Anaergia Inc. (ANRG.TO) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for joining us, and welcome to the Anaergia Q2 2025 Conference Call and Webcast. My name is John, and I will be your moderator for today's call. [Operator Instructions] I will now hand the conference over to Darlene Webb, Investor Relations. Please go ahead.

Thank you very much, operator, and good morning, everyone. On today's call, we'll be discussing Anaergia's earnings for the second quarter of 2025, which ended June 30, 2025. If you're following along with our slide deck, which is available here on our live streaming webcast or you can also access it directly from the Investors section of our website, my comments relate specifically to Slides 1 through 3. On Slide 2, you'll see that on today's call, I'm joined by Mr. Assaf Onn, Anaergia's Chief Executive Officer; Mr. GregWolf, Anaergia's Chief Financial Officer; and Dr. Yaniv Scherson, Anaergia's Chief Operating Officer. Before beginning our formal remarks, we would like to refer you to Slide 3 of the presentation, which contains a caution on forward-looking information and a note on the use of non-IFRS measures. Listeners are reminded, as always, 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. Anaergia 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 that is filed with Canadian securities regulators. And with that, I'll turn the call over to Assaf.

Thank you, Darlene, and good morning, everyone. Thank you for joining us here today. I am now speaking to Slide 4. We are now deep into our transformation under Anaergia 2.0, and the results are starting to speak for themselves. Quarter-over-quarter, year-over-year, we are seeing clear improvements. Momentum is building and the strategy we put in place is delivering. You have heard us talk about our 5 pillars, operational efficiency, capital sales, geographic expansion, strategic partnerships and a stronger balance sheet. This quarter, we made real progress on each of these. We are now on Slide 5. Our project teams are delivering. Backlog is being converted into revenue. Execution is picking up pace, and our closing backlog is up 22% over Q1 and a significant 137% since year-end, a strong sign that customer demand and market confidence are both growing and that confidence is well earned. In Europe, we expanded our agreement with Techbau and signed a multiproject deal with Capwatt. In North America, we secured a significant change order on the East County project. These are well-established partners coming back to us for more business. That must say something. Inside the business, we are sharper, leaner and more disciplined. We are managing costs, we are tightening project controls, and we are staying laser-focused on profitable growth. Moving to Slide 6. The result, a stronger company, a company that is turning the corner and building real momentum. We are doing it in a market that needs exactly what we offer. So what do we offer? End-to-end solutions, global reach, proven results. We convert waste into fuel, clean water and fertilizer, and we do it at a commercial scale in complex environments for customers who need us to deliver. That includes customers with large projects, small projects or portfolio that spend both because our model is scalable, up or down across geographies and tailored to real-world conditions. That combination is rare and is creating real opportunities for Anaergia. Anaergia 2.0 is working. We are scaling smarter. We are winning the right kind of work, and we are building a platform that creates lasting value for our customers, our partners and our shareholders. I will now pass the call over to Greg. He will walk you through the numbers and show you exactly how Anaergia strategy is turning into performance. Greg?

Thank you, Assaf, and good morning, everyone. I'm now referring to Slide 7 and 8. Let me take you through how our strategy is starting to translate into performance. Revenue for the second quarter was $32.3 million, an increase of 36.8% or $8.6 million compared to the same period in 2024 and an increase of $7.4 million or 30% compared to the first quarter of 2025. This revenue growth was primarily driven by increased capital sales project execution in North America and Italy as well as higher service revenues in North America. These gains were partially offset by lower BOO revenues as some facilities continue to ramp towards full production capacity. Regionally, revenue increased in North America, Italy and the broader European region. Revenue in the Asia Pacific region declined slightly, primarily due to decreased activity in the integrated waste management facility capital sale project in Singapore. Gross profit for the quarter was $10.5 million, more than double last year's figure, up 152.9%. The strong performance was driven by improved margins in all 3 segments of our business, capital sales, BOOs and O&M services. Capital sales is leading the way with newer projects now under construction in Italy and North America. Gross margins for the second quarter was significantly higher at 32.5%, up from 17.6% in Q2 2024. The overall increase in gross margin reflects better cost management and stronger project delivery across the business. SG&A expenses for Q2 2025 were $14.3 million, a slight decrease of 3.7% or approximately $600,000 compared to $14.9 million in Q2 2024. This reflects continued cost control with savings in audit and professional fees offset with some increases in net labor costs. Net loss for the quarter was $9.5 million, an improvement of 29% or $3.9 million compared to a net loss of $13.4 million in Q2 2024. The improvement in net loss was mainly due to increased revenues and higher gross margins as well as decreases in SG&A. Adjusted EBITDA for the quarter was a loss of $2.2 million, reflecting a large improvement of 72.1% or $5.8 million improvement compared to a loss of $8 million in Q2 2024. As I have noted, the improvement was the result of higher revenues and gross margins, coupled with a slight decrease in SG&A in Q2 2025 compared to Q2 2024. Now moving to Slide 9. As of June 30, 2025, our total revenue backlog was $243.9 million, an increase of $140.9 million or 137% growth compared to $103.1 million backlog at December 31, 2024. Year-to-date June 30, 2025, we have capital sale backlog of $191 million and O&M services backlog of $52.9 million. As a reminder, our definition of backlog is only signed capital sales agreements and 3 years of modeled revenue from long-term O&M contracts, even though many of our O&M contracts have longer terms of 10-plus years. In addition, since June 30, 2025, we have announced another $43.8 million in new capital sales signed contracts. The growth is mainly driven by new contract signings, particularly in Italy and North America and reflects growing demand for Anaergia's solutions across multiple markets. In summary, Q2 marked another large step forward in our transformation. We delivered strong year-over-year improvements in revenue, gross profit and adjusted EBITDA, which is the result of disciplined execution and focused delivery across our business. Margins improved and backlog more than doubled since year-end 2024, providing a clear line of sight of future revenue. We're building a stronger, more resilient business, one that's grounded in execution, disciplined approach and cost management and a growing pipeline of high-quality projects. With that, I'll turn it over to Yaniv for an update on our operations and the progress we are making on the project pipeline. Yaniv?