Earnings call transcript: Energia reports Q4 2024 revenue growth amid strategic shifts

Energia Inc. reported its fourth-quarter 2024 financial results, highlighting a revenue increase to $34.1 million, a 1.9% rise from the previous quarter. The company also noted a significant expansion in gross profit and margins. Despite a net loss of $55.9 million, the result marks a 71% improvement from 2023. The company launched its "Energia 2.0" strategy, focusing on a capital-light business model and geographic expansion. According to InvestingPro data, the stock has shown remarkable momentum with a 243% return over the past year, though it currently appears undervalued based on Fair Value analysis.

Key Takeaways

• Q4 2024 revenue increased by 1.9% sequentially to $34.1 million.
• Full-year 2024 revenue declined by 24.2% compared to 2023.
• Gross profit surged by 157.8% in Q4.
• The company launched the "Energia 2.0" strategy for future growth.
• Net loss improved significantly by 71% from 2023.

Company Performance

Energia’s overall performance in Q4 2024 shows a strategic shift towards improving profitability and operational efficiency. Despite a 24.2% decline in full-year revenue to $111.6 million, the company managed to expand its gross margins significantly. InvestingPro analysis reveals a concerning financial health score of 1.31 (labeled as ’WEAK’), with particular challenges in profitability metrics. The introduction of the "Energia 2.0" strategy marks a pivotal change, focusing on innovation and geographic expansion to drive future growth.

Financial Highlights

• Revenue: $34.1 million in Q4 2024, up 1.9% sequentially.
• Full-Year Revenue: $111.6 million, a 24.2% decline from 2023.
• Gross Profit: $9 million in Q4, a 157.8% increase.
• Full-Year Gross Profit: $25.6 million, a 29.9% improvement.
• Net Loss: Improved to $55.9 million, a 71% improvement from 2023.
• Gross Margin: Expanded to 26.4% in Q4 from 10.5% in 2023.

Outlook & Guidance

Energia is targeting sustainable revenue growth and is preparing significant projects in Charlotte and Riverside for 2025. The company aims to capitalize on the growing organic waste to energy market, pursuing contracts exceeding $250 million in capital sales. With a market capitalization of $117.5 million and analyst consensus maintaining a hold recommendation, the strategic focus is on profitable, low-risk projects supported by strong policy incentives for clean energy. For deeper insights into Energia’s growth potential and comprehensive analysis, access the full Pro Research Report available exclusively on InvestingPro, along with 13 additional key ProTips and advanced financial metrics.

Executive Commentary

CEO Asaf An emphasized the foundational changes in 2024, stating, "2024 was about deliberate action, not just small improvement, but foundational changes to ensure our long-term success." COO Yaniv Shearson added, "Energia 2.0 is not just about transformation, it’s about execution," highlighting the company’s commitment to its new strategy.

Risks and Challenges

• Market Saturation: Increasing competition in the renewable energy sector could impact market share.
• Regulatory Changes: Potential shifts in policy could affect incentives for clean energy projects.
• Supply Chain Issues: Disruptions could impact project timelines and costs.
• Economic Conditions: Macroeconomic pressures could affect investment and consumer demand.
• Project Execution: Delays or cost overruns in large projects could impact financial performance.

Energia’s strategic shifts and improved financial metrics position the company for potential growth despite the challenges ahead.

Full transcript - Anaergia Inc (ANRG) Q4 2024:

Operator: Hello, everyone, and thank you for joining us for today’s Anagia Q4 twenty twenty four 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 and A session. It’s now my pleasure to hand over to Darlene Webb, Investor Relations for Energia. Please go ahead when you’re ready.

Darlene Webb, Investor Relations, Energia: Thank you very much, operator, and good morning, everyone. On this call, we’ll be discussing our earnings for Energia’s fourth quarter twenty twenty four, which ended 12/31/2024. 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 Wolfe, Energia’s Chief Financial Officer and Doctor. Yaniv Shearson, Energia’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.

Asaf An, Chief Executive Officer, Energia: Thank you, Darlene, and good morning, everyone. We are currently on Slide four. I’m pleased to be here today to reflect on a 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, NEGI 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 €41,000,000 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. Ard Epstein, 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 Energia multiple voting shares into single class common share structure, these changes ensure that we are not only financially stronger, but also more accountable and shareholder focused. Moving to Slide five. With these structural changes in place, we launched Energia two point zero, a strategy focused on financial discipline, operational excellence and sustainable growth.

More than just a shift in direction, Energia two point zero 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 reduced debt and improved 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, rightsizing and streamlining the business and SG and A to align 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 market, including Latin America, Central And Eastern Europe, Africa, Japan and North America. Region where regulatory incentives, sustainability mandates and the demand for RNG 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 macro growth of previously delayed project, 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 seven. Our commercial momentum began accelerating in Q4, driven by a major contract wins 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 more significant Q4 wins are PepsiCo Colombia, a flagship organic waste to energy project for a global food and beverage leader, Monterrey One Water in The U. S, a significant O and M expansion in California that we expect will generate more than $3,000,000 annually. And already in early twenty twenty five, we are seeing further traction. QGM Italy, two biometric production facilities under EPC contracts that we announced yesterday valued over $46,000,000 The CTO of Ferboe Italy, a newly announced anaerobic digester project for a municipal client, reinforcing our growing presence in Italy public sector valued at over $9,000,000,000 University of California Davis campus have a new project to upgrade on campus anaerobic digester facilities, supporting one North American leading institute in its sustainability goals, a contract value at approximately $7,000,000 PECBAU, Italy, a multi plant binding agreement to develop five bio mentoring 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.

Insights purchased from our largest shareholders, Mani Investments and Doctor. 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 reengage institutional investors and build analyst coverage, helping to ensure that the market better understands Energia long term potential. And the financial markets took notice. Energia’s top stock delivered a remarkable 260% return in 2024, making it the best performing Canadian Greek tax stop of the year, as recognized by the financial press.

We are now on Slide 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 operational 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 winning 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 and 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 on AGR two point zero, 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?

Greg Wolfe, Chief Financial Officer, Energia: 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 of two point o in setting the stage for sustainable 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 ten and eleven, our financial results for the period ending 12/31/2024. Revenue for q four twenty twenty four was 34,100,000.0, a sequential increase of 1.9% from 33,400,000.0 for the same period in 2023.

On a full year basis, revenue was a hundred and 11 point 6 million dollars down 24.2% or $35,600,000 from $147,200,000 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 year in in new capital sale project signings. In addition, revenue declined because of the sale of of Pioneer, a food project in Italy, which was divested 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 prepare the site for construction. Gross profit for q four twenty twenty four was $9,000,000 reflecting a 157.8 increase or up 5,500,000 from $3,500,000 in q four twenty twenty three. Full year gross profit was $25,600,000 a 29.9% or a $5,900,000 improvement from $19,700,000 in 2023.

The increase was driven by strategic focus towards more profitable capital sales and operating and maintenance contracts, plus our continued progression and ramp up of our existing boot projects, combined with our disciplined project execution approach. Gross margins for q four twenty twenty four expanded substantially to twenty six point four percent, up from 10.5% in q four twenty twenty three. 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 light strategy and cost disciplines are beginning to flow through the bottom line in a meaningful way.

SG and A expenses for the fourth quarter increased to $18,600,000 from 13,800,000.0 in q four twenty twenty three. This increase was mainly driven by year end compensation and executive severance accruals, external professional fees regarding our year end audit, increased insurance costs and other year end related expenses and reserves. For the full year, SG and A expenses were £66,800,000 a decrease of £8,500,000 or 11.3% from £75,300,000 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 q four twenty twenty four was 15,400,000.0, a 54.7 improvement or 18,600,000.0 from the 34,100,000.0 loss in q q four twenty twenty three.

This eighteen point six million dollars improvement was driven by a notable increase in gross margins during q four twenty twenty four compared to the same period last year, coupled with losses on the deconsolidation of Rialto that occurred in q four twenty twenty three. On a full year basis, net loss significantly improved to 55,900,000.0, representing a 71% improvement compared to a hundred and 92,800,000.0 in 2023. This $136,900,000 improvement was primarily due to a prior year onetime charge related to the disposition of the company’s subsidiary, ATA, and the deconsolidation of Rialto, both of which were partially offset by the sale of Tondr. Additionally, 2024 benefited from the large improvements in gross margin and reduction in SG and A expenses, as noted. Adjusted EBITDA for Q4 twenty twenty four was a loss of £6,300,000 an improvement of 18.2% or $1,400,000 compared to a loss of $7,700,000 in Q4 twenty twenty three.

The majority of the adjusted EBITDA improvement relates to substantially higher gross margin achieved in q four twenty twenty four compared to q three twenty twenty three q four twenty twenty three as noted earlier. Full year adjusted EBITDA loss improved 23% or 8,000,000 to 26,900,000.0 compared to a loss of 34,900,000.0 in 2023. This marks a notable improvement driven by higher gross margins, reduced SG and A expenses, and continued financial discipline 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 and m service segment with a conservative approach to backlog bookings. For for capital sales, for example, we include only signed contract values. And for o and m services, we modeled just three years of revenue as backlog even though several of these agreements extend beyond ten years. Under this refined definition, our backlog at year end stands at $90,000,000 in capital sales and $13,300,000 in O and M services contracts for a year ending backlog of $103,300,000 This figure is as of December 31 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 250,000,000 in capital sales and over 15,000,000 in o and 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 prepare the site for future construction.

Riverside also can be continues to be ready for construction as we complete development work under our 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 these RNG developments. Both of these development projects are anticipated to begin construction in 2025 once the financial partner is selected. In summary, our financial results for the fourth quarter and full year reflect clear tangible progress under Energia two point o. 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 on execution and margin enhancement growth. In early twenty twenty five, 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?

Yaniv Shearson, Chief Operating Officer, Energia: 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 to 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 thirteen eighty three, 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 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, there’s growing 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 TechBow for five new biomethane plants, expanding energy of scale in the high growth European market. These plants will process 270,000 tons of organic waste annually.

We’re focused to capitalize on the rapidly expanding European energy security initiatives and leverage Repower EU 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 thirteen eighty three and SB fourteen forty in California and Repower EU in Europe, Energy is well positioned to accelerate growth in the global organic waste energy market. And on to slide 16, why does all this matter? Because our execution translates into long term revenue growth, stable margins, and increased cash efficiency.

Our capital light 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 two point o 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 Assaf for his closing remarks.

Asaf An, Chief Executive Officer, Energia: Thank you very much, Adeev. As you have just heard, we are making clear, measurable progress in moving Energia 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 focused strategy and an expanding presence in key markets, Energia 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?

Darlene Webb, Investor Relations, Energia: Thank you, Asaf. Operator, I believe we’re now able to open the call to questions.

Operator: Apologies. We will now start today’s Q and A session. It looks like we have no questions registered at this time, so I’ll hand back over to Darlene Webb for closing remarks.

Darlene Webb, Investor Relations, Energia: 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@energia.com or visit us online at energia dot com. Thank you all for your time today. And operator, you may now end the call.

Operator: Thank you. That concludes today’s call. You may now disconnect your line.

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