M VEST WATER AS (MVW) Q1 2026 Earnings Call Transcript

Good morning and welcome to the presentation of Amvast Water's first quarter 2026 results. My name is Thor Olav Gabrielsson and I'm the executive chairman of Amvast Water. I'm also joined by our CFO Morten Hilton Thomassen who will take you through the financials and summarize the key takeaways from today's presentation. Please note that the webcast is being recorded. The replay, including the presentation slides, will be available at our website later today. Here you can also find our first quarter report for more details. Before we begin, please note that the following mandatory disclaimer applies to everything presented today. We will start with a brief overview of recent highlights, followed by a short introduction to our company. Then we will provide an update on our business activities and financials. Please submit your questions via the Q&A panel and we will address them during the Q&A session at the end of the presentation. Total revenues for the first quarter of 2026 amounted to 5.8 million Norwegian kroner, up from 4.3 million in the same period last year. representing a year-over-year growth of approximately 35%. In March, we received a purchase order from our business partner Donstrin Marine for the delivery of a flotation unit to a Norwegian salmon slaughterhouse, owned and operated by one of the major seafood companies. Aquaculture is a profitable, standalone business segment with strong visibility into future earnings. Our ambition is to reach annual revenues of NOC 100 to 150 million from this segment during 2028 to 2030. Based on our current projects and our existing order book, baseline annual revenues are projected to exceed NOC 30 million in 2026. This outlook is expected to strengthen further, supported by the ongoing tender activity and strong demand from our solution for both existing and new customers. We have two important pilots to complete, one in Saudi Arabia and one in Germany. The pilot for a major oil producer in Saudi Arabia, originally planned for completion during the first quarter this year, has been put on hold pending stabilization of the geopolitical situation in the Middle East. in germany the paid long-term pilot at the large-scale metal dredging plant in hamburg started in q4 25 was was temporarily paused by the operator due to technical maintenance of the plant the pilot is scheduled to resume in may and expected to run throughout the second quarter finally i would like to mention that we have now moved into new premises in bergen increasing our capacity for chemical production and storage to support a higher activity level we foresee over the next five years. MS Water develops green technologies for water and wastewater treatment, helping industries address water pollution challenges. Our two main products are NovaFlock, a green and biodegradable chemical, and NovaPol, a high-performance filtration technology. In addition, we deliver equipment and complete solutions combining chemical and technical expertise to meet our customers' needs. We have established facilities in Norway and Germany and operate in the US and Middle East through partnerships and agents. More than 80 percent of the world's wastewater flows back into the environment without any water treatment and about 1 to 3 million tons of nano and microplastics are released into nature annually. The paradox is that for decades the chemicals used to treat wastewater are synthetic and thereby directly contributes to nano and microplastics being released into the environment. The world is facing a growing water crisis driven by climate change, urbanization and increasing competition for limited freshwater resources. This is leading to environmental challenges such as more pollution, higher water consumption and ultimately increased scarcity of clean water. MS Water's mission is to innovate eco-friendly water treatment solutions that minimize the impact of hazardous chemicals and support a circular economy. Our solution is natural-based products that replace microplastic-based chemicals and enable the sustainable reuse of valuable sludge. Let's move on to the business update. The global water treatment chemical market is growing steadily and is expected to reach 50 billion US dollars by 2028. Our priority business areas are oil and gas, municipal wastewater, dredging and aquaculture. These are large water-intensive industries facing increasing pressure to reduce emissions to the environment and reuse water to a far greater extent than they do today. With our patented and proven technology combined with a scalable capitalized business model, We are well-positioned to capture growth as industries invest in water treatment, reuse and circular solutions. In the Norwegian oil and gas market, Amvest Water supplies two water treatment facilities with our technology and technical services. Both these facilities create highly oil-contaminated water from oil production in the North Sea with excellent results. These installations provide stable and growing revenues and serve as an important commercial and technical references. Over the past year we have focused on establishing our presence in the Middle Eastern markets. Our approach has been twofold, winning contracts to pilot our technology and securing participation in tender processes for long-term deliveries of our products and solutions. Two important pilots were planned in the Middle East in 2025. The first is an assignment to qualify oil technology at an oil treatment facility in Saudi Arabia. I will return to this on the next slide. The second was a green de-oily technology pilot carried out in collaboration with a national oil and gas producer in Oman. The pilot was executed in October 2025, and MS Water's products demonstrated effective de-oiling performance. This verification required reducing the emulsion breaker dosage during the test. However, the operator could not reduce the optimal dosage during the execution, limiting our ability to document the full potential effect. However, the pilot confirmed that Amvest Water's product meets the customer's key objectives and performance requirements, and our chemicals were evaluated as performing equal to the incumbent synthetic products for oil and water removal. Even though the pilot did not have optimal conditions to fully demonstrate the performance potential of our products. Amherst Water is now prepared to participate in future tenders for this and other projects in Oman. In March last year, Amherst Water announced that a large oil company in Saudi Arabia has decided to qualify our technology at a major oil field. The pilot was initially scheduled for June 25 but was postponed due to geopolitical situations in the region in the time, the 12-day war. The next available execution window was Q1 26 and the pilot was rescheduled accordingly. In February 26 Amastwater and our partner Envirotech system mobilized equipment, NovaFlock products and personnel to the site in preparation for the pilot. Following the outbreak of the war in february 28th our focus shifted to personnel evacuation and the pilot was placed on hold again at present the field remains shut down due to the absence of export routes for the produced oil consequently a stabilization of the geopolitical situation and re-establishment of the export route is necessary to execute this important pilot. For our German business, the ongoing and paid long-term pilot at Meta is currently our most important priority. To our knowledge, we are still the only provider of 100% natural products to replace synthetic chemicals within the dredging industry. Our main goal is to convert the ongoing qualification work into a long-term supply contract in the large-scale dredging market hopefully within this year i would also like to highlight that our natural products can be used in several other industries which represents a significant business potential for amassed water in a longer term meta is a flagship in the dredging industry recognized for its scale and leadership in sustainable dredging management with a strong ambition to eliminate the use of synthetic chemicals in sludge dewatering. We have collaborated with META since 2022. In the first full-scale test in 2023, we achieved a 25% substitution of synthetic chemicals, meeting META's mandates and validating the performance of our natural-based alternatives. With increasing regulatory pressure from the German authorities, we further developed our solutions. In 2024, we achieved a technological breakthrough with our new natural products and can now replace 100% of synthetic chemicals. In 2025, we initiated a structured test program to qualify the products at Meta. In the third quarter, we received an order for the final qualification step, a paid long-term pilot we started in Q4 25. In first quarter 26, the operator temporarily paused the pilot due to the need for restoration and maintenance of the plant's existing dewatering equipment. We expect the pilot to resume in May and continue throughout second quarter. Upon successful completion of the final qualification step and provided that both META's and Harbour Port Authority's expectations are met, Amvest Water will go into further commercial negotiations regarding long-term contracts with META. The latest news in aquaculture is that our strong collaboration with downstream marine resulted in yet another equipment order in March. The delivery is to a Norwegian salmon slaughterhouse operated by one of the world's leading seafood companies. The slaughterhouse is expanding its capacity and preparing to meet future strict discharge requirements. The delivery is planned to be installed in Q326 and includes a flotation unit with potential for additional sales of a dosing system and Amvast Water's natural water treatment product, NovaFlock. Our latest technology, a sensor-based adaptive water treatment solution, provides 24-7 real-time monitoring, track progress variations, analyze data trends, and proactively adjust system parameters to sustain optimal performance. These efforts are key to maintaining MS Water's market-leading position. These technology advancements developed in 2025 resulted in two new contracts before the end of the year. The equipment deliveries started in the first quarter and are expected to be complete during the second quarter. I would also like to mention that in parallel we are exploring sludge dewatering solutions for the industry. Wastewater treatment and sludge management are closely linked, and Amvest Water is actively researching improved dewatering methods to ensure a more complete and integrated approach in future systems. As mentioned, aquaculture has become a profitable standalone business segment with good margins and good visibility in the expected revenue going forward. By maintaining our leading position, we have good visibility into future expansion as the implementation deadlines for the EU regulations approach. Based on our current information, the majority of these factories are expected to implement water treatment solutions between 26 and 2030. To date, the only two mandated slaughterhouses, both completed in 24, chose to integrate NovaFlock from day one. And the third mandated facility is in the recipient of the recent equipment order from Downstream Marine, announced back in December 25. Moving forward, our goal is to capture the market as the deadlines approach. Amassed Water estimates our market potential to be 100 to 150 million NOC in annual recurring revenues. In addition, approximately 300 to 500 million NOC in regulatory compliance measures and equipment. The rollout of new solutions is also driving increased demand for relay service and maintenance. Our ambition remains high and we are targeting a 70% market share within 2030. I will now hand it over to Morten, who will provide you with an update of the financial and wrap up the presentation with a few key takeaways. Thank you.

Thank you to Olof. Let's start with the P&L statement. In the first quarter, the revenues were 5.8 million NOC, up from 4.3 million in the same period last year, which is a year-over-year increase of 35%. EBITDA was negative, 4.7 million NOC and in line with the first quarter of 2025. Net loss was negative with 5.6 million NOC. We expect the revenue growth to continue as we will have two equipment deliveries to be completed during the second quarter. Our revenues consist of chemical sales, equipment sales as well as services related to process optimization and technical support. In the first quarter of 2026, chemical sales represented 70% of total revenues and sales to the aquaculture segment accounted for 80% of the revenues. Our steady growth in chemical sales and recurring revenues is perfectly illustrated by the chart to the left. The right chart, divided into each industry's contribution to our total revenues, illustrates how aquaculture has been our primary growth driver during the last three years. During this period, we have also continuously supplied two oil and gas treatment plants with chemicals and technical support. Looking at the balance sheet, operating cash flow in quarter was negatively 2.3 million NOC. Our capitalized business model is reflected in a consistently low capex. During the quarter about 1 million NOC were invested in patents and test equipment to support ongoing projects, optimization and improved water treatment performance for our customers. The company has a credit facility of 8 million NOC issued by the bank of which 3.3 million was drawn as end of the quarter. In February we secured a 10 million NOC credit facility from our largest shareholder. At the end of the quarter 1 million was drawn. The loan is convertible and secured and has a one-year duration. Interest bearing debt was in total 4.3 million and includes both the overdraft on the credit facility from the bank and the drawn amount of the shareholder facility. We appreciate the trust from our main shareholders. Combined with expected revenues and our existing bank facilities, the shareholder credit facility strengthens our liquidity position and support continued execution of our ongoing projects and strategic priorities. Let's take a look at our financial performance since 2023 and our growth predictions over the next five-year period. As mentioned, aquaculture has become a profitable, standalone business segment for M-West Water. Our company has more than doubled its revenues during the last three years, from 11 million NOC in 2023 to 26 million in 2025, with the aquaculture segment being our primary growth driver. In this market, we have strong visibility into the implementation timeline, as Salmenslade hosses are required to install water treatment solutions under the new regulatory framework. This visibility allows us to plan and scale chemical production in line with expected deliveries. Our leading market position supports high growth ambitions over the next three to five years. Toward the end of this period we expect the aquaculture segment alone to generate annual revenues in the range of 100 to 150 million NOC. Dredging and oil and gas, on the other hand, are markets with significantly greater revenue potential but involve much longer lead times. M-West Water remains confident in the relevance of our solutions in these markets and the revenue potential moving forward. However, important pilots need to be completed before we can provide any revenue predictions for these markets. For the present year, based on current projects and our existing order book, we expect baseline revenues to exceed 30 million NOC. This projection is expected to strengthen further, supported by ongoing tender activity and solid demand from both new and existing customers. Finally, here are the key takeaways from this presentation. Ambers Water is confident that with our patent and proven technology combined with a scalable capitalized business model, we are well positioned to capture growth as industries invest in water treatment, reuse and circular solutions. Our excellent partnership with Downstream Marina has resulted in yet another new contract during the quarter, confirming the industry's trust in our solutions. Today, the aquaculture segment represents a profitable business area and generates stable and recurring revenues for our company. At the same time, we are experiencing a growing order intake and have strong visibility into our future earnings in the upcoming 3-5 year period. For the current year, 2026, based on project execution and our existing order book, we We expect baseline revenues to exceed 30 million NOC. But it is important to note that we expect this outlook to strengthen further as we progress through the year, supported by ongoing tender activity and increasing demand from both existing and new customers. Our ambitions remain high and we remain for the aquaculture segment alone to generate annual revenues in the range of 100 to 150 million NOC within 2030. Our international growth initiatives within dredging and oil and gas continue to represent substantial long-term value for our company. Ambas Water is fully focused on a successful execution of current and upcoming pilot projects in Germany and Saudi Arabia with the ultimate goal of converting these into long-term supply contracts. I will now hand it over to Fearnley for questions and answers.

Very good so that concludes the presentation of the results and we will now move over to the Q&A session. As a reminder if you have any questions please post them through the Q&A chat function and we will try to cover as many as as possible. So starting off we have a question relating to to growth and the aquaculture segment. So your baseline revenue guidance of NOC 30 million for 2026 implies meaningful growth from 1Q's annualized run rate of roughly NOC 23 million. Can you please walk us through the specific contracts that bridge that gap through the remainder of the year?

I think I don't want to go into the specific contracts but I can say that it's mainly driven by the aquaculture and that we are seeing that as we implement these solutions the clients see the need to actually both in terms of increased spending of both equipment and sensor for instance sensor and automatic solutions and also increased chemical consumption as they also increased the production at these slaughterhouses. And this 30 million that we provided a couple of weeks ago as some kind of a baseline, that is also, as Morten pointed out, a baseline which we are expecting to be raised during this year so this baseline was based on the first quarter what we saw in the order book and expected revenues for the year at that point in time so that will be we will in the future and as we progress forward obviously adjust that and we have an expectation for that to be increased.

Okay, thank you, Torulav. One more question related to aquaculture. What is the current status of enforcement of discharge regulations for salmon slaughterhouses? Are the new requirements already being enforced?

Yes, they are being enforced. However, as they have certain implementation dates set out by the authorities, So as they reach these deadlines, they need to be within those parameters and implement their solutions. So this is a license to operate and also the slaughterhouses that have already implemented our solutions, like Martin said, the two mandated slaughterhouses, they're also being followed up by the authorities. So this is regulations that is being followed up by both the authorities and the industry as we progress. So we expect the industry to actually also be implementing these solutions as they reach the deadline. So yes, it will be enforced.

Okay, perfect. Thanks. on liquidity i believe that's best directed towards you morton you had knock 4.3 million drawn across your credit facilities at quarter end against total credit facilities of 18 million how many quarters of runway do you believe you have before potentially having to seek additional funding or do you expect to be cash flow positive before that point i think what But what we have stated earlier also is that we expect to be cash positive within 2027.

But of course, it depends on how many contracts we win and to add on to one of the questions here is that we also have a new client, another Salman Slaughterhouse that we will get revenues from in in second quarter this year and and and then in the end i think the uh they succeed with the success we have on on sales will will actually determine uh at the time uh the timeline uh going forward uh when it comes to cash but we have not planned for uh for any uh any rise of capital as

today and we are we are confident with this situation okay thank you martin um question one more question related to growth uh you mentioned the goal of not 250 million in annual aquaculture revenues by 2028 to 2030 can you please give us a sense of how many installations that would imply and how far along you are today in building that the customer base?

As we pointed out in the presentation of the two mandated slaughterhouses they have chosen to implement our solutions. The third one which is also mandated for the next the next step they are currently receiving the equipment needed for operating our solutions so we expect them to be implemented within this year total installation that we target varies between 19 to 12 installations in Norway which are representing approximately 80 to 90 percent of the slaughtered volume of Salman Okay, perfect.

Thank you. Some questions here related to oil and gas and dredging. First of all, on the Saudi Arabia pilot, is there any visibility on when the field could reopen? I understand that it's very hard for you to predict, but either way, do you have a new target execution window and also if the current situation remains unresolved at what point does this sort of opportunity risk becoming stale um first one first what we have we are continuously dialogue with the agent they um confirmed that this national oil company will execute the pilot as soon as possible.

So when the plant is up and running, we will have our scheduled pilot. The reason for why the shutdown, that is because one of the streams from this field is going into the refineries on the east side of Saudi Arabia. And one of this refinery was actually hit by some of the missiles from Iran. So hopefully we think that during second quarter or third quarter we will have executed this pilot.

Okay, thank you. On Meta, when the pilot resumes in May, what is the specific timeline to completing the qualification process? And also further on to that, what would the successful outcome mean commercially in terms of contract size?

Once the pilot is finished and we have our findings from that pilot, we can go directly into commercial negotiations with the plant for implementation of the first um production lines that they have they have in total five production lines two chamber filter price lines and the three belt filter process so we will seek to implement this solution on the chamber filter process firstly as the first step in total we believe that there could be a potential upwards to around 1.5 million euros annually but we need to actually complete the pilot and look through the findings to see how much they will consume of our chemical and our solutions.

Perfect thank you and one final question here related to pilots as well Once you execute the pilots, should we expect any ramp-up in costs while that happens?

No, not a large ramp-up. Of course, when we start a pilot for the meta, it's not a large ramp up in cost for some of the pilots going on in the middle east there will be some mobilization cost but that's mainly related to to our field engineers that will actually participate in the pilot we have already sent down the our nova flock products and our partner ets have already also sent down the equipment which is still on site at that terminal so some travel and cost and cost related to personnel being sent down there okay perfect uh yeah i think we've reached the end of the questions so thank you all for contributing and for participating and thank you for letting us host your quarterly presentation and with that i'll leave the word back to you to rolav and and martin for some concluding remarks and thank you very much nicolai and thank you very much to firmly for hosting this presentation and as always you are always welcome to contact us directly for our presentation or a visit at our production facilities here in bergen So thanks everyone.