Anaergia Inc.

Hello everyone and thank you for joining us for today's Energia Q4 2024 and year-end conference call and webcast. My name is Drew and I'll be the operator on today's call. After today's prepared remarks, we will have a Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. And if you wish to withdraw your question, then it's star followed by two. It's now my pleasure to hand over to Darlene Webb, Investor Relations for Energia. Please go ahead when you're ready.

Thank you very much, operator, and good morning, everyone. On this call, we'll be discussing our earnings for Energia's fourth quarter 2024, which ended December 31st, 2024. If you're following along with our slides, my comments are directed to slides one through three. And on slide two, you'll see that for our call today, I am joined by Mr. Asaf An, Energia's chief executive officer, Mr. Greg Wolf, Energia's chief financial officer, and Dr. Yaniv Sherson, Energy's Chief Operating Officer. Before beginning our formal remarks, we would like to refer listeners to slide three 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 does not undertake to update any forward-looking statements except as may be required by applicable laws. Listeners are urged to review the full discussion of risk factors in the company's prospectus, which is filed with Canadian securities regulators. And with that, I'll turn the call over to Asaf.

Thank you, Darlene, and good morning, everyone. We are currently on slide four. I'm pleased to be here today to reflect on the pivotal year for Energia and share how we are positioning the company for long-term success. When I stepped into this role, Energia was at the turning point. We faced significant challenges, but also significant opportunities. Over the past year, we took bold, decisive steps to stabilize our financial position, refine our strategy, and rebuild trust with our investors. Today, I can confidently say, Energia is stronger, more focused, and better positioned than ever. 2024 was about deliberate action. not just small improvement, but foundational changes to ensure our long-term success. And as we close the year, I want to highlight some of the most meaningful progresses we have made. The successful $41 million strategic investment for money investment marked a turning point for Energia, significantly improving our balance sheet and providing the capital need to execute on our strategy. With this investment came a new controlling shareholder, Mr. Adelstein, a new management team, a refreshed board, and a new chairman, reinforcing governance and positioning us for potential substantial growth. As we took steps to enhance transparency and better align with investors by converting energy and multiple body shares into single class common share structure, these changes ensured that we are not only financially stronger, but also more accountable and shareholder-focused. Moving to slide five. With the structural changes in place, we launched Energia 2.0, a strategy focused on financial discipline, operational excellence, and sustainable growth, more than just a shift in direction. Energia 2.0 is about focus, doubling down on what we do best and executing with purpose. We prioritize capital sales, building on our successful core business, leveraging our proven expertise to drive revenue with lower capital intensity while focusing on profitable projects. This shift is already gaining traction. supported by a strong pipeline of well-funded strategic customers who recognize the value of our organic waste-to-energy solutions. At the same time, we reduce debt and improve financial flexibility, ensuring that we can pursue growth while maintaining a disciplined approach to investments. Strategic partnerships has played a key role in this effort, allowing us to share project risk strengthen execution capacity, and broaden our market reach through our collaboration with trusted regional players. We also worked to make our operation more efficient, right-sizing and streamlining the business and SG&A to allow with our capital light model and reducing headcount by 35%. These efficiencies have contributed to improved profitability and greater financial resilience. As well, our geographic expansion has been another important pillar of the strategy. We extended our presence into high-potential markets, including Latin America, Central and Eastern Europe, Africa, Japan, and North America. Regions where regulatory incentives, sustainability mandates, and the demand for R&G are driving adoption. We are positioning Energia to be a preferred solution provider in these rapidly evolving markets. Together, these actions have transformed our ability to compete, win, and grow. We now turn to slide six. The removal of our growing concern note marked a critical inflation point. This milestone reopened opportunities that were previously frozen and restored our ability to secure bonding capacity for new contracts. Most importantly, it allowed us to pursue sustainable backlog growth of previously delayed projects, enabling us to capitalize on long-term revenue opportunities that had been on hold. This backlog provides clear visibility into future growth and reinforce our strong financial trajectory. We are now on slide number seven. Our commercial momentum began accelerating in Q4, driven by a major contract that validate our strategy and reinforce our role as a global leader in organic waste to energy solutions. These contracts are not just about revenue. They reinforce credibility, expand our market reach, and support our long-term growth plans. Among most significant EQ4 wins are PepsiCo Colombia, a flagship organic waste-to-energy project for a global food and beverage leader. Monterey One Water in the US, a significant O&M expansion in California that we expect will generate more than $3 million annually. And already in early 2025, we are seeing further traction. QGM Italy, Two biometric production facilities under EPC contracts that we announced yesterday valued over $46 million. The city of Ferma, Italy, a newly announced anaerobic digestion project for a holistic client. Reinforcing our growing presence in Italy public sector, valued at over $9 million. University of California, Davis Conference. a new project to upgrade on-campus anaerobic digester facilities, supporting one North American leading institutes in its sustainability goals, a contract value at approximately $7 million. PECBAL, Italy, a multi-plant binding agreement to develop five biomethane facilities. JGC Holding Japan, a major step into the Japanese RNG market. These projects are more than just revenue. They represent the trust of global partners, validation of Energia's capabilities, and the strong indicators of the momentum that we are building. Moving on to slide eight. The renewed confidence in Energia is evident, not just from our partners, but also from leadership and investors. Inside purchase from our largest shareholders, Mani Investments, and Dr. Andrew Benedict, as well as two board members, and our CFO demonstrate clear alliance and conviction in the company's trajectory. We have also taken steps to re-engage institutional investors and build analyst coverage, helping to ensure that the market better understands Energia's long-term potential. and the financial markets took notice. And India stock delivered a remarkable 260% return in 2024, making it the best-performing Canadian cleantech stock of the year, as recognized by the financial press. We are now on slide number nine. While we are proud of these accomplishments, we recognize that 2024 was a transition year, a year of rebuilding, repositioning, realigning Energia for the future. We have stabilized our financial position, improved operation efficiency, and laid the foundation for long-term profitable growth. But most importantly, we have momentum. Our capital sales building business is gaining traction. Our operating model is sharper, and we are a willing business with well-funded strategic partners. This momentum, combined with the renewed confidence of our investors, positioning Energia to accelerate growth in 2025 and well beyond. I also want to take a moment to thank the entire Energia team, from our engineers and project managers to our corporate operational staff, who have worked tirelessly to deliver results. We are a team of doers, and that mindset had made all the difference in this past year. We are committed to execute an AGI 2.0, delivering profitable projects, expanding into key markets, and creating long-term value for our shareholders. I look forward to keeping you updated. With that, I will turn the call over to Greg to go over the financial results. Greg?

Thank you, Asaf, and good morning, everyone. Before I begin, I'd like to echo Asaf's gratitude for the exceptional work of our team in executing Energy at 2.0 and setting the stage for sustainability and profitable growth. Today, I'll walk you through our financial results for the fourth quarter and full year. Results that reflect not just improving fundamentals, but the impact of disciplined execution, sharper focus on our core business, and the early returns from our strategic reset. Let's now move to slide 10 and 11, our financial results for the period ending December 31, 2024. Revenue for Q4 2024 was $34.1 million, a sequential increase of 1.9% from $33.4 million for the same period in 2023. On a full year basis, revenue was $111.6 million, down 24.2% or $35.6 million from 147.2 million in 2023. The year-over-year decline was primarily due to the completion of the Italian and North American capital sales projects, some customer-driven project delays, and an interim slowdown in new capital sales project signings. In addition, revenue declined because of the sale of Bioneer, a food project in Italy, which was divested in August 2023, as well as the idling of the Charlotte facility in February 2024, a decision that was made by us to minimize operating losses while we prepared the site for construction. Gross profit for Q4 2024 was $9 million, reflecting a 157.8% increase or up $5.5 million from $3.5 million in Q4 2023. Full year gross profit was $25.6 million, a 29.9% or a $5.9 million improvement from $19.7 million in 2023. The increase was driven by a strategic focus towards more profitable capital sales and operating and maintenance contracts, plus our continued progression and ramp-up of our existing BOO project, combined with our disciplined project execution approach. Growth margins for Q4 2024 expanded substantially to 26.4% up from 10.5% in Q4 2023. On a full year basis, gross margins also increased to 23%, up from 13.4% in 2023. This kind of expansion reflects the early payoff from our shift towards more profitable projects, tighter cost controls, and production oversight. It shows that our capital life strategy and cost disciplines are beginning to flow through the bottom line in a meaningful way. TAB, Alex Weinheimer, SGN a expenses for the fourth quarter increase to 18.6 million from 13.8 million in Q4 2023 this increase was mainly driven by your rent compensation and executive severance accruals. TAB, Alex Weinheimer, External professional fees regarding our urine audit increase insurance costs and other year and related expenses and reserves. TAB, Alex Weinheimer, For the full year. SG&A expenses were $66.8 million, a decrease of $8.5 million or 11.3% from $75.3 million in 2023. This improvement reflects the impact of the business actions we took throughout the year, including a reduction in headcount and other cost reduction measures aimed at lowering our overhead cost structure. Net loss for Q4 2024 was $15.4 William Kramp- million a 54.7 improvement or 18.6 million from the 34.1 million loss in Q4 2023. William Kramp- This 18.6 million improvement was driven by a notable increase in gross margins during Q4 2024 compared to the same period last year, coupled with losses on the deconsolidation of Rialto that occurred in Q4 2023. On a full year basis, net loss significantly improved to $55.9 million, representing a 71% improvement compared to $192.8 million in 2023. This $136.9 million improvement was primarily due to a prior year one-time charge related to the disposition of the company subsidiary, ATA, and the deconsolidation of Rialto, both of which were partially offset by the sale of Tonder. Additionally, 2024 benefited from large improvements in gross margin and reduction of SG&A expenses as noted. Adjusted EBITDA for Q4 2024 with a loss of $6.3 million, an improvement of 18.2% or $1.4 million compared to a loss of $7.7 million in Q4 2023. The majority of adjusted EBITDA improvement relates to substantially higher gross margin achieved in Q4 2024 compared to Q3 2023 as noted earlier. Full year adjusted EBITDA loss improved 23% or 8 million to 26.9 million compared to a loss of 34.9 million in 2023. This marks a notable improvement driven by higher gross margins, reduced SG and expenses, and continued financial disciplines throughout our system. And now let's move to slide 12. As we close out 2024, we're reintroducing our revenue backlog, which gives us a clearer picture of the business we have in hand. This includes signed contracts across our capital sales and O&M service segments with a conservative approach to backlog bookings. For capital sales, for example, we include only signed contract values and for O&M services, We modeled just three years of revenue as backlog, even though several of these agreements extend beyond 10 years. Under this refined definition, our backlog at year-end stands at $90 million in capital sales and $13.3 million in O&M services contracts for a year-ending backlog of $103.3 million. This figure is as of December 31st and does not reflect contracts announced since that date. Beyond that, across various stages of the sales cycle, we are actively pursuing and are negotiating additional contracts that collectively exceed $250 million in capital sales and over $15 million in O&M services. With this solid backlog and a large growing pipeline of new deals, we are not only securing work for the near term, we're laying the foundation for sustainable revenue growth and long-term stability. Moving to slide 13. Our current operating build-own-operate facilities in SoCal and Rhode Island both continue to increase performance, with SoCal Biomethane operating profitably and getting closer to full capacity, and Rhode Island also continuing to ramp up production. Our other development stage projects, including Charlotte and Riverside, remain in various stages of development. In 2024, we took actions to minimize losses at our Charlotte facility by idling operations as we prepared the site for future construction. Richard Schauffler, Riverside also continues to be ready for construction, as we complete development work under existing capital sales contracts both projects will be constructed under our capital light model where whereby we are seeking a financial partner to fund the capex for the r&g development. Richard Schauffler, Both of these development projects are anticipated to begin construction in 2025 once the financial partner is selected. In summary, our financial results in the fourth quarter and full year reflect clear, tangible progress under Energia 2.0. We've taken meaningful steps to stabilize our financial foundation, improve operational discipline, and position the company for long-term value creation. We are productively managing risk, strengthening our internal controls, and focusing on execution and margin enhancement growth. In early 2025, we already see a much greater opportunity in our pipeline, and because we are the market leader in RNG technology and a complete turnkey solution, this makes us the perfect choice for our customers. We believe this will lead to sustainable long-term returns for our shareholders. With that, I'll now turn the call over to Yaniv to share operational highlights to provide further context on our strategic execution. Yaniv?

Thanks, Greg. We're now on slide 14. We're driving a fundamental shift in how organic waste is managed, energy is produced, and how the circular economy is strengthened. Going forward, we ensure that each project we take creates long-term value, both financially and environmentally, reinforcing our leadership in sustainable infrastructure. Our partnership with PepsiCo in Colombia expands our partnership to three continents, where we continue to support decarbonization solutions from major industrial players. Going forward, we expect continued demand for on-site decarbonization solutions from large industrial players seeking to reduce Scope 2 emissions. In California, we continue to expand our operations footprint through new agreements with Monterey One Water and the Rialto Bioenergy Solutions facility. Both projects align with California Senate Bill 1383, Organic Waste Recycling Mandate, and leverage energy as a vertically integration of design, technology, and operations. These projects provide recurring revenue and strengthen our ability to scale operations efficiently in the North American region, growing municipal and industrial segments. In Japan, our new office and recently announced LOI with JGC Holdings marks a strategic entry into one of Asia's most forward-thinking energy markets. Japan has set clear goals for carbon neutral gas by 2030. And with government-backed incentives and the introduction of the clean gas certificate system that is drawing demand for RNG solutions like ours. This move expands our global footprint and establishes Energia as a key player in Japan's transition to low-carbon energy. In Italy, we recently secured an agreement with TechVal for five new biomethane plants, expanding Energia's scale in the high-growth European market. These plants will process 270,000 tons of organic waste annually. We are focused to capitalize on the rapidly expanding European Energy Security Initiative and leverage RepowerEU incentives that support sustainable biomethane development across the EU. Moving on to slide 15. Beyond individual projects, our build, own, operate and capital sales pipeline continues to gain momentum with strong policy tailwinds, including the Clean Fuel Regulation in Canada, SB 1383 and SB 1440 in California, and RepowerEU in Europe. Energy is well positioned to accelerate growth in the global organic waste energy market. And onto slide 16. Why does all this matter? Because our execution translates into long-term revenue growth, stable margins, and increased cash efficiency. Our capital life strategy ensures we focus on financially healthy projects that reduce financial risk while expanding in markets where we already have strong momentum. This disciplined approach positions Energia for scalable and sustainable profitability, making us more resilient in evolving global energy markets. Energia 2.0 is not just about transformation, it's about execution. We're proving that our business model works, and we are poised to capture growing opportunities in the global organic waste to energy market. With that, I'll turn the call back to Asaf for his closing remarks.

Thank you very much, Yaniv. As you have just heard, we are making clear, measurable progress in moving energy forward, financially, operationally, and strategically. 2024 was a year of stabilization, a time to refocus on our core strengths and lay the groundwork for long-term success. We have taken decisive action to improve our financial position, streamline our business model, and place Energia on a path to profitable, disciplined growth. But our work is far from done. As we look ahead to 2025, our focus remains on execution, converting our growing pipeline into signed contracts, advancing strategic partnership, and counting on building a financial resilience. With a strong team, a focus strategy, and an expanding presence in key markets. And AGI is well positioned to drive sustainable growth and create value for our shareholders. With that, I will return back the call to Darlene to close. Darlene?

Thank you, Asaf. Operator, I believe we're now able to open the call to questions.

Apologies, we will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If you wish to withdraw your question, then it's star followed by two. We'll pause for just a moment to see which questions we get. It looks like we have no questions registered at this time, so I'll hand back over to Darlene Webb for closing remarks.

Thanks again, operator. And thank you everyone. As always, for additional information or should you have any questions, please do contact the IR team at ir.anergia.com or visit us online at anergia.com. Thank you all for your time today. And operator, you may now end the call.

Thank you. That concludes today's call.

You may now disconnect your line.