EverGen Infrastructure Corp. (EVGN) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to EverGen Infrastructure's Q2 2026 Earnings Presentation. As a reminder, this call is being recorded. Before we begin, I would like to direct all participants to our website at www.evergeninfra.com, where you will find a copy of the second quarter earnings presentation. Please allow me to remind you that our discussions today contains forward-looking statements. Actual results may vary materially from those discussed. Additional information is contained in the second quarter 2026 management's discussion and analysis. I will now turn the call over to Chase Edgelow, who is EverGen's Co-Founder and CEO.

Good morning, and thank you, Shubham. I am Chase Edgelow, Co-Founder and CEO of EverGen, and I'm joined here today by Maria O'Sullivan, our CFO; and Shubham Trehan, who's our Director of Business Development. I want to begin somewhere other than the numbers because numbers only matter if you understand the evidence of the hard work that we've put into the business over the last 15 months. When we took the reins at EverGen in May of 2025, EverGen was a set of genuinely good infrastructure assets that were not working. Real plants, real contracts, real waste coming in through the gate and performance that did not reflect any of it. Today, our platform is running at record production, converting that production into cash and doing it in a method that we believe we can repeat again and again. That is the story of Q2, not a good print, evidence of a method that works. So I'll take you through it in 4 parts: what we've stabilized; what the turnaround is now producing; the team that produced it; and why I believe this is a business that is priced at a value that is very little resemblance to what you actually own. Maria will then take you through the financials in detail, and we'll open up the call for questions. So just to recap on the stabilization, starting with what we took on in May of 2025, EverGen went through a recapitalization transaction and change of management. I returned to CEO alongside Ron Green, our COO. ASK America came in as our lead investor and across 2 tranches of equity raise, we did $7 million of new equity into the business, all at $0.60 a share. What we inherited was 4 operating assets across British Columbia and Alberta, about $75 million of total assets, feedstock arriving at our door, at our gate under long-dated municipal contracts and RNG going out to our utility buyers. What we did not inherit was reliability. And for infrastructure companies, reliability is critical. So we focused on 3 things. One, the assets. Without capital, without operating discipline, we saw significant downtime, unplanned downtime, interruptions and our -- overall, our facility uptime went from under 80% to high 90s. Fraser Valley Biogas continues to set new production records with a beat in July and continued strong performance. Secondly, fixing the balance sheet. Along with the equity raise, we also closed a $13 million asset level debt facility at Fraser Valley, which is nonrecourse to the parent and used the proceeds to retire approximately $12 million of corporate senior debt. What that did for the business? We saved a significant amount of debt service costs, and we've aligned with a lender that's committed to the space in Farm Credit Canada. Thirdly, our business is about contracts, and we entered into the 20-year period at Fraser Valley Biogas with FortisBC on our new contract in January of this year. That collectively is stabilization. It's not changing numbers, but it's the foundation for everything I'm about to take you through. Our next phase was a turnaround. And I think that what we're here today to tell you is that after 15 months with the business, first 6 months really focused on what we talked about above, the stabilization, you're starting to see the evidence of the turnaround in the numbers. What that foundation produced in the second quarter, revenue, up 71% year-over-year. RNG production, up 11%. Incoming feedstock, up 34%. Compost sales, up 51%. Collectively, adjusted EBITDA of $1.75 million against sub-$400,000 in the same quarter last year, an increase of over 400%. I think if you take nothing else from this call, take the 3 numbers that sit below those headline numbers, which are: one, our direct operating costs didn't rise while our revenues did; two, with that, over $0.70 of every incremental dollar that comes in the door converted straight to adjusted EBITDA. That's the torque that's in this business if we get our operations stabilized; and three, from a cash flow perspective, we look at positive cash flow versus negative cash flow where the business was in the same -- in the same period last year. And Maria will take you through the first half in detail in a moment. But what I want to hold on to here is that the direction of the business has been 4 consecutive quarters of a rising floor and our run rate that has moved from approximately $4.3 million of EBITDA to over $5 million in a single quarter. That, from our perspective, is what our turnaround has resulted in. It's not one single number, but a floor that keeps rising. And that floor only rises with the team. I think before I get into growth, I wanted to talk about something that doesn't appear in our Q2 financials or MD&A. I think we've really focused in this turnaround on building a strong team, empowering those within the business that are capable. And these plants were not fixed from our head office. They were fixed at site by operators who understand that uptime is won through preventative maintenance, having inventories on spare parts and not in a boardroom. I'd ask you to think about 2 things about our team maybe versus other platforms in the space. We run a genuinely lean organization. G&A fell approximately 20% while revenues grew. So we've got a small team carrying a lot of weight, and I want to recognize everyone that's made an impact this quarter and in the last 15 months. So why is the team important? Why is that base important? I think ultimately, our vision for EverGen was there were strong assets underlying what were weak results. The turnaround has shown that the strong production out of those assets is capable. But I think more importantly than that, all of this provides for us a playbook for growth. So this is repeatable, templatable turnaround of assets that we think we can repeat not just on our own assets, but as we look to grow. Organically, we've got growth at GrowTEC that will expand that facility. We've got continued improvement at Fraser Valley Biogas. We've got a large expansion at Pacific Coast Renewables that cleared a major regulatory hurdle in March of this year. It has $10.5 million of NRCan funding towards it, of which we've allocated $9.2 million toward capital expenditure as at June 30, and we are continuing to move that project towards FID. Beyond our PCR RNG expansion in terms of large capital projects, we also hold 50% of Project Radius, which is approximately 550,000 gigajoule per year development project in Ontario. We have FID target on that project for later this year or early next year, and it's had some really interesting developments in the last 12 months. And then finally, I'll speak to the consolidation potential that we believe our platform is uniquely positioned to take advantage of. North America went from approximately 100 RNG facilities before 2020, before the sort of clean tech boom and funding push towards the space to more than 600 today. A great deal of those were built by developers or, I guess, teams and platforms that no longer exist that were maybe hit a little bit harder than EverGen as that capital outflow from the space happened in 2021, 2022. And we see that a meaningful share of those 600 facilities underperform for exactly the same reasons that our facilities used to. And so what I'm saying is that EverGen is a natural owner of underperforming RNG assets. We've already proven we can fix the ones that we own, and that's our template. And so finally, I think this is important for all of our shareholders, the value question. And let me be direct because I think this is probably the least understood part of the business. What you own today $75 million in total assets, shareholders' equity of $42 million, which is about $1.63 a share against 25 million shares outstanding, 4 operating facilities that are strategically located in areas where it's challenging to build infrastructure, i.e., there is a moat, feedstock arriving under long-dated municipal contracts, RNG being sold under 20-year utility-grade offtakes and roughly $16 million of debt sitting at the project level against the assets that service those. Against all of that value, EverGen carries a market cap of roughly $10 million. And let me give you 3 ways to consider value here. One, on book value, on our net asset value, market is valuing our equity at about 1/4 of its carrying value despite -- and obviously, we'll give the market time to adjust, but despite just delivered record production and record feedstock volumes. Two, on a cash flow basis, our run rate adjusted EBITDA over the first half is over $5 million. Our enterprise value, including our debt net of cash is sub-$25 million, which is a sub 5x EBITDA multiple. Publicly-traded RNG and environmental infrastructure companies generally trade from high-single digits into the mid-teens on that same EBITDA metric. And we continue to see private sector transactions clearing well above the 10x EBITDA mark. And then finally, what the informed shareholders have actually paid. Our last 2 equity tranches were priced at $0.60 a share, no warrants. And our Board management and institutional holders hold roughly 70% of our shares and nobody at this table is a seller. And finally, consider the torque or asymmetry, our valuation with every incremental $1 million of EBITDA would be worth somewhere between $9 million to $12 million of enterprise value in the private sector or against other peers. Every single incremental dollar of EBITDA in our entire market cap is $10 million today. And that's really what I want to point you to is that we're now at the point where every incremental improvement that we put back into the business, every capital investment that our team makes is -- has a lot of torque for our shareholders. And so to bring it all together, we've stabilized the platform, uptime, our balance sheet, our contracts. The turnaround is now visible in the rearview mirror, and we believe we have a repeatable template to point at a North American market that is full of assets very similar to the ones that we've just fixed. And with that, I will hand it over to Maria to walk through the financials in more detail, and then we'll open up to questions at the end of the call. Thank you for your time. Over to you, Maria.

Thanks, Chase. So touching first on revenues. Q2 2026 revenue increased 71% compared to Q2 2025, reaching $4.8 million. This growth was driven by strength across nearly every revenue stream. Tipping fees grew 52% year-over-year on higher volumes at our organic waste and composting facilities. RNG revenue was up 15% and organic compost and soil sales increased 22%. We also recognized $1.1 million of carbon credit revenue in the quarter, which is also -- which wasn't a contributor in Q2 2025. Compared to Q1 2026, revenue increased 81% from $2.6 million to $4.8 million, reflecting the normal seasonal recovery in tipping and compost volumes we flagged last quarter plus the carbon credit contribution. For the first half of 2026, revenue was $7.4 million, up 57% from $4.7 million in the same period last year. Turning to adjusted EBITDA. Q2 2026 came in at $1.7 million, a $1.4 million or 416% increase compared to Q2 2025 and up from $870,000 in Q1 2026. This is primarily driven by the revenue growth already described and touched on by Chase. Looking at the 6-month period, adjusted EBITDA was $2.6 million, up $1.8 million from the prior year, reflecting both the revenues increases and also a reduction in general and administrative expenses. On net loss, we saw an improvement of $1.6 million here from a loss -- sitting at a loss of $386 million (sic) [ $386,000 ] for Q2 2026. For the 6 months ended June 30, 2026, net loss was $1.1 million, down from $3.1 million in the prior period. Turning to the balance sheet and liquidity. Our working capital surplus has improved to $3 million as of June 30, 2026, up from $2.1 million in the prior quarter and compared to a deficit of $855,000 at the end of 2025. This is showing continued improvement off the back of the financing activity we discussed in Q1 2026, and that Chase has also spoken about earlier in the presentation. The Q2 results show that our core operations, our tipping volumes, RNG production are driving sustained improvement. With that, I'll turn it back to Chase to conclude the presentation and to open up to Q&A.

Yes. Thank you, Maria. I believe this is a really, really important time to be looking at our business. And we have -- as mentioned, we've completed our stabilization, moved through a turnaround phase and the results speak for themselves, and we're really keen to speak with anybody that wants to discuss our business further after the call. We'll move into a Q&A period. Why don't we start with this initial question, Shubham?

Yes. So we have a question here that's saying roughly $1.1 million of our Q2 revenue was carbon credit sales. And if we strip that out and the quarter looks very different. So is the EBITDA real?

It's a fair question and one that I'd rather have people ask than wonder. I think we look at $1.1 million of carbon credit revenue and think about it this way. Our credits are generated and clear through ECCC. So there is lumpiness in the timing of the generation of those credits and timing -- and not just timing of the generation, but the timing of the sale of those credits, and we recognize revenue as those credits are sold. That said, what we've seen in terms of carbon credit sales over the first half of 2026 would be indicative of the run rate carbon credit sales if we were generating instantaneously and selling instantaneously. So I think that's to say there will -- it will continue to be a not seasonal but a lumpy revenue recognition on carbon credit sales. But we don't think it's a -- it's not a onetime windfall. This market has really stabilized since coming into effect. It's been steadily clearing north of $350 per ton of CO2 avoided emissions. And the reason for that is it's a market that's supported by both sides of the aisle. It provides a stable way of clearing and dealing with emissions from large industrial producers, and I think RNG is uniquely positioned to continue to find homes in other markets as a lowest cost decarbonization option. So while we look at our business as primarily tip fee, primarily long-term base value in our contracts, our contracts also come with the upside of a portion of the carbon credits that are associated with our business.