Envipco Q1 2025 slides: Revenue drops 23% amid continued investment in growth

Introduction & Market Context

Envipco Holding NV (ENVI) reported a challenging start to 2025, with first-quarter revenue declining 23% year-over-year to €21.0 million, according to the company’s Q1 2025 results presentation released on May 14, 2025. The recycling technology company described the quarter as a "soft start to 2025" following a record fourth quarter in 2024, when revenue reached €36.4 million.

Despite the revenue decline, Envipco maintained a healthy gross margin of 37.3%, an improvement from 35.1% in the same quarter last year, as the company continues to invest in growth initiatives targeting the expanding Deposit Return Scheme (DRS) market across Europe and globally.

Quarterly Performance Highlights

Envipco’s Q1 2025 financial results showed mixed performance across key metrics. While revenue declined significantly, the company improved its gross margin and continued to generate positive EBITDA, albeit at a lower level than the previous year.

Key financial metrics for Q1 2025 include:

• Revenue: €21.0 million (-23% y/y)
• Gross profit: €7.8 million (-19% y/y)
• Gross margin: 37.3% (up from 35.1% in Q1 2024)
• EBITDA: €0.5 million (down from €2.7 million)
• EBITDA margin: 2.3% (down from 10.0%)
• Net loss: €2.4 million (compared to €0.1 million profit in Q1 2024)

As shown in the following chart of quarterly revenue and gross profit development:

Operating expenses increased 12% year-over-year to €9.8 million as the company continued to invest in market and business development, technology platforms, administrative capacity, and systems to support anticipated market growth. The company reported 483 employees at the end of the quarter.

Regional Performance Analysis

Envipco’s performance showed significant regional divergence, with European operations experiencing a substantial decline while North American business demonstrated growth.

European revenue fell 38% year-over-year to €12.3 million, primarily due to lower Reverse Vending Machine (RVM) sales, which dropped to €11.0 million from €19.2 million in Q1 2024. The company noted that "timing of markets cause quarterly variations" and identified Romania and Hungary as key sales drivers. Program services revenue in Europe increased to €1.3 million from €0.7 million in the same period last year.

The European revenue trend is illustrated in the following chart:

In contrast, North American operations showed positive momentum with revenue increasing 16% year-over-year to €8.7 million. This growth was driven by both program services, which grew 4% to €7.4 million, and RVM sales, which jumped 176% to €1.3 million.

The North American revenue development is shown below:

Financial Position and Cash Flow

Envipco’s balance sheet showed total assets of €119.9 million at the end of Q1 2025, down from €129.4 million at the end of 2024. The company maintained a solid equity ratio of 54%, though equity decreased to €64.4 million from €67.6 million in Q4 2024.

The cash position declined significantly during the quarter, with the cash balance falling to €20.7 million from €30.7 million at the end of 2024. This €10 million reduction was primarily due to negative operating cash flow of €4.0 million (including a working capital build of €2.5 million on higher inventories), investing activities of €1.1 million, and financing activities of €4.8 million related to reduction in borrowings and lease liabilities.

The company’s financial position is summarized in the following balance sheet visualization:

The cash flow statement provides further details on the movement of funds during the quarter:

Strategic Initiatives and Market Outlook

Despite the challenging quarter, Envipco highlighted several strategic developments and maintained an optimistic outlook based on the expanding global DRS market opportunity.

Operational highlights included:

• Major contract wins in Romania announced in February and April
• Inauguration of the Cluj-Napoca Engineering Center of Excellence in April as a global R&D and IT hub
• Continued efficiency gains in production from operational improvements

The company emphasized its strong position in Romania, where it has built a leading market share and announced follow-on orders for 800 RVM units from a major retail group for 2025.

Looking forward, Envipco remains focused on capitalizing on the "DRS Second Wave" driven by the EU Packaging (NYSE:PKG) and Packaging Waste Regulation (PPWR), which requires a 90% collection rate for plastic bottles and cans by January 2029. The company has identified several key markets for near-term DRS implementation, including Czech Republic, Greece, Poland, Portugal, Singapore, Spain, Turkey, and the UK.

The timeline for DRS implementation across European markets is illustrated below:

Envipco estimates a market opportunity of over 200,000 new RVM units with an average price of €18,000-25,000 per unit. The company is targeting a market share above 30% in new markets and aims to achieve a 40% gross margin as it realizes further operational leverage from scale in Europe.

While the first quarter showed revenue challenges, Envipco’s continued investment in growth initiatives and strategic positioning for the expanding DRS market suggests the company is prioritizing long-term opportunity over short-term results. The next financial update is scheduled for August 13, 2025, when the company will report its Q2 2025 results.

Full presentation:

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