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spk08: Hello and welcome to Energia's fourth quarter and year-end 2021 conference call. My name is Lauren and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star raised by one on your telephone keypad. I will now hand you over to your host, Darlene Red from Energia's Investor Relations to begin. Darlene, please go ahead.
spk07: Thank you very much, Lauren, and good morning, everyone. On this call, we'll be discussing our earnings for Energia's fourth quarter and year-end of December 31st, 2021. If you're following along on our slide deck, I'll be directing my comments to slides one through three. Today, I am joined by Dr. Andrew Benedek, Energia's founder, board chairman, and CEO, Dr. Yaniv Sherson, Energia's chief operating officer, and Mr. Hani Casey, Energy's Chief Financial Officer. Now, before beginning our formal remarks, we'd like to refer listeners to slide two of the presentation, which contains a caution on forward-looking information and a note on the use of non-IFRS measures. Listeners are reminded that today's discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements. Energia doesn't undertake to update any forward-looking statements, except as may be required by applicable laws. Listeners are urged to review the full discussion of these factors in the company's prospectus, which is filed with the Canadian securities regulators. Lastly, while this conference call is open to the public, And for the sake of brevity, questions will be prioritized for analysts. And with that, I'll turn the call over to Andrew.
spk02: Thank you very much, Darlene. I'm on slide four, which summarizes the quarter. First and foremost, you can see that our backlog continues to increase. significantly quarter to quarter. A lot of our growth has been happening in within the European region, with seven facilities being built, and also increasing capital sales. The Market outlook is particularly promising in Europe. And they've outlined that in the press release associated with the quarter, as well as an earlier one. Our revenue has gone up 20%, which is relatively slow for what we're expecting to do. But it's still a healthy growth. And the reason for the slower growth has been, as we've been saying over and over, the slowness of the ramp up in Rialto, and also somewhat slower supply line related issues. Overall, the quarter results, are in line with our excellent analysts' predictions and is continuing the trend that we established going in the positive direction. I'm moving on to slide five. And I want everybody to understand that what I have believed from the start and the reason I started the company is that indeed a very significant solution to climate change is renewable natural gas and that as climate change worsens the outlook for us will continue to improve what i didn't expect is the security issues as well that has happened in europe due to the recent conflict, continuing conflict. Although prices for gas in Europe have been constrained even prior to the conflict, and even the conflict is settled today, it will continue to be high for wholesale gas. But in addition, the security issue in Europe has led to dramatic increase in targets And it will eventually follow with incentives to produce more and more renewable natural gas. And some of the countries, in particular the one that started out Germany, is now also going to be entering the market in a big way because simultaneously with the security concerns that Germany now has, it has also established new standards to a European standard called RET2. which, in fact, helps all renewable forms of energy, and in particular, renewable natural gas. Now, in Germany, is where we started, and we have a significant number of customers that will need help to take advantage of the current gas-related changes and as most of these customers are on electric power and they will be shifting to to gas in terms of north america while the gas prices the wholesale fossil gas prices have not moved all that much there is still very significant movement and in particular is a big one in california with a new law that's going into effect called SB 1440, which requires the purchase of renewable natural gas, and it's particularly focused on the kind of gas we create, and it gives us a floor. The LCF price plus rinse will still be higher, but we think that having a floor is a really good thing over a longer term, and we will be taking advantage of this over time it is specifically designed to focus on waste related gas generation within the state and as you all know we're in a very strong position within california for this in addition over above california other states are have already established or are establishing similar incentives as California for low-carbon fuel standards. And also, many utilities, not just the California utilities, will be either required or voluntarily will be purchasing gas under long-term contracts. In Canada, We all know that Fortis and Energy here in Quebec are already purchasing renewable natural gas on long-term contracts, similar to what Fortis is trying to do in California. And we're expecting new standards from the federal government that will also promote the use of renewable natural gas. So overall, the market has never been more positive. And I'm I believe it will continue to be positive and even more positive as time goes on. At this point, I hand it over to Yaniv to update you on the operation sign.
spk00: Yaniv Shacharov, I think, Andrew, you're handing it to me. This is Hani. Oh, sorry. My apologies. I got mixed up for a second. Go ahead, Hani. Thank you. No problem. No problem. Thank you, Andrew. Good morning, everyone, and thank you for joining. Looking at slide six, during 2021, our revenue backlog has increased from $2.8 to $4.6 billion. This increase of $1.9 billion, which represents a 68% increase year over year, was primarily driven by the Thunder project in Denmark, our Rhode Island project on the East Coast, and the Italian build-on-operate project. Now, about 95% of the revenue backlog is for BOO project, with the rest being for capital sales and services. What's worth noting here is that these revenue backlog numbers do not include the impact of the higher European gas prices. And assuming a European natural gas commodity price of 26 U.S. dollars per MMVTU, the annual run rate for our 13 BOO projects is expected to be about 177 million. Now this is the annual run rate of EBITDA. It's, I apologize, it's a typo here. It's not the run rate of revenue. It's the run rate of EBITDA. The revenue run rate is more in the 270 million range. Moving on to slide six. At $50 million, the Q4 revenues are 26% higher than the quarter in 2020. The revenues in financial in fiscal year 2021 were $153.6 million, which is an increase of 20% compared to 2020. And that was mainly driven by the capital sales activities and revenue growth in Italy. making EMEA the largest revenue contributor at 60%, while North America made up 35% and Asia 5%. Gross margin erosion in Q4 2021 was primarily due to cost overruns related to atypical issues with the winding down of the legacy capital sales project in the Netherlands. Now, despite that, the gross margin for the full year 2021 is in line with that of the previous year. In fiscal year 2021, the net SG&A increased by a marginal 4%, a much lower growth rate than the 20% increase in revenue, and thus supported the improvement in the EBITDA. Leading me to say that our profitability is also up with an adjusted EBITDA totaling $5 million in fiscal year 2021 and a significant 60% year-over-year increase of $1.9 million. I will now pass it over to Yaniv.
spk06: Thank you, Hani. This is Yannis speaking. Good morning, everybody. Looking at slide number eight, I'll be discussing in order our capital sales businesses with turnkey system solutions, our services that have recurring O&M and service revenues, and most focusing on our build-on-operate where we're investing significantly to capture the significant market wave both in Europe and North America. Highlighting as a theme, we continue to operate significantly, invest significantly in our build-on-operate business to capture high profitability, high margin recurring revenue. Moving to slide number nine, starting off with our capital sales, you'll notice comparing our Q4 2021 to Q4 2020, we experienced a 24% improvement on these capital sales revenues and a 19% overall for the fiscal year. Going down the list, that the capital sales continue to drive the majority of our revenues while our boos are continuing to ramp up and we are continuing to execute in our implementation, particularly in Europe and Italy and in North America. Capital sales overall, as we discussed, are up 19% for the year and driven primarily because of the growth in the AMEA region, specifically in Italy. The significant contribution from our Italian projects is driving capital sales with a 62% increase in EMEA from 2020 year comparison. It's also expected that the Italian government will continue the RNG incentive that is in place, largely in the wake of the significant EU directive to implement REDD2, as well as a doubling down and acceleration of the transition to RNG not only for decarbonization, but also for security and local energy production purposes in light of the conflict. On the new capital sales offering front, we announced two significant orders in Italy in the agricultural sector, as well as an existing customer adding on scope in North Carolina with our wastewater treatment solutions. Also notably, we sold the first-ever RNG liquefaction system in Italy, demonstrating the expansion of our energy portfolio and product offering to be flexible with different fuel products as our customers and market needs. Moving to slide number 10, highlighting the service and VOO business, you'll see that there was healthy growth in the service business with a 40% increase in 2021 compared to 2020. This is due primarily to new service contracts signed both in Q4 21 and early 22 that are expanding on with existing customers for servicing and operating systems we sold. On the blue front, the ramp up in Rialto is the main driver for the delay and increase from feedstock delays, which is unique to Rialto from a regulatory perspective on commercial sector. But multiple blue projects are coming online. Specifically, our SoCal Biomethane facility is injecting gas as we speak, and our European assets are starting from Q2 through the end of 2022, with all six anticipated to start operations by the end of the year. Moving to slide number 11, this is a significant summary here, so I'll go through a couple of steps to highlight. Most notably, on the consolidated CapEx, you'll notice $682 million of CapEx investment only from operating assets or those that are under construction. We'll note that this compares to $368 million at the time of IPO, reflecting an 85% increase in CapEx investment from boot projects that are under construction or in operation now. The result of this magnitude and the significant CapEx investment is translating to $177 million of run rate EBITDA, which is 104% increase at the time of IPO. And on the far right, the proportional run rate EBITDA for Energia represents $130 million run rate EBITDA compared to $52 million in IPO. This is 150% increase in run rate EBITDA, again, from the CapEx projects in operation and construction. What does this mean for the future? This means that we're investing heavily in high-growth market regions where RNG is accelerating, particularly capturing the wave of the European energy crisis and the rapid transition to renewables, both from decarbonization and security, with a backlog increase from the top right of a 76% increase, from $2.5 billion at the IPO to $4.4 billion currently. The BOO profitability continues to grow and de-risk our future EBITDA through now diversification with a strong portfolio on both continents. And the record high European gas prices are driving a significant amount of near-term expected BOO profitability. The impact of our European BOO assets with the six in Italy that will come at the end of the year as well as our Danish project, which will be complete in 2023. It has an improvement at run rate of about $39 million per year, just from the increased gas prices. On the new development front, highlighting not only the projects that are in the ground under construction as we speak, but attesting to our growth in diversified market segments of solid waste and wastewater, Jumping back to North America, we recently signed the project development agreement with Kent County in Michigan that was announced earlier this year to build a $280 million mature recovery facility. This is focused on solid waste to RNG, as well as a recent development and lease agreement, long-term lease agreement, as an expansion with our existing partner and customer, the Victor Valley Water Reclamation Authority, where the SoCal Biomethane project is injecting RNG today. This is a facility that's equivalent in size to Rialto, servicing both organic waste diversion as well as wastewater biosolids solutions like Rialto. Jumping to slide 12 on the Rialto Bioenergy Facility, the feedstock continues to ramp up as organic selection program rolls out with a steady increase month over month. However, significant growth is expected to happen with the enforcement of 1383 state law that requires all generators to sign up for organic collection. This has been delayed, but it's coming. In addition, the driver for haulers is this year there are penalties that haulers will be facing for the shortfall and diversion based on the 2022 diversion year. So the drivers are in place this year. It's with delayed enforcement. But what will significantly increase feedstock at Rialto are three OREX lines. The existing OREX line at Sun Valley continues to increase feedstock gradually. The second one that will be installed in downtown Los Angeles with universal waste systems will be installed late summer. And we've started manufacturing on a third OREX line in the Southern California region that will be feeding Rialto that's expected to install and start at the end of this year. And importantly to note that at full capacity, these three OREX lines would oversupply the Rialto facility as sort of an insurance policy that Rialto will be filled, particularly once the enforcement hits hard. However, gap sales are quite lucrative, and that's anticipating to commence in 22. So the RNG that's currently produced is being stored in the grid from Rialto. These sales are expected to occur in Q4 of 22 with the final registrations of the federal RIN and TI score under the LCFS programs. There has been some deviation in credit prices. The LCFS credits have dropped, but the rents have increased, and so there's no net impact to the value of the gas from Rialto. Moving to slide 13 with other BU updates, the other California BU, SoCal Biomethane, recently started operations. We commissioned in January, and RNG is actively being injected into the grid and stored. And the approval process is ongoing for both RIN and LCFS PI scores. And this is an important facility because it's the first wastewater plant in the state of California to inject RNG at a wastewater plant that's from food waste and wastewater co-digestion model. This is significant because it's a replicable model that can be leveraged across 150 wastewater plants in California that have existing digesters. And then in the wake of not only 1383 diversion requirements, but now SB 1440, renewable natural gas procurement requirements, that would require about 75 Rialto facilities worth of RNG to be purchased by 2030 in California. In Europe, the market continues to grow as well. A specific update, the first two facilities in Italy will be commissioned in Q2 of this year, with all facilities by the end of this year. And the Danish project, which is 40% larger than Rialto and benefiting from the surge in gas prices, is currently experiencing the construction of the Phase 1, which will be completed in Q3. And this is to ensure that there's qualification for the subsidy program in Denmark that needs to be completed by the end of this year. Phase two is the expansion for the full project will be completed in 2023. And as I noted, 1.4 million MMVTUs of production, which is 40% larger than Rialto. And finally, back to North America, the Rialto or the Rhode Island and Charlotte bioenergy facilities. Construction is underway for the conversion of the Rhode Island plant from its current CHP power production conversion to pipeline RNG. Construction is on the way, completion expected mid-2023, and a firm fixed-price one-year offtake with a major North American utility as expected. Subsequently, construction will begin later this year to do the same conversion at the Charlotte facility in North Carolina to convert it to pipeline RNG as well with a similar offtake arrangement. This would add the portfolio of food waste RNG projects in North America, diversifying our geographic space. With that, I will hand it over back to Andrew for slide 14. Andrew?
spk02: Thanks very much, Yannick. In this slide, we highlight some adjustments that we have made to guidance. And I want to make sure everybody understands this. Nothing has worsened since the IPO. The market has, as we've been telling you, if anything, moved faster, much faster than we thought. But in a company like ours, it takes time. But what we have done since the IPO, we have emphasized backlog and build on operate project and slowed a bit on capital equipment sales. The net result of that is that short term, the revenues are somewhat lower. But long term, our profitability is dramatically better. so it's it's people are looking at us as a short-term company then we are doing the wrong strategy but i believe that our strategy will prove itself to be a really good strategy but it's this kind of a transition from capital equipment to build on operate and locked in long-term profitable projects take time so i am I'm hoping that everybody understands this. And I'm very proud of what our team is doing and has done. And I truly believe that we have a very important role to fulfill in combating climate change. And we will be one of the global leaders in that particular space. And RNG will be one of the key things that we can do short term to avoid the crisis. With this last slide, I'd like to hand it over to the operator for questions and answers.
spk08: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. As a reminder, that is staffed by one. We will pause for a moment to allow questions to be registered. Our first question comes from Derek Whitfield from Stiefel. Derek, please go ahead.
spk04: Good morning, all. And, Andrew, I certainly agree. The fundamental backdrop for both costs of R&G is very positive for your company. With my first question, I wanted to focus on your 2022 and 2023 guidance. Could you help us frame the degree of project execution delays you're experiencing as a result of short-term supply chain issues? And then separately regarding your latter comment, the degree of reduction in capital sales, how much has that impacted your 2022 and 2023 projections?
spk02: I can answer the first one. I think perhaps Hani can answer the second one better than I. On the first one, it is not a dramatic impact. It's slowing us down, you know, a quarter in some of the projects, maybe two quarters in some others. So it's definitely been led to some slowdown. In terms of financial results, in general, we don't take on contracts now without locking up the supplies, the major supplies at least. So we're trying to make sure that we don't get caught with these increases. And in general, I think it's not a major impact so far, but it definitely is a major impact on the pricing of the projects. So we really cannot go into assuming any project will be at the same price as it was in the past. Most of our older projects have already locked down all the suppliers, so there should be no significant impact on that. Juan, do you want to answer the second question?
spk00: Sure. So the capital state, what Andrew mentioned, is similar to what's happening on some of the food avenues. It's just a question of dining. Nothing has disappeared or not being pursued. It's just taking a little bit longer. Like, for example, things related to the Denmark project where we have split the execution of the job into two phases and spread them out a little bit longer. And that's just an example. So things like these, but, you know, again, it's only a question of timing. So whatever, you know, nothing is disappeared or gone.
spk04: That makes sense. And then with my follow-up question, I wanted to focus on slide five in your prepared remarks on European energy security. In addition to Denmark and Italy, could you speak to the opportunities you see in other countries and the degree of policy incentives you'd expect to stimulate RNG growth?
spk02: Right. So basically, on the red tool, there is a market for green certificates, which are the carbon assets of the gas. And this is in all EU countries. So we are focused mostly in Italy and Denmark. And we now want to accelerate in Germany as well. But we're already active in Spain and France. And all of these countries are actively developing RNG projects. We're also... We also have a strong presence in the UK where we have similar opportunities, not the same system, but similar kind of gas prices and similar wholesale gas prices. So this will eventually go, which is not included in many of these projections. but it will add to it once it goes. We had expected more movement in the UK, but it's slowed down a bit, but it will happen. And it will happen across Europe.
spk04: Thanks for your time.
spk08: Our next question comes from Aaron McNeil from TD Securities. Aaron, please go ahead.
spk06: Hey, morning, all. Thanks for taking my questions. Can you walk us through the details of the expansion at Victor Valley? I mean, I've got a handful of specific questions like, you know, has the project officially been sanctioned? What's the potential timeline? What's the CapEx? How will you source feedstock? But maybe there are any questions I'm not thinking about. So perhaps you could just provide an overview. Yeah, absolutely. This is Yanniv speaking. Thanks for the question, Aaron. The Victor Valley facility is similar in size and scope to Rialto, which has served the growing needs for the two key organic waste problems, sustainable outlets for wastewater biosolids, as well as what will be a wave of organic waste that will have to find a home. And for the most part, the main alternative in the area is to drive hundreds of miles either north or east to compost facilities that have very limited capability to take food waste at the moment. So it's considered a close local outlet to the Southern California region. The two main feedstocks will be like Rialto, biosolids and landfill-diverted organic waste. CapEx would be similar to Rialto, $180 million plus magnitude. and would serve our similar customers, to put some scale to it, the biosolids at Rialto is one-tenth of the capacity from the total generation of the three wastewater plants that are served by the facility. And obviously there's many more than three wastewater plants in the Southern California region. So this is one waste problem, and this is driven primarily from concerns over the regulations of – the disposal of Class B sludges that have pathogens that's currently exported in large part out of state, and these forever chemicals called PFAS with regulations expected to come. So it's a security move for the wastewater facilities. On the organic waste side, this is, as we said, the three Oryx machines that will feed Rialto would oversupply when at full capacity. There's a number of other localities that our existing hauling customers have that will be needed as 1383 expands exponentially in adoption. With respect to timing, like California, we have a 20-year lease for the facility, so it's locked in long-term at the site. Permitting would likely take 18 to 24 months before construction can start. I'll pause there, Aaron, if there's some follow-ups. No, that's great. In terms of capital spending expectations, You mentioned the $682 million on the slide, which I assume excludes both Kent County and Victor Valley, which, as you mentioned, could be significant. To the extent that these projects go ahead, it seems like you're finding new opportunities maybe a bit faster than you articulated during the IPO. So I guess I'm wondering, like, how do you expect to finance these projects, and can you give us a sense of, what we expect for annualized booze spending for that $682 million with and without Kent County and Victor Valley? Yeah, I'll give an overlap and a preview, and Honey can fill in as well. You're right that the Kent County boos, the Victor Valley boos, as well as the European boos, are in large part in excess of our plan from IPO, which we view as a good problem to have, particularly with the acceleration of multiple drivers, decarbonization and energy security. And so, correct, the $682 million reflects what is contracted or in operation right now. The reality is that the investment is much larger. We continue to work on expanding our access to large debt and equity like before and expanding to facilities. that can be much larger in value to continue roughly 70% financing of our CapEx spend, future CapEx spend on the blue front. Ani, do you want to add some color?
spk00: Sure. So out of the 682 that are listed there, um some of it is going to be spent not all of it is going to be spent in in in the in 2022 it's going to be spread out a little bit more uh some of it is going to be spent in 2023 particularly the part related to the project in denmark um this is as you said in excess of what we had uh uh you know in the in the plan at the ipo time um and and this is this is basically translating into the large larger than planned also backlog numbers. In terms of the financing, I think, as Yaniv said, we will continue leveraging the debt financing on the project. But in addition to that, we have the MES financing that we are seeking on most of our projects.
spk06: I'll jump back in the queue.
spk09: Thanks.
spk08: As a reminder, to ask any further questions, please press the star followed by 1 on your telephone keypad. Our next question comes from Luca Nadu from National Bank Financial. Luca, please go ahead.
spk05: Thank you, and good morning. My first question is a follow-up on the last question regarding financing. So no debt and managed to find the debt portion of the new projects, but how should we look at the equity portion of the debt? Do you see possible equity raise in the future, or how else would you fund the equity portion of these new projects?
spk02: Hany, do you want to address that?
spk00: Sure. So first, with the fact that we are bringing in mezzanine to the table, mezzanine debt, it's allowing us to leverage more of the cash that we had raised at the IPO. But the opportunity is so huge in front of us, and it's a unique opportunity that we are able to take advantage of. particularly in Europe where the projects are so much more profitable than what we initially thought, including the ones we are executing, that it really, you know, we want to be aggressive. And if we want to be aggressive and continue accelerating the growth that we have, as we have done so far, we may want to think about new sources of capital.
spk05: Okay, thank you very much. And as my follow-up, you mentioned earlier that the supply chain issues will impact project pricing and not timing. So I'd just like to know what the project pricing impact would be on you. So would it be mostly offset by the fact that capital sales are going to get the revenue higher prices for the blue projects, which will also be higher costs, or should we expect higher costs for the projects and for your other projects that you're locking in right now, are the prices secured or will inflation have an impact on them?
spk02: I'll answer that. The example of the Danish project, we've locked in all the prices before we started. This was in at the end of the quarter like this past year. And those are pretty much locked. And the overall margin we then estimated, overall cost increase we estimated from supply chain issues was about 15%. We managed to go a little lower. than that when we locked them in but now we're finding some peripheral things like the steel building that was both difficult to procure and the cost is higher but if we still not push it above the 15 percent okay okay thank you for the call that took our final question is a follow-up question from aaron mcneil from td securities aaron please go ahead
spk06: Hey, I'm back. A couple of follow-up questions. What were the circumstances around the capital sale in the Netherlands? And could you maybe comment on how frequently this might occur or if you think it's one time in nature?
spk02: Well, I certainly hope it's one time in nature, but it's an issue that comes when you have a developer that develops a project and we do not have a clear control over the operation of the plant. So in this particular case, the problem was that the developer was supposed to supply the feedstock and is not doing that, not capable of doing it. But in the meantime, They are causing us some issues over paying our bills. So we've gone through arbitration. We hope to recover the losses, but whatever we encounter operationally, we simply put that on the chain.
spk06: Understood. I guess I wanted to ask a bit more about your capital sales and that it hasn't been a priority. I guess I don't put words in your mouth, but I mean, you've had pretty close to a hundred million of announcements year to date. Like would you say that's lumpy and we shouldn't expect that going forward or, or is that a good run rate?
spk02: Well, we have to be really careful about, capital sales, like the one I just gave you. So you're absolutely right. We need to avoid those things. And I think we will. This contract was, um, goes back about three years. Uh, we had, we did not have a very strong legal department and contract reviews at that, at that time train. Um, and we've tightened up on all of those things, particularly now that we're public, but also the approach. We will not get into this kind of responsibility split, as I said earlier. Now, in terms of slowing the capital, I didn't mean that we're slowing it. It's just not getting the same level of emphasis. If you have a choice, we'll will go for a build on operate because of the really significant value addition that such a project does. And sometimes when we do a build on operate, we do not get the benefit of the capital equipment that we sell to it. So that too tends to reduce the revenue a bit. But definitely in regions such as Asia, if anything, we're doubling down on capital equipment, and you'll see us showing progress, which is happening on the ground, and we're late to announce that.
spk06: Understood. Thanks for the clarification. I promise this next one's my final question. The seven Italian facilities, the BOO facilities, as you compiled your 2023 guidance, what volume ramp and pricing expectations have you made that would keep you within the 2023 EBITDA range?
spk02: Hany, do you want to address that?
spk00: Yeah, sure. So out of the seven Italian booths you're referring to, six of them are under construction and one is in contract. The six that are under construction will most all of them be at full revenue in 2023. They all are going to go into operation by the end of the year and next year they should all be at full capacity.
spk06: So there shouldn't be a similar Rialto, like, ramp or any risks around a slow volume ramp? That's ultimately what I'm hearing.
spk00: This is a different type of feedstock, SSOs. We have feedstock agreements in place. Maybe any of you want to comment on that?
spk06: Yeah, it's important to note that Rialto is a unique situation because it's relying on a new program to be implemented in the largest city in California in the wake of COVID. So it's a new rollout, new organic collection that is backed by enforcement that's been slightly throttled down to give folks a recovery period from the COVID pandemic. In the other plants, we're dealing with any stock that's existing, either agricultural waste or food waste that are already existing, that are already collected, the infrastructure is there, and on its collection and rules. It's a matter of building the plants to get the trucks to come in the gate. And then from a pricing perspective, does your current guidance assume that $26 per MMVTU for the gas, or would it be a more conservative figure?
spk00: It does assume the $26. Understood.
spk06: Okay. That's all for me. I'll turn it over. Thanks.
spk02: Maybe to add to that, Aaron, it does not assume anything other than what's already on the docket. So in that sense, the guidance is conserved.
spk06: Interesting. Thanks, Andrew.
spk08: Our final question. Our final question comes from John Gibson from BMA Capital Markets. John, please go ahead.
spk03: Good morning, everybody. Just wanted to follow up with one more on the capital spending question. Just wondering how much capacity you have to book for a worker. Are you getting to the point where you're kind of tapped out on adding backlog until you have a few more projects going and maybe some capital sales work out the door?
spk01: I'm sorry, John. I'm a little confused on your question. Would you mind repeating it? Perhaps we'll do better next time.
spk03: yeah i guess i mean your backlog has risen significantly over the past few months um but i'm just wondering how much more capacity you have to book more work um i'm just wondering if you're getting to the point where you're maybe having to turn down some things until you get some more of this uh backlog out the door that makes more sense yeah so we've been able to significantly increase our
spk02: capabilities in Italy to cope with this growth. But maybe I'll let Yaniv speak to this.
spk06: Yeah, we have been benefiting from being more selective because the market has increased dramatically. So we are benefiting from saying no to more opportunities than before so that we can prioritize investment in mega projects. You'll notice the size of the projects are large, particularly our Danish project is bigger than Rialto and the recently booked booths are also sort of the mega facility things. And so we're able to be more selective. I wouldn't say we're saying no, but we're being more selective to projects that are much more core into market fundamentals. And those two mainly are in Europe and food waste RNG, food and ag waste RNG that are in countries where we have existing presence or we're able to enter quite quickly, Germany will be next. And so we already have a very long standing market presence. and capturing the new EU regulatory wave for acceleration to RNG. And then in North America, as evidenced by the continued booking of these large facilities, the momentum, the garnering momentum to organic waste diversion from landfills solid waste processing to carbon negative RNG. And we are keeping our focus on carbon negative RNG projects where the tariffs like 1440 are asking for as a high priority feedstock to combat climate change as well as utilities are increasingly saying they want carbon negative fuel to get their overall portfolio to neutrality. So I would say it's given us the ability to focus. Now, as far as the human resources side, we're able to scale with our structure. And capital does become a constraint, which is why we are expanding our debt facility, the size of our debt facilities and meds that Hani discussed.
spk03: Thanks, I'll turn it back.
spk08: Okay, there are no further questions, so I'll now hand you back over to Darlene for any closing remarks.
spk07: Thank you again, Lauren, and thank you, everyone, for your time today. I just wanted to say if you have any additional, if you require any additional information or you have any questions, please do not hesitate to contact the IR team at ir.energia.com. And with that, we'll close the call. Thank you.
spk08: This concludes today's course. Thank you for joining. You may now disconnect your lines.
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