Earnings call transcript: Cambi ASA's Q2 2025 revenue climbs, stock dips

Cambi ASA reported Q2 2025 revenue of NOK 342 million, a 12% year-over-year increase, but its stock declined 5.99% to NOK 20.4 following an 8% drop in EBITDA to NOK 75 million and a decrease in gross margins to 49%. This mixed performance, signaling investor concern over profitability despite top-line growth, comes as the company maintains a robust NOK 938 million order backlog and strategically acquired a 51% stake in C and P Cycles to expand its technology portfolio. While leveraging strong global demand for sustainable sludge treatment, Cambi anticipates potential revenue challenges in 2026 due to lower recent order intake, despite current backlog visibility.

Analysis

Cambi ASA's Q2 2025 results present a conflicting narrative of strong top-line growth against deteriorating profitability, which prompted a negative market reaction. The company reported a 12% year-over-year revenue increase to NOK 342 million, driven by high activity on existing construction projects. However, this was overshadowed by an 8% decline in EBITDA to NOK 75 million and a reduced gross margin of 49%, which management attributed to higher operating expenses from organizational expansion and a less favorable revenue mix towards lower-margin, extended-scope projects. The stock's 5.99% decline reflects investor concern over this margin compression. While the order backlog remains substantial at NOK 938 million, it has decreased significantly from the previous year and the low quarterly order intake of NOK 102 million has led to explicit guidance for a potential revenue dip in 2026. Strategically, Cambi is expanding its portfolio and market reach by acquiring a 51% stake in Germany's C and P Cycles and sees long-term tailwinds from tightening environmental regulations on contaminants like PFAS, positioning its technology as a crucial enabler for advanced sludge treatment methods like incineration. Nevertheless, management acknowledges that this regulatory uncertainty could also cause near-term project delays.

Key Decisions for Investors

• Investors should scrutinize the company's ability to stabilize or improve its gross and EBITDA margins, as the current shift towards lower-margin projects and increased operating expenses are pressuring profitability despite revenue growth.
• Closely monitor the order intake in the upcoming quarters, as the company has explicitly stated that new contract awards are needed to prevent a guided revenue decline in 2026 and replenish the shrinking order backlog.
• Evaluate the long-term thesis based on regulatory tailwinds, such as PFAS restrictions, and the successful integration of the C and P Cycles acquisition against the near-term execution risks and potential for customer-driven project delays.
• Factor in the conditional nature of the authorized dividend of NOK 0.7 per share, which is contingent on achieving key project milestones, indicating a cautious capital return policy amidst the current operational pressures.