Thank you very much for that and very welcome to this audiocast with QleanAir. I am pleased to present to you our Q3 report. Page three, please. I would like to start with giving you a brief overview of QleanAir. We are a global provider of premium indoor air cleaning solutions. Our main markets that we operate in are Nordic Europe, Central Europe, Japan, and the U.S. We have a diversified customer base with a high retention rate and more than 2,500 customers. We operate with a business model which mainly consists of long-term contracts of 36 months. This means that we have a business model that generates strong cash flow and a high and increasing level of recurring revenues. We have satisfied customers and more than 75% of our customers are extended or renewed, and on average, our solutions remain with our customers for six years.
We have proprietary technology and solutions providing substantial barriers to entry in these areas that we operate in. Our markets have strong fundamental drivers from regulatory shifts and from increased awareness of the importance of indoor air quality. We have large opportunities within the customer segments that we focus in on industry, food, offices, automotive, and Cleanroom segments. Page five, please. Looking at our operational highlights during Q3, we have maintained a high activity level at the company in challenging times, given the COVID-19 situation. We continue to serve our customers. We have also continued our path of introducing new innovative solutions in the marketplace within our product category, Facility Solutions. In Q2, we launched a specific solution for the food segment, which was followed in Q3 by a solution for larger industrial spaces, which previously has been an important focus area for us.
We've also worked a lot on a new introduction in Q4 of a solution which we have developed in close cooperation with the healthcare sector as a response primarily to the COVID-19 challenge. We've also taken our first order of Facility Solutions in Japan and step-by-step plan the introduction of facility there. We have our new marketing team in place at our headquarter in Solna, and we won a new frame agreement with PostNord, which is an important customer of ours since a number of years and a Nordic customer in the logistics sector. Page six, please. Looking at our key financial highlights in Q3, we continue to deliver stable and good margins and an increased level of earnings per share. Our EBIT margin landed at 17% and SEK 17.8 million compared to an adjusted level of SEK 21 million last year.
Our sales landed at SEK 104.9 million , which represented a decline of 4.6% compared to the same period last year, taking into account currency adjustments. Our order intake landed at SEK 54.4 million , which meant a decline of 39% compared to the same period last year. We have had impacts from COVID-19 on our sales and our order intake level. Given the large contribution of our business from recurring revenues, it is however, not possible to automatically translate our order intake level to future revenue generation. We see a strong increase in recurring revenues, which land at SEK 64.9 million in the quarter, which is an increase of 35% compared to the same quarter last year.
We continue to deliver an improved operating cash flow of SEK 22.4 million, and our earnings per share amounted to SEK 0.61 per share compared to SEK 0.16 during the same period last year. Our resilient business model with a large and increasing share of recurring revenues and outsourced services in services and manufacturing serves us well during the COVID-19 phase. Page seven, please. Looking at the development in our different product categories, let's start with Cabin Solutions first, which is the foundation of the company and comprises the product lines of smoking stations towards offices, public spaces, and industry. Cabin Solutions represented in the quarter 79% of our total sales, and our main markets are Europe and Japan, where the European market is more mature, and we during the years have seen a strong growth in the Japanese market.
In Japan, during the latter part of last year and the first half of this year, we saw an exceptionally high growth in sales, which was linked to a Health Promotion Act that came into force from the 1st of April in Japan, and which meant that many customers made their purchasing decision prior to that date. Now we've seen a normalization in demand in the Japanese market. We've also seen impact from the COVID-19 situation in Japan, where the market has been largely in a lockdown phase during most of this time of the COVID-19 situation. We continue to see strong potential in our cabin business over the medium and long term, and in spite of a decline in Q3 of 11% in sales, we are still up year to date with 16% in sales in our Cabin Solutions business. Page eight, please.
Moving to our product category, Room Solutions, which is one of our newer product categories, where we, during the years 2016-2019, have delivered an annual growth level of 63%. The U.S. is our main market in this product category. In the quarter, the sales of Room Solutions represented 12% of our turnover. There we saw an impact both on our sales performance in the quarter and our order intake, very much related to the situation that our core segments in the U.S. market are hospitals. It's pharmacies within hospitals and independent pharmacies. They have been severely impacted by the COVID-19 situation. We were down in the quarter in sales 28%, but we are still up here to date with 24% in the Room Solutions business.
We are addressing this with a strong focus on accelerating the pace of closing customer opportunities, focusing on customers outside of the hospitals, and also putting a lot of energy and effort to reinforce our channel cooperations and marketing activities to increase our qualitative lead generation. We are convinced about the opportunity in our Room Solutions business also over the medium and long term. Next page, please. Moving to Facility Solutions, our second of our newer product categories. We continue to invest in innovation and new solutions. Step by step, we introduce more products where we focus on real customer demands. We increased our sales compared to the same quarter last year with 14%, and we also delivered good growth year to date of 10%. Next page, please. Page 10. Here I would like to show to you our family of solutions within the facility segment.
Moving into 2020, we had two solutions. We had the AirQlean Low, and we had our FS 70. We have step by step built up a family of products. We target different product segments with specific features that we know these different customers need. We started with a Food Solution that was introduced in Q2, where we have learned that the food segment is a segment with a lot of regulations, given the importance to protect the consumer goods that are being produced, and also to protect employees working in the food sector. That has given us great contribution in our business in Q3.
We are then launching what we call the FS 90, which is a larger unit with the biggest capacity we have ever produced as a response to requests from some of our customers with larger industrial areas where FS 90 is a good complement to our complete installations. We have worked a lot in tight cooperation with the healthcare sector to develop the FS 30, aiming for the office segment and public places and healthcare, where we provide HEPA 14 filtration, which contributes to reduce the risk of spreading viruses, but also with a combination of good efficiency and low sound level, which is very important to these customer segments. We have during 2020, step by step, built up a very strong portfolio within our Facility Solutions segment when we move into 2021. Next page, please. The COVID-19 has had impacts for us in the short term.
On the challenging side, it has meant that it's more challenging for us to some extent to conduct our sales processes because we continue to be dependent on physical meetings. We have seen in some segments that customers have longer decision processes related to investments. We've also seen an increase in demand for air cleaning in some of our customer segments. We also have seen an increase in awareness in general in society about the importance of clean indoor air, and the fact that professional air cleaning solutions can contribute to reducing the risk of the spreading viruses. We, for instance, in Germany, a very important market for us in Europe, there's been an increased activity supported by the public to increase activities to improve the general indoor air quality in the market.
The mixed picture for the short term, but for the medium and long term, we see that the COVID-19 situation will have a positive impact on the demand for our types of solutions. Page 12, please. To summarize our portfolio, we have a stable and diversified revenue base from our more than 2,500 customers. We have more than 9,400 installed units within our three product categories in more than 20 countries. In Q3, we had 62% of recurring revenue and a typical contract length is 36 months, and more than 75% of our contracts are extended or renewed. I would like to hand over to our CFO, Henrik Resmark.
Thanks. Moving to page 14, please. As mentioned, order intake is down by 39% and sales down by 5% organically in the quarter. We are a growth company. We are launching new products and hence we need to meet our new customers to be able to sell. A large part of our markets in Europe and the U.S. have been closed or have had restrictions. Also Japan, to some extent. We move on to page 15, please. Despite the decline in order intake and sales, the margins are stable in the third quarter. When I say stable margins, I mean stable EBITDA, EBIT, and gross margins. We have an increase in recurring revenues, up by 34%, increase in short-term contracts, primarily within Facility Solutions. Rolling 12 months, we have recurring revenues of SEK 246 million, close to 50% of total revenues.
Cash flow is improved versus third quarter 2019, and the business model is efficient also in challenging markets. Still again, more than 75% of customer agreements are either renewed or extended. It is clear that QleanAir has a satisfied customer base, and that customer base is growing with increase in installed units globally. We move to page 16, please. On this page, I would like to highlight three items. Equity ratio improved to 23%, up from 14. Net debt reduced to SEK 207 million, down from SEK 251 million. We have a clear strategy to reduce the net debt over time according to scheduled amortizations. Operative cash flow, SEK 22 million, up from 14. It is improved, and again, the business model is efficient also in these markets. Cash generative business model and strategy to pay dividends to shareholders.
The dividend for this year, 2020, was withdrawn and that question is under review by the board. We move to page 17, please. We had an organic growth, -5% in the quarter. Accumulated January to September, it's +15.6%. The target is approximately 10%. The EBIT was 17% in the quarter. Accumulated January to September, 19.3% EBIT margin, the target we have is 15%-20%. Again, the dividend was zero. With that, I hand over to Christina again.
Page 18, please. Since 2015, we also measure our performance in terms of our amount of Clean Air Delivery. That is based on our whole installed base over the world. We translate that into how many Ericsson Globe Arenas we clean per hour. There we've seen a continuous increase, and by September 2020, the number was 8.65 Ericsson Globe Arenas per hour in terms of clean air delivery. Page 19, please. In summary, QleanAir as an investment. We have a unique service offering based on a holistic approach to deliver clean air as a service with full-service rental contracts. We have proprietary air cleaning technology and back-office solutions providing substantial barriers to entry.
We have long contracts with a high degree of extensions across a diversified customer base, generating strong and predictable revenues. We have an asset-light business model with limited CapEx needs, providing strong free cash conversion and equity returns. With that, we would like to hand over to the Q&A session.
Thank you. If you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, it's zero one on your telephone keypad if you wish to ask an audio question. Our first question comes from Anders Roslund from Pareto Securities. Please go ahead.
Yes, good morning. I would like to ask question about the demand situation. Order intake was down quite significantly while sales was held up well, and also the installed base. You mentioned in your report that short-term orders, less than 36 months, are not part of the order intake, but that short-term order intake increased by 127% in the number of units. Could you elaborate a little bit about the order intake and this short-term demand?
Yes, good question, Anders. First of all, how we define the order intake. It's a long rental contract with a defined end date. We now have a strong order intake on shorter contracts, shorter than three years. Many of those shorter contracts, they don't have a clear end date, so to speak. That is the reason why it's not included in the order intake. We increase our installed base, yes, because we are getting still a flow of contracts and installations, but again, shorter contracts. That also adds to the installed base. We are growing this company in terms of global installed base units, and that is driving the recurring revenues. Shorter contracts than three years, they are recorded as recurring revenues. The recurring revenues is increasing, and that of course, is a great contributor to our long-term revenues.
That is the reason why we have a large decline in order intake versus what we can recognize in the P&L through also including all contracts, of course. That is the reason for that.
Yeah. We shouldn't interpret a lower order intake as that sales will continue to go down.
We cannot translate the reduction in order intake to a projection of the revenue generation for the following quarters. As a reference point in Q2, we had a decline in order intake of 29%, whereas we generate a reduced sales level in Q3 of 4.6%. That cannot be translated into Q3. Simply to say that there is not a direct correlation between the order intake level and the upcoming revenue level.
Okay. The next question, what is the composition of those short-term orders? Are they found in Cabin Solutions or in Facility Solutions? How do you see upon this potential in that area?
It's more Facility Solutions, more related to new solutions within facilities. The bulk is medium term, so around 12 months. It's a good way to enter new markets with new solutions.
Okay. Coming back to Japan again, where do you think there is some sort of a stable market demand in Japan? How do you see upon the future demand there?
The future for the medium and long term, we are very much convinced about the continued strong development in Japan. In 2020, during COVID-19, Japan had been in a lockdown phase during much of this time of COVID-19, and there's been a large degree of working remotely, and that has impacted companies' willingness to invest in their office environment. That is a short-term issue related to the COVID-19 situation.
If we look at the sales development in the quarter, it seems that Europe is held up relatively well. While the downturn was entirely in Japan and also to some extent in the U.S., what has happened in Europe? Is it a sequential recovery in Cabin Solutions, or is it Facility Solutions coming back, or both?
We see good contribution from our new solutions in the Facility segment, like the food product, for instance, that we launched in Q2, but also an overall growth in Facility. We also see a continued great contribution from our installed base of Cabin Solutions.
Okay, excellent. Coming to your new products here, and of course, there is some attention to this indoor air cleaner, where we start marketing that in the fourth quarter. Is it already launched? Is it possible to buy it already, or is it something that will come?
It is launched, and we are open to take orders, but it will still take some time before we start shipping it. We are getting prepared and geared up to introduce it in the marketplace.
It's introduced in Europe and in Japan?
Exactly. This is an important vehicle for us in the Japanese market, and there we primarily turn towards our already existing customer segment in the offices from our Cabin Solutions business.
Yeah, when you talk about the indoor market, you also mention several areas like hotels, et cetera, that you are not that present today. How do you market in those areas where you're not present with Cabin Solutions? Are the new sales forces introduced?
It's a little bit different in different markets. In Japan, our primary market is the office segment, where we are well-established since many years, and that is also our primary market here with our new solution, the FS 30. In some European markets, we've seen an increased demand in segments like hotels and schools and so on. At the moment, that varies a little bit in the different geographies.
It seems that you're having a more optimistic view short term in the Facility Solutions area than in the Room Solutions area. When do you think that the healthcare sector in the U.S. may recover? Do we have to wait until next year, or what do you think?
I think it's very dynamic what is happening in the U.S. I cannot predict when we will be through with the COVID-19 challenge in the U.S. We are working, of course, a lot with our customer segments that are not as impacted by this as the hospital sectors. We are also working a lot with increasing, in general, our leads generation. We have a lot of activities in place and lots of different customer discussions, which for us confirms that the business opportunity there remains. It's difficult to predict completely when we are out of the COVID-19 situation in the U.S.
The new legislation in the U.S. market has been postponed. Have you seen any changes in that respect?
No, we have not. We continuously ask ourselves that question, but we see a continued demand for implementing the solutions that live up to these standards, even though the deadline is still floating. Nothing has changed in our view regarding the opportunity there.
Okay. Yes, thank you for this. Open up for other questions.
Thank you. Just as a quick reminder, if you wish to ask an audio question, you may do so by pressing zero one on your telephone keypad. Once again, it's zero one on your telephone keypad if you wish to ask an audio question. Okay, there appears to be no further questions. I will hand back to the speakers for any final remarks.
Sorry.
Apologies. There appears to be another question from Anders. Anders, please go ahead.
Yes, I would like to come back to the margin development, which I think was impressive given a lower sales outcome. Are you still addressing the COVID-19 situation? You are talking about taking measures, et cetera. How do you see upon the near-term margin development? Are there still measures to take or will you wait for the recovery?
Good question, Anders. I will put it like this. Of course, we follow the COVID-19 situation very carefully and adjust accordingly. Still, we are a very clear growth company, so we are investing in certain activities that are long-term for us, launching new products, et cetera. I also would like to emphasize our business model including a high degree of variable cost structure. If we are selling a lot of new products, then of course we have higher costs, et cetera. If we have somewhat smaller order intake on long-term contracts, for instance, that will, of course, also change the costs. Also then the certain variable costs are going down automatically, you can say. That is the primary reason why we have these stable margins on gross margin, on EBITDA, and on EBIT. As you know, one of our three financial targets is the EBIT margin.
It's very important for us to remain stable and hopefully improving margins, of course. In these times and circumstances, we are quite happy with delivering these stable margins, and again, the business model proves to work.
Yes. Those margins you delivered in the third quarter are impressive given that you are launching a lot of new products. Are there more costs related to the product launches in the near term, or are they already reflected in your present cost level?
Of course, we accrue the costs accordingly. With product launches, it's not only product development, it's also marketing and all those efforts.
Yeah.
Those efforts are to be recognized and are to come as well. As I said, we are keeping to invest. We are a growth company, so we truly believe in our business model, but also in the new products that we are launching. We will continue to invest in R&D, we will continue to invest in marketing to be able to support the sales. There will be costs coming related to that, definitely.
You haven't said anything about it. It seems that your production is unaffected by the COVID-19. The negative part is just that your sales and marketing activities, I guess, are lower than should have been the case in a better, less COVID-19 impact.
We, of course, work very tight with all our partners in our supply chain, and that has been a big part of our high activity levels here during the quarter. So far, both from our side and our partner side, we managed that very well. That requires, of course, continuous hard efforts.
Finally now, you have launched a couple of new products here in the Facility Solutions area. Are there more to come, or is this something you will work on now for the next year?
We will continue to invest in new solutions. Innovation and marketing will be very important areas for us going forward and moving into 2021. That will continue to be part of our future roadmap. Absolutely.
Okay. That's all questions from me. Thank you.
Thank you. There appears to be no further questions. I will hand back to the speakers for any other remarks. Speakers, the floor is yours.
Thank you very much.