Anaergia Reports Fourth Quarter and Fiscal 2021 Financial Results
BURLINGTON, Ontario–(BUSINESS WIRE)–Anaergia Inc. (“Anaergia” or the “Company“) (TSX: ANRG), a company that offers integrated waste-to-value solutions to reduce greenhouse gases by cost-effectively turning organic waste into renewable natural gas, fertilizer, and water, today announced its financial results for the three-month and the twelve-month periods ended December 31, 2021. All financial results are reported in Canadian dollars unless otherwise stated. Management of Anaergia notes that these results are being released against the backdrop of dramatic changes that have taken place in energy markets in a few short weeks. In management’s view, energy security will become a dominant force for years to come, and this new reality will have dramatic consequences for Anaergia and other international renewable energy supply companies.
“Anaergia’s fourth quarter shows higher revenues compared to the same quarter in 2020. We did, however, post a lower gross profit due to cost overruns related to atypical issues with the winding down of a large legacy capital sales project in the Netherlands.
“Overall, I’m pleased to report that Anaergia saw a healthy 20% increase in revenues year over year. This was slightly less than we anticipated due to slower ramp-up of volumes at our Rialto Bioenergy Facility (“RBF”) and to global supply chain issues related to the COVID-19 pandemic, both of which are temporary. All indications are that volumes at RBF will accelerate during the year,” said Anaergia’s Chairman and CEO, Andrew Benedek. “I am also happy to note that our Revenue Backlog1 rose to $4.6 billion from $3.5 billion at the end of the third quarter. This was primarily due to the addition of the build-own-operate (“BOO”) project in Tønder, Denmark.
“Anaergia’s portfolio of 13 BOO facilities, operating or under construction across North America and Europe, as well as recent development agreements signed, underscore Anaergia’s global leadership position in large-scale RNG production from solid waste, wastewater, and agri-food sectors,” added Dr. Benedek.
Management of Anaergia believes that in Europe, the tight natural gas markets and the tail winds from the European Union’s resolve to achieve natural gas independence from Russia, present an historic opportunity for Anaergia. This is because European BOO projects are expected to be more profitable than originally anticipated and the number of new opportunities for capital sales and investment is expected to increase dramatically.
As we had previously indicated, assuming a natural gas price in Europe of US$26 /MMBTU, (as forecasted for 2022 by the International Energy Agency, before the current conflict in Ukraine), which is well below the average market price of the last six months, the estimated annualized EBITDA for our seven plants that are starting their ramp-ups during the second quarter of this year would increase from an initially forecasted total of approximately $58 million to approximately $97 million. In addition, the certificates associated with the environmental attributes of RNG are also expected to increase, however, this upside is not included in our forecasted EBITDA increase.
Business Highlights
North America
As noted, during 2021, Anaergia saw a slower-than-anticipated ramp up in volumes of organic waste shipped to the RBF in California because of conditions unique to this facility.
Furthermore, RBF is seeing a ramp up in its waste volumes with gradually increasing feedstock supply from the OREX™ line operated by Waste Management Inc. In addition, a second OREX™ line with Universal Waste Systems Inc. is to be installed this summer and a third OREX™ line is being manufactured for this market and is expected to be operating in late 2022, which will all add to feedstock supply for the RBF. Operating at full capacity, these three OREX™ lines would generate enough feedstock to exceed the capacity of RBF. RBF is continuing to store the RNG that it produces in the gas grid, and sales of this RNG are expected to commence during the fourth quarter of 2022, after final registration under the federal Renewable Identification Number (RIN) and state Low Carbon Fuel Standard (LCFS) programs.
Also in California, operations recently commenced at the SoCal Biomethane facility located at the City of Victorville’s wastewater treatment plant, where RNG is being produced and injected into the natural gas pipeline system.
Construction has commenced at the Rhode Island Bioenergy Facility, which was acquired subsequent to Anaergia’s initial public offering (the “IPO”). Construction activity is underway to convert this plant’s renewable energy output from combined heat and power to RNG, which will be injected into the pipeline of a major utility, under the terms of a 20-year offtake agreement. This construction activity is expected to be completed by mid-2023.
At the Charlotte Bioenergy Facility in North Carolina, also acquired post-IPO, construction is expected to start later this year to convert this plant’s renewable energy output to renewable natural gas (RNG) for pipeline injection, with a similar offtake arrangement in place to that of the Rhode Island Bioenergy Facility.
Together, the Rhode Island and Charlotte facilities, which are owned and operated by Anaergia, account for approximately $670 million of the Company’s revenue backlog.
In addition to the project development agreement for the Kent County Sustainability Park announced in March 2022, Anaergia recently entered into an exclusive development agreement with a 20-year lease to develop a food waste-to-RNG and biosolids-to-fertilizer facility, similar in size to RBF, at the Victor Valley Water Reclamation Authority. This is part of an expansion of the successful partnership and is expected to serve the growing need for organic waste diversion and sustainable biosolids management in Southern California.
Europe
In Italy, construction of six BOO facilities is continuing, with the first two of these facilities expected to be commissioned in the second quarter of this year. It is anticipated that all six of these facilities will have started operations by the end of 2022.
In Tønder, Denmark, construction continues on what is expected to be one of the largest anaerobic digestion-to-RNG plants in the world. The project is to start generating revenue from RNG sales in the fourth quarter of 2022, although construction activity at this site is to continue until the third quarter of 2023.
Fiscal 2021 Financial Results
Financial highlights:
- Revenues for the fourth quarter rose to $50.2 million from $39.9 million during the same period of the previous year. Revenues increased to $153.6 million for fiscal 2021 from $128.0 million in the prior year. The increases were driven primarily by activity in Europe.
- Gross Profit for the fourth quarter decreased by 36% from the same period in the prior year. The drop is chiefly driven by cost overruns in a large, legacy capital sale project that is in the process of winding down. Gross Profit increased to $31.6 million for fiscal 2021 from $28.6 million in the previous year.
- Net Loss for the fourth quarter increased to $7.8 million when compared to $1.6 million for the same period the previous year, while the net loss for the year decreased to $9.4 million when compared to $16.8 million for the same period the prior year.
- Adjusted EBITDA2 for the fourth quarter decreased to break-even from $1.6 million in the fourth quarter of the previous year. Adjusted EBITDA increased to $5.0 million for fiscal 2021 from $3.1 million for the prior year.
|
Three months ended: |
31-Dec-21 |
31-Dec-20 |
% Change |
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|
(In millions of Canadian dollars) |
|
|
|
|||
|
|
|
|
|
|||
|
Revenue |
50.2 |
39.9 |
26% |
|||
|
Gross profit |
6.3 |
9.9 |
-36% |
|||
|
Gross profit % |
13% |
25% |
|
|||
|
Income (loss) from operations |
(2.6) |
(2.6) |
|
|||
|
Net loss |
(7.8) |
(1.6) |
|
|||
|
Adjusted EBITDA |
0.0 |
1.6 |
|
|||
|
Twelve months ended: |
31-Dec-21 |
31-Dec-20 |
% Change |
|||
|
(In millions of Canadian dollars) |
|
|
|
|||
|
|
|
|
|
|||
|
Revenue |
153.6 |
128.0 |
20% |
|||
|
Gross profit |
31.6 |
28.6 |
11% |
|||
|
Gross profit % |
21% |
22% |
|
|||
|
Loss from operations |
(8.1) |
(4.4) |
|
|||
|
Net loss |
(9.4) |
(16.8) |
|
|||
|
Adjusted EBITDA |
5.0 |
3.1 |
|
|||
|
Statement of |
|
|
||
|
Financial Position |
31-Dec-21 |
31-Dec-20 |
||
|
(In millions of Canadian dollars) |
|
|
||
|
|
|
|
||
|
Total Assets |
703.9 |
|
452.2 |
|
|
Total Liabilities |
367.3 |
|
326.4 |
|
|
Equity |
336.6 |
|
125.8 |
For a more detailed discussion of Anaergia’s results for the three-month and twelve-month periods ended December 31, 2021, please see the Company’s financial statements and management’s discussion & analysis, which are available at https://www.anaergia.com/investor-relations and on the Company’s SEDAR page at www.sedar.com.
Fiscal 2022 and Fiscal 2023 Guidance Update
Despite the significant incremental growth in project bookings, we are revising our Fiscal 2022 and Fiscal 2023 guidance disclosed in our supplemented base PREP prospectus, dated June 18, 2021, as result of the slower than expected ramp up at the RBF and project execution delays caused by short-term supply chain issues. We still expect a healthy year of growth in Fiscal 2022, with an over 50% increase in revenues relative to Fiscal 2021 and Adjusted EBITDA of over 10% of Fiscal 2022 revenues. For Fiscal 2023, management also expects lower than initially anticipated revenues but expects that Adjusted EBITDA will be within our previous guidance.
For more information, including management’s assumptions relating to the foregoing guidance, please refer to the Company’s management’s discussion and analysis of financial condition and results of operations for the three-month and twelve-month periods ended December 31, 2022, which is available on SEDAR at www.sedar.com.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures to provide investors with supplemental measures. Management also uses non-IFRS measures internally in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements. Management believes these non-IFRS measures and industry metrics are important supplemental measures of operating performance because they eliminate items that have less bearing on operating performance and highlight trends in the core business that may not otherwise be apparent when relying solely on IFRS financial measures. Management believes such measures allow for assessment of our operating performance and financial condition on a basis that is more consistent and comparable between reporting periods. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.
Definitions of non-IFRS measures and industry metrics used in this press release are provided below. A reconciliation of the non-IFRS measures used in this press release to the most comparable IFRS measure can be found below under “Reconciliation of Non-IFRS Measures”.
“Adjusted EBITDA” is defined as net earnings before finance costs, taxes and depreciation and amortization adjusted for our normalized proportionate interest in our BOO assets and one-time or non-recurring items, stock-based compensation expense, asset impairment charges and write downs, gains and losses for equity-accounted investees, foreign exchange gains or losses, restructuring costs, ERP customization and configuration costs, litigation and other claims settlements, gains and losses resulting from changes in certain balance sheet valuations (such as derivatives and warrants), acquisition costs and costs related to our initial public offering, including estimated incremental auditing and professional services costs incurred in connection with our initial public offering. For further details, refer to “Reconciliation of Non-IFRS Measures” below.
“Revenue Backlog” is defined as the balance of unrecognized, undiscounted, consolidated revenues from signed contracts in our capital sales and services segments and from our BOO assets that are operational, under construction or financially closed over their remaining useful life. We have conservatively modelled for only 20 years of revenue out of the useful life of the BOO assets.
Conference Call and Webcast
A conference call to review the Company’s results for the fourth quarter of 2021 will take place at 11:00 a.m. (ET) on Monday March 28, 2022, hosted by Chief Executive Officer Andrew Benedek, Chief Operating Officer Yaniv Scherson and Chief Financial Officer Hani Kaissi. An accompanying slide presentation will be posted to the Investor Relations section of our website shortly before the call.
To participate in the call please sign up to receive your personal event-joining details at the following pre-registration link:
To listen to the webcast live:
The webcast will be archived and will be available in the Investor Relations section of our website following the call.
About Anaergia
Anaergia was created to eliminate a major source of greenhouse gases by cost effectively turning organic waste into RNG, fertilizer and water, using proprietary technologies. With a proven track record from delivering world leading projects on four continents, Anaergia is uniquely positioned to provide end-to-end solutions for extracting organics from waste, implementing high efficiency anaerobic digestion, upgrading biogas, producing fertilizer and cleaning water. Our customers are in the municipal solid waste, municipal wastewater, agriculture, and food processing industries. In each of these markets Anaergia has built many successful plants including some of the largest in the world. Anaergia owns and operates some of the plants it builds, and it also operates plants that are owned by its customers.
For further information please see: www.anaergia.com
Forward-Looking Statements
This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the Company’s current expectations regarding future events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risk Factors” in the Company’s annual information form dated March 28, 2022 for the fiscal year ended December 31, 2021. Actual results could differ materially from those projected herein. Anaergia does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required under applicable securities laws.
Reconciliation of Non-IFRS Financial Measures
|
Three months ended: |
31-Dec-21 |
31-Dec-20 |
||||
|
(In thousands of Canadian dollars) |
|
|
||||
|
Net income (loss) |
(7,791 |
) |
(1,550 |
) |
||
|
Finance costs |
307 |
|
(312 |
) |
||
|
Depreciation and amortization |
982 |
|
1,650 |
|
||
|
Income tax expense |
3,769 |
|
546 |
|
||
|
EBITDA |
(2,733 |
) |
334 |
|
||
|
|
|
|
||||
|
Share-based compensation expense |
134 |
|
123 |
|
||
|
Net gain on Fibracast deconsolidation |
– |
|
– |
|
||
|
(Gain) loss on RBF embedded derivative |
(2,160 |
) |
(9,040 |
) |
||
|
Stock warrant valuation (gain) loss |
– |
|
6,643 |
|
||
|
Share of loss in equity accounted investees |
2,190 |
|
1,000 |
|
||
|
Provision for customer claim |
– |
|
– |
|
||
|
Other (gains) losses |
1,496 |
|
400 |
|
||
|
ERP customization and configuration costs |
1,675 |
|
– |
|
||
|
Costs related to the Offering |
(192 |
) |
– |
|
||
|
Project development write offs |
– |
|
2,418 |
|
||
|
Foreign exchange (gain) loss |
(432 |
) |
351 |
|
||
|
Adjusted EBITDA |
(22 |
) |
1,575 |
|
||
|
|
|
|
||||
|
Twelve months ended: |
31-Dec-21 |
31-Dec-20 |
||||
|
(In thousands of Canadian dollars) |
|
|
||||
|
Net income (loss) |
(9,382 |
) |
(16,821 |
) |
||
|
Finance costs |
(917 |
) |
2,158 |
|
||
|
Depreciation and amortization |
3,354 |
|
3,128 |
|
||
|
Income tax expense |
3,066 |
|
4,869 |
|
||
|
EBITDA |
(3,879 |
) |
(6,666 |
) |
||
|
|
|
|
||||
|
Share-based compensation expense |
539 |
|
660 |
|
||
|
Net gain on Fibracast deconsolidation |
(2,346 |
) |
(654 |
) |
||
|
(Gain) loss on RBF embedded derivative |
(5,673 |
) |
(12,152 |
) |
||
|
Gain on warrant forfeitures |
(615 |
) |
– |
|
||
|
Stock warrant valuation (gain) loss |
914 |
|
8,387 |
|
||
|
Share of loss in equity accounted investees |
4,819 |
|
3,941 |
|
||
|
Provision for customer claim |
3,473 |
|
– |
|
||
|
Other (gains) losses |
1,740 |
|
979 |
|
||
|
ERP customization and configuration costs |
3,171 |
|
1,300 |
|
||
|
Costs related to the Offering |
4,140 |
|
– |
|
||
|
Project Development write offs |
– |
|
2,418 |
|
||
|
Foreign exchange (gain) loss |
(1,248 |
) |
4,873 |
|
||
|
Adjusted EBITDA |
5,035 |
|
3,086 |
|
||
|
|
|
|
||||
Source: Anaergia, Inc.
________________________
1 See “Non-IFRS Measures and Industry Metrics” below.
2 “Adjusted EBITDA” is a non-IFRS measure.
Contacts
For media relations please contact: Melissa Bailey, Director, Marketing & Corporate Communications, Melissa.Bailey@Anaergia.com
For investor relations please contact: IR@Anaergia.com
