Fluence Corporation (ASX:FLC) specialises in the delivery of water and wastewater solutions in industrial, municipal and commercial industries across the globe. The company has delivered a solid quarterly Q1 FY2026 operating result, particularly given seasonally weaker conditions and some timing challenges. Both revenue and EBITDA improved, driven by strong project execution, margin expansion and cost discipline. Gross margins increased to 29.2% [+3pp year-on-year (YoY)], illustrating improved delivery across key segments, most notably the Industrial Wastewater & Biogas (IWB) and Southeast Asia & China (SEA & China) divisions. New orders were a weak point, at $7.5m, down $4.6m YoY, primarily due to delays rather than cancellations, and management emphasised that they remain in the pipeline with strong visibility into Q2 and Q3. As a result, total order backlog declined marginally to $64.4m, but core business backlog is ~20% higher YoY. Again, timing issues impacted operating cash flow (OCF) with an outflow of $8.2m, in this case due to the delay of the €6.6m milestone 7 payment for the Ivory Coast Addendum project which had been expected in March but delayed to April/May. Management expects positive operating cash flow for the remainder of FY26. Despite near-term noise, underlying momentum is strong and the core business units are performing solidly. Management reiterated FY26 guidance of double-digit revenue growth, margin expansion and strong EBITDA growth, underpinned by backlog strength, pipeline conversion and disciplined cost control. We retain our existing forecasts and our DCF valuation remains unchanged at A$0.18 per share, representing potential upside of 122% from the current share price.