORWAFLOC is applicable not only in the dredging industry, but also in municipal wastewater, mining, and sand and gravel washing. As we headed into this quarter, we experienced a higher level of lead generation and sales activities across our target segments. This has materialized into a growing pipeline of opportunities and tenders, especially in oil and gas, aquaculture, and dredging. We are noticing a clear increase in interest for our solutions, with more inbound inquiries coming in. At this stage, we need to prioritize our resources to develop these leads and grow our opportunities and tender portfolio. However, we are quite confident that this heightened interest and activity will start converting into new orders and sales in the coming periods.
I will now hand it over to Mr. Morten Thomassen, who will give you an update on the financial and provide you with a brief summary before the Q&A session. Thank you.
Thank you, Tor Olav. The increase in the supply of chemicals to the aquaculture industry has had an important impact on our third quarter results. The revenue in the quarter reached NOK 5.3 million, representing a year-over-year increase of 56%. Looking at the year-to-date revenue, the increase is 83% compared to 2023. We emphasize the importance of revenue shifting from non-recurring to recurring, in other words, from sale of equipment to sale of chemicals, securing a solid base for long-term revenues. We also experience a positive development in our gross margins. In the third quarter, the average gross margin was 62%, up from 38% in the corresponding period last year.
Our target markets are large, global, and evolving, with an increasing demand for greener solutions in water and sludge treatment. M Vest Water has developed solutions that replace synthetic and harmful chemicals and enable sustainable options for sludge reuse. In September, we began supplying green chemicals to two additional salmon slaughterhouses. This has led to a significant increase in recurring revenue, not only for this quarter, but also in the long run. As mentioned, we anticipate a further growth as more discharge exemption applications are processed. Dredging, municipal, and oil and gas are attractive markets for M Vest Water. The previously mentioned technological breakthrough in Germany and international contract awards confirm the competitiveness of our products and solutions. Moving forward, our primary focus is on entering these markets. We are dedicating all our resources to sales activities and securing new contracts.
With that, we are ending the presentation and will move on to the Q&A session.
All right. Yes, let's kick off the Q&A session. My name is Nils Thomassen, representing Fearnley Securities. I will moderate this Q&A session. As a reminder, there is a Q&A button at the end of your screen, so please use that to submit your questions. The first question, it's straight up. When do you expect to reach EBITDA break-even?
As soon as possible, and let's try to relate it to the number of contracts. Today, we have five current paying long-term contracts, and based on the average value of those contracts, when we expect to reach, for instance, I think 10-12 contracts, we will be EBITDA break-even. However, as you could see from one of the slides, my final slide before Morten, we have currently built up our tender portfolio.
That tender portfolio consists both of different projects through our key segments, and some of them are in the oil and gas industry, and they are significantly larger in volume. So if one of those contracts we will sign up, that will take us into EBITDA break-even a bit quicker. But we are currently trying to build up our tender portfolio across our target segments as quickly as possible. And yeah, Morten, if you want to add to that?
I have no further comments.
Great, and then a question on the contract situation in Germany. What's the status there? Any contracts yet, or do you expect something during the fourth quarter?
I referred to my final slide again and our tender portfolio. As you can see, we have increased that from the last quarter, and one of those is a tender we are working on within dredging in Germany, and we expect a clarification of that tender within the fourth quarter. And so hopefully, we are in negotiations right now, and hopefully, we will have clarified that during this quarter.
Very good. And what's the current legal requirements for discharge for slaughterhouses, and what's the outlook there right now?
The current legal requirements have been implemented, but there is a transition period because the slaughterhouses need to do some environmental studies of how this affects the environment around it. And when those are processed, they will get the feedback from the authorities. So currently, we expect that the Miljødirektoratet to process all this application within 2024, but I don't think that is realistic.
The ones that have been processed that have been mandated chemical treatment, they have all selected our solutions. We expect the authorities to continue to process these applications during the next quarters. Morten, if you want to add something to that?
I just want to emphasize that these two slaughterhouses that chose our technology, they are new-build, meaning that they started off the process, the production this year. So that's the reason why they didn't get any further, yeah, they didn't have any more time to comply with the regulations that needed to do that from first date.
Good. With respect to the salmon slaughterhouses, did you deliver both hardware solutions for using NORWAPOL and the NORWAFLOC products?
Yes, we are doing the deliveries together with our partner Downstream Marine, which already have a lot of equipment. I think they have like 70% of the market for their products, and we are going in with them and we are delivering together with their products. And Morten, if you can expand on that.
What we have delivered so far is the flotation systems, dosing equipment, and for the future, it could also be potential to deliver our NORWAPOL technology to these slaughterhouses.
Very good. Then the last question we have now, if you have more, please submit. How does your solution compare to mechanical solutions within the oil and gas segment, for instance, Soiltech, which is another company people look at, I guess?
I guess it's two completely different kinds of solutions. I can't comment too much on our competitors' solutions. We really don't see them as a competitor for our solutions. For instance, for oil and gas, we are competing with other kinds of technologies like the walnut shell filter and the filtration units, which we outperform significantly. So together with our chemical, the NORWAFLOC and NORWAPOL. So it's that combination that makes this unique. Soiltech has, as far as I know, different kinds of solutions more towards the slop water, and we are currently focusing on the produced water segment right now.
Good. One more question here. Can you elaborate a bit on the balance sheet? Are you comfortable with the cash balance given your expectations for fourth quarter and onwards?
Yes, we are very confident with our current liquidity situation, in addition to our cash balance at the report date, accounts receivable, and good sales momentum. If we should require further working capital, we have secured additional credit facilities to finance that.
All right. Very good. Well, that was the end of the line of questions. So with that, we wrap up the Q&A, and Tor Olav, do you have any closing remarks? Please go ahead.
I just want to thank everybody for following our company, and please do not hesitate to contact me or Morten directly, and we can give you a presentation more in depth of the company and our products.
Very good. Thank you.
Thank you very much.