What you need to know: • BQE reported Q3 financial results yesterday that were mixed relative to our expectations, missing on revenue and beating on profitability. • Q3 proportional revenue came in at $10.7M (+12% YoY), below our estimate of $13.1M. Adjusted EBITDA was $3.3M compared to our estimate of $3.0M. • The quarter was driven by strong performance from the technical services segment; however, we expect the recurring operations segment to resume growth over the coming quarters. Yesterday, after market close, BQE Water (BQE:TSXV, BTQNF:OTC) reported Q3 financials that were mixed compared to our expectations, missing on revenue and beating on profitability. Q3 was similar to H1, with technical services leading the charge, resulting in a record $22.6M in revenue through the nine months. While the recurring operations segment’s performance has been weak lately, BQE commissioned a new selenium plant in the US and a new SART plant in China, setting up for stronger recurring revenue in Q4. We view this as a material catalyst, and the stagnant share price makes for a great entry price at just 5.6x 2025E EBITDA. We are maintaining our BUY rating and $80.00/share target price on BQE Water. Key Highlights • Q3 proportional revenue came in at $10.7M (+12% YoY) vs. our estimate of $13.1M. This was comprised of $2.3M in operations services revenue (-40% YoY), $7.0M in technical services revenue (+137% YoY), and $1.3M in BQE’s share of JV revenue (-60% YoY). • Gross margin was 51% vs. our estimate of 36% and 59% in Q3/24. • Adjusted EBITDA for the quarter was $3.3M (-24% YoY) vs. our estimate of $3.0M. This represents a 31% margin compared to 46% in Q3/24, due to the lower margin technical services representing a larger portion of sales. • BQE’s share of JV net income was $0.3M, compared to $1.6M in Q3/24. • Net income was $2.8M or $2.15/share vs. our estimate of $2.2M or $1.71/share and $3.5M or $2.91/share in Q3 last year. • The Company ended the quarter with $17.0M in cash after generating $2.9M in OCF (before WC). BQE ended the quarter with $2.3M in debt (leases and non-interest-bearing debt). • BQE also ended Q3 with record working capital of $20.5M.