@suhmCashburn was abnormally high after the 2017 merger due in...

@suhm

Cashburn was abnormally high after the 2017 merger due in large part to an RWL Water legacy project (PDVSA Agricola in Venezuela) that had been pre-paid. It meant that much of the cash on hand that came with RWL was used to complete this project, and there was no incoming cashflow from this work to balance this out.

RWL Water has certainly not been ditched, but focus has shifted to the SPS (smart packaged products) strategy. There are quite a few legacy projects still being completed with RWL tech (Ivory Coast, anything desalination related, waste-to-energy, lithium). Ivory Coast should provide cashflow until approx Q1 or Q2 of 2023, before any possible O&M contracts may begin.
The difficulty with having too many large, long term CES projects is the effect on cash on hand. The Ivory Coast project fluctuates in value to the the different exchange rates, but is around a $190 million USD project. If the margin on the project remains at 22%, then over the course of the project Fluence would need to spend approx $148 million USD on costs associated with the project. During that time, Fluence also needs to hold at least $20 USD million cash in construction guarantees. So for reasons of cashflow, more of these types of projects cannot be pursued at the same time, as some of the other cash on hand needs to be allocated to other parts of the business. The length of negotiations as well as construction also adds in additional project risk that is not suitable for a listed company the size of Fluence.
The SPS strategy with smaller MABR and Nirobox related projects with strong partners ensure quicker build times, less construction risk and less cash being tied up for long periods, while being higher margin. The MABR tech in particular is the most efficient to produce cost-wise, as production can scale to approx $500 million per year with minimal additional investment.
Iterms of incumbents or competition, RWL Water actually have both the largest installed desalination plants in Argentina and Brazil, and have involvement in some decent contracts in Egypt. The larger competition actually doesn't tend to focus on the same areas as Fluence, they go after much larger plants and contracts. While $10 million USD plants may seem like a decent win for Fluence, the larger players may not bother to bid on anything below $200 million, as it is not worth their resources for no real impact on their bottom line. RWL Water had a reputation for doing business in risky locations where they had less competition. It is very, very difficult for a complany like RWL was to gain traction in modern western markets like the USA, Canada, Australia, UK. There is a lot of favour to incumbants, it is all politics as well as being a slow,clunky and expensive process just to get 1 plant installed. To get the bulk orders and acceleration shareholders wants, Fluence needs to go after markets like China and the Philippines where the market is craving new technologies and the political climate is supportive of outsiders coming in and bidding.

Richard Irving (Emefcy) #3 largest shareholder has taken the reins, but former CEO Henry Charrabe (RWL) was really just a representative of the interests of #1 largest shareholder billionaire Ronald Lauder (RWL Water / Estee Lauder). Lauder is supportive of Irving's desire to focus on SPS. #2 shareholder Jay Faison is also has convoluted links to Lauder and the current $20 million USD finance facility through Upwell Water.

In terms of sludge, there is an external (underground) sludge holding tank. Some of the older sludge is returned to the process to help with nitrification process (Return Activated Sludge - RAS). The Waste Activated Sludge needs to be pumped out of the tank when required, this is part of normal maintenance with any modern sewage treatment plant. It varies by partner, but will usually be taken to another location for de-watering and either turned into fertilizer or disposed of. At one stage Fluence were doing some R&D into a value-add service of building some central sludge handling plants as well, where sludge from their distributed plants could be taken to for treatment, but I have not seen further progress on this.