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, 2022. All financial results are reported in Canadian dollars unless otherwise stated.
“Overall, I’m pleased to report that Anaergia saw a healthy 25.4% increase in revenues year over year. This revenue growth would have been even higher if not for delays in the timing of both Capital Sales and BOO projects,” said Dr. Andrew Benedek, Chairman and CEO of Anaergia.
“Recent developments, including sale agreements with PepsiCo, underscore Anaergia’s global leadership position in RNG production from organics in the solid waste, wastewater and agri-food sectors,” added Dr. Benedek. “Subsequent to year end, the sale of our BOO asset in Tønder, Denmark strengthened our financial position, and this gives me increased confidence that we are positioned to take advantage of growth opportunities.”
Business Highlights
Rialto Bioenergy Facility (“RBF”) in California
In Fiscal 2021, the decrease in commercial activity resulting from government-mandated restrictions in response to the COVID-19 pandemic resulted in low volumes of organic waste being shipped to the RBF as the facility started operations. During Fiscal 2022, escalation in the volumes of organic waste continued to be slower than previously anticipated due to a delay in the implementation of the city-wide ordinance by the City of Los Angeles mandating that waste generators subscribe to organic waste collection and recycling services (the “LA Ordinance”). However, after its implementation, the LA Ordinance is expected to gradually increase subscription in the RecycLA program for organic waste collection and recycling, with a corresponding gradual increase in the volume of feedstock delivered to the RBF in 2023. The LA Ordinance contains an enforcement mechanism for the assessment of damages with respect to waste haulers that are not in compliance, but this will not be enforceable until 2024.
In addition to feedstock supply from the OREXTM line operated by Waste Management at the Sun Valley Recycling Park, two additional OREXTM lines are being installed at facilities operated by Universal Waste Systems (“UWS”) in the Los Angeles region, though they have experienced client-driven delays in permitting and construction. The UWS OREXTM line in downtown Los Angeles is expected to start operations in the second quarter of 2023 and the UWS OREXTM line at Santa Fe Springs is expected to start operations in the third quarter of 2023. These installations will further improve feedstock availability for the RBF independent from the status of the implementation of the LA Ordinance. However, given the delays in the startup of the two additional OREXTM lines and the delayed implementation of the LA Ordinance, management expects ramp up of feedstock delivered to the RBF to continue increasing at a slow rate in 2023.
In Fiscal 2022 the RBF obtained RIN and LCFS approvals after significant administrative delays in a first-of-its-kind application with the U.S. Environmental Protection Agency (“EPA”). Considering the necessary measurement period for gas production to become qualified, the applicable environmental credits will be eligible for monetization of RNG volumes generated after March 2023.
The combination of feedstock and regulatory delays has impacted anticipated revenues for the RBF in Fiscal 2022. Each of the members of the RBF’s project company, Rialto Bioenergy Facility, LLC (“Rialto”), has provided certain loans to support operations, including debt service. Under these circumstances, the Rialto members will consider the pace of the recovery of feedstock volume in 2023, together with any other impacts on revenues, as part of a comprehensive strategic review to identify and evaluate potential alternatives available to the Rialto members in respect of the RBF.
The feedstock shortfall impacting the RBF is unique due to the roll out of a new organics collection program for the commercial and multifamily sectors in Los Angeles. Elsewhere, Anaergia’s BOO assets rely on existing, readily available feedstock, such as sludge at wastewater plants or existing food waste collection, which are not tied to the enforcement of new regulations. Similarly, while regulatory approvals for environmental attributes relating to RNG from the RBF were delayed due to lack of precedent with the regulatory authorities, that is not expected to be an issue for other BOO assets.
BOO Projects in Europe
In Italy, three BOO facilities have been successfully commissioned. It is anticipated that three more facilities will be commissioned during the course of this year with a total of six facilities starting operations by the end of 2023.
The facility that Anaergia developed in Tønder, Denmark successfully produced its first RNG during 2022. This was prior to our sale of this plant to Copenhagen Infrastructure Partners’ Advanced Bioenergy Fund I in February 2023. The Tønder facility, which had been financed by Anaergia, was sold for €56 million (approximately $80 million) and the proceeds will help drive growth in Europe.
Anaergia Chosen to Supply Waste-to-Biogas Solutions at PepsiCo Food Processing Plant in South Africa
Anaergia has been chosen to supply its unique technologies, engineering and process design for new facilities that will convert food processing waste into biomethane and renewable energy for the PepsiCo potato processing plant in Johannesburg, South Africa. Anaergia has already sold a similar system to one of PepsiCo’s facilities in Europe. These projects at its facilities will help PepsiCo reduce its Scope 1 emissions and manage waste sustainably, reduce operating costs and enhance resiliency by generating carbon-negative energy to help PepsiCo achieve its net-zero emissions goals.
“Leveraging synergies between the waste and the wastewater from food production maximizes energy generation and avoids methane emissions into the atmosphere, a major cause of climate change. This is achieved when we use the waste to make renewable energy,” said Dr. Benedek. “One of the most hopeful signs in the battle against climate change is the desire of leading multinationals like PepsiCo to voluntarily invest in the optimization and decarbonization of their facilities and Anaergia is proud to be able to support PepsiCo’s efforts with our unique technologies that maximize the renewable energy produced from both the solid and liquid waste currently produced by these facilities.”
Fiscal 2022 Financial Results
Financial highlights:
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Revenue for the fourth quarter were $40.6 million, are lower than revenues of $46.7 million during the same period in the previous year. For the year ended December 31, 2022, revenues increased 25.4%, or $33.0 million, to $162.9 million compared to revenues in 2021. The increase was driven mainly by Capital Sales projects under execution and BOO revenue in the Europe, Middle East and Africa (“EMEA”) region, specifically in Italy.
-
Gross profit of $3.2 million for the fourth quarter decreased by 40.8% compared to results in the prior year. The decrease was due to project delays and pricing increases during the quarter. Gross profit of $28.6 million for the year ended December 31, 2022 increased 15.1% compared to $24.9 million in gross profit in the prior year. The increases were driven by Capital Sales and BOO activity in the EMEA market as well as from BOO revenue from plants prior to full commercial operations in North America.
-
Net loss for the fourth quarter of 2022 was $37.9 million when compared to a net loss of $8.1 million for the same period in the previous year. The net loss for the year ended December 31, 2022 increased to $74.7 million when compared to a net loss of $14.1 million for the prior year. Net loss for 2022 was $60.6 million lower than 2021 due to a non-cash loss on an embedded derivative ($22.3 million), higher net SG&A expenses ($21.5 million), an increase in income tax expense ($13.0 million), and other items ($3.8 million).
-
Adjusted EBITDA1 for the fourth quarter decreased to ($15.4) million from adjusted EBITDA of ($0.8) million in the fourth quarter of the previous year. Adjusted EBITDA decreased to ($22.0) million for the year ended December 31, 2022, from ($1.5) million in the prior year. The decrease for both was driven by higher project costs, additional provision on trade receivables and expensing of previously capitalized costs.
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Three months ended:
|
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31-Dec-22
|
|
31-Dec-21
|
|
% Change
|
|
(In millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
40.6
|
|
|
46.7
|
|
|
(13.1
|
)%
|
|
Gross profit
|
|
3.2
|
|
|
5.5
|
|
|
(40.8
|
)%
|
|
Gross profit %
|
|
7.9
|
%
|
|
11.8
|
%
|
|
|
|
Loss from operations
|
|
(21.1
|
)
|
|
(3.4
|
)
|
|
|
|
Net loss
|
|
(37.9
|
)
|
|
(8.1
|
)
|
|
|
|
Adjusted EBITDA
|
|
(15.4
|
)
|
|
(0.8
|
)
|
|
|
|
Twelve months ended:
|
|
31-Dec-22
|
|
31-Dec-21
|
|
% Change
|
|
(In millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
162.9
|
|
|
129.9
|
|
|
25.4
|
%
|
|
Gross profit
|
|
28.6
|
|
|
24.9
|
|
|
15.1
|
%
|
|
Gross profit %
|
|
17.6
|
%
|
|
19.2
|
%
|
|
|
|
Loss from operations
|
|
(32.4
|
)
|
|
(14.7
|
)
|
|
|
|
Net loss
|
|
(74.7
|
)
|
|
(14.1
|
)
|
|
|
|
Adjusted EBITDA
|
|
(22.0
|
)
|
|
(1.5
|
)
|
|
|
|
Statement of
|
|
|
|
|
|
Financial Position
|
|
31-Dec-22
|
|
31-Dec-21
|
|
(In millions of Canadian dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
935.1
|
|
693.4
|
|
Total Liabilities
|
|
593.0
|
|
370.0
|
|
Equity
|
|
342.1
|
|
323.4
|
For a more detailed discussion of Anaergia’s results for the three-month and twelve-month periods ended December 31, 2022, 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 2023 Guidance Update
There is no change to our guidance for Fiscal 2023, as previously disclosed in our press release dated December 7th, 2022.
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.
Management Cease Trade Order
On March 31, 2023, Anaergia announced that it had submitted an application to the Ontario Securities Commission (the “OSC”) for the implementation of a management cease trade order (the “MCTO”) under National Policy 12-203 – Management Cease Trade Orders in connection with its default with respect to not having filed its annual information form for the year ended December 31, 2022, audited annual consolidated financial statements for the year ended December 31, 2022, the related management’s discussion and analysis of financial condition and results of operations and CEO and CFO certificates relating to the audited annual financial statements as required by National Instrument 52-109 – Certificate of Disclosure in Issuers’ Annual and Interim Filings (collectively, the “Required Documents”) by the prescribed filing deadline of March 31, 2023. On April 6, 2023, the OSC granted the MCTO, which will remain in place until two full business days after Anaergia files the Required Documents and restricts trading by Dr. Andrew Benedek, Anaergia’s Chief Executive Officer, and Paula Myson, Anaergia’s Chief Financial Officer, in securities of Anaergia.
As Anaergia has now filed the Required Documents, it is expected that the MCTO will be revoked two full business days after today.
Anaergia applied for the MCTO as an alternative to the imposition by the OSC of a general cease trade order. The MCTO prevents the persons named in the order from trading in Anaergia’s securities, but does not affect the ability of other shareholders, including the public, to trade in securities of Anaergia.
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.
Conference Call and Webcast
A conference call to review the Company’s results for the fourth quarter of 2022 will take place at 11:00 a.m. (ET) on Monday April 10, 2023, hosted by Chief Executive Officer Andrew Benedek, Chief Operating Officer Yaniv Scherson and Chief Financial Officer Paula Myson. 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 renewable natural gas (“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 30, 2023 for the fiscal year ended December 31, 2022. 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-22
|
|
31-Dec-21
|
|
(In thousands of Canadian dollars)
|
|
|
|
|
|
Net income (loss)
|
|
(37,921
|
)
|
|
(8,146
|
)
|
|
Finance costs
|
|
1,034
|
|
|
307
|
|
|
Depreciation and amortization
|
|
854
|
|
|
982
|
|
|
Income tax expense
|
|
8,611
|
|
|
3,642
|
|
|
EBITDA
|
|
(27,422
|
)
|
|
(3,215
|
)
|
|
|
|
|
|
|
|
Rialto non-controlling interest
|
|
(647
|
)
|
|
-
|
|
|
Share-based compensation expense
|
|
508
|
|
|
134
|
|
|
Change in fair Value of equity investment
|
|
656
|
|
|
-
|
|
|
(Gain) loss on RBF embedded derivative
|
|
(2,324
|
)
|
|
(2,160
|
)
|
|
Remeasurement of previously held interest in Bioener
|
|
92
|
|
|
-
|
|
|
Gain on warrant forfeitures
|
|
-
|
|
|
-
|
|
|
Stock warrant valuation (gain) loss
|
|
-
|
|
|
-
|
|
|
Share of loss in equity accounted investees
|
|
581
|
|
|
3,033
|
|
|
Provision for customer claim
|
|
4,760
|
|
|
-
|
|
|
Remeasurement of debt
|
|
3,164
|
|
|
-
|
|
|
Gain on debt restructuring / gain on extinguishment of liability
|
|
-
|
|
|
(1,115
|
)
|
|
Other (gains) losses
|
|
4,803
|
|
|
1,496
|
|
|
ERP customization and configuration costs
|
|
262
|
|
|
1,675
|
|
|
Costs related to the Offering
|
|
22
|
|
|
(192
|
)
|
|
Foreign exchange (gain) loss
|
|
158
|
|
|
(432
|
)
|
|
Adjusted EBITDA
|
|
(15,387
|
)
|
|
(776
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended:
|
|
31-Dec-22
|
|
31-Dec-21
|
|
(In thousands of Canadian dollars)
|
|
|
|
|
|
Net income (loss)
|
|
(74,712
|
)
|
|
(14,107
|
)
|
|
Finance costs
|
|
1,211
|
|
|
(917
|
)
|
|
Depreciation and amortization
|
|
3,541
|
|
|
3,354
|
|
|
Income tax expense
|
|
14,523
|
|
|
1,516
|
|
|
EBITDA
|
|
(55,437
|
)
|
|
(10,154
|
)
|
|
|
|
|
|
|
|
Rialto non-controlling interest
|
|
(647
|
)
|
|
-
|
|
|
Share-based compensation expense
|
|
1,335
|
|
|
539
|
|
|
Change in fair Value of equity investment
|
|
656
|
|
|
(2,346
|
)
|
|
(Gain) loss on RBF embedded derivative
|
|
16,676
|
|
|
(5,673
|
)
|
|
Remeasurement of previously held interest in Bioener
|
|
(3,272
|
)
|
|
-
|
|
|
Gain on warrant forfeitures
|
|
-
|
|
|
(615
|
)
|
|
Stock warrant valuation (gain) loss
|
|
-
|
|
|
914
|
|
|
Share of loss in equity accounted investees
|
|
5,204
|
|
|
5,662
|
|
|
Provision for customer claim – Bluesphere
|
|
4,760
|
|
|
3,473
|
|
|
Remeasurement of debt
|
|
3,164
|
|
|
-
|
|
|
Gain on debt restructuring / gain on extinguishment of liability
|
|
-
|
|
|
(1,115
|
)
|
|
Other (gains) losses
|
|
4,339
|
|
|
1,740
|
|
|
ERP customization and configuration costs
|
|
1,178
|
|
|
3,171
|
|
|
Costs related to the Offering
|
|
285
|
|
|
4,140
|
|
|
Foreign exchange (gain) loss
|
|
(222
|
)
|
|
(1,248
|
)
|
|
Adjusted EBITDA
|
|
(21,981
|
)
|
|
(1,512
|
)
|
1 “Adjusted EBITDA” is a non-IFRS measure.
Source: Anaergia Inc.