May. 13 at 2:22 AM
$ANRGF
Q1/26 First Look: Solid Start to the Year, Validating Strategic Pivot
Anaergia delivered a solid Q1/26, with consolidated revenue and gross income both coming in ahead of expectations, though partially offset by softer EBITDA landing below our forecast due to higher SG&A. Overall, we view the quarter positively, as results continue to demonstrate improving execution, strong commercial activity, and ongoing traction in validating the company’s transition toward a more capital-light operating model. Notably, backlog increased during the quarter despite elevated revenue conversion, reinforcing demand visibility and supporting continued growth into FY26E. While some cost variability remains as the business scales project activity, we believe the underlying trends in execution, margin profile and operating discipline remain constructive. We expect a modestly positive reaction to the print, with investor focus likely centered on backlog conversion, margin progression and the sustainability of positive EBITDA generation (third consecutive quarter). We maintain our
$5/sh price target, based on an EV/Sales multiple of 3x on our FY27E estimate. The company will host its conference call tomorrow morning at 10 AM ET.
Q1/26 Results: Revenue and Gross Margin Beat; EBITDA Softer
Anaergia reported Q1/26 revenue of
$55.2 mln, exceeding our
$40.8 mln estimate and consensus of
$45.4 mln, representing ~122% y/y growth. The upside was driven primarily by Capital Sales, with revenue increasing
$30 mln, or ~187% y/y. Growth was broad-based geographically, with particularly strong activity in Italy, alongside contributions from North America, other EMEA and APAC regions. The company also benefited from modestly higher BOO revenue, partially offset by a decline in O&M Services revenue due to reduced field activity.
Gross profit came in at
$12.7 mln, ahead of our
$10.5 mln estimate (cons.
$10.4 mln), with gross margins of 23.0% (vs. NBCM 25.8%, cons. 22.9%). The upside was primarily driven by stronger execution within the Capital Sales segment, partially offset by continued drag from the BOO segment, namely costs associated with higher production at BOO facilities, including ongoing ramp-up of RIBF.
Despite the strong top-line and gross margin performance, adj. EBITDA came in at
$1.1 mln, below our
$2.4 mln estimate and consensus of
$1.6 mln, implying adj. EBITDA margins of 1.9% (vs. NBCM 5.8%, cons. 3.5%). The variance relative to our estimate was primarily attributable to higher-than-expected SG&A expenses, which totalled ~
$14 mln vs. our
$9.3 mln estimate, representing ~26% of sales vs. our 23% forecast. While higher than expected, SG&A expenses still declined 18% y/y, driven primarily by reductions in net labour costs, accounting and legal fees. We view the quarterly variability somewhat lumpy in nature, and continue to expect the company remains on track to achieve its longer-term target of SG&A below 20%. Importantly, ANRG still delivered its third consecutive quarter of positive adj. EBITDA, reflecting continued progress in its capital-light strategy and underlying profitability performance.
Net loss narrowed to (
$0.01) vs. (
$0.02) in Q1/25, ahead of consensus of (
$0.05), but fell short of our
$0.01 estimate. The y/y improvement was primarily attributable to stronger Capital Sales mentioned.
Figure 1 - Discrepancy between NBCM Esimates and Actual Results
Image
Source: NBCM, Company Reports, LSEG
Commercial Momentum and Backlog Continue to Support Growth Visibility
Commercial activity remained active through Q1 and into the post-quarter period, with Anaergia announcing over
$54 mln of new contract awards across Europe and North America. Recent wins include expanded scope across three biomethane projects in Italy, increasing the total contract value to approximately
$85 mln from
$68 mln previously, alongside continued activity across RNG and infrastructure development initiatives.
The company reported a revenue backlog of
$265 mln in Q1/26, up from
$257 mln at FY25 and
$103 mln at FY24. Backlog increased both sequentially (+3% q/q) and year over year (+32% y/y), driven almost entirely by the capital sales business, primarily due to new bookings in Italy. Despite delivering a record Q1 for the capital sales segment, backlog continued to grow, underscoring the strong demand for the company’s products. Backlog remains supported by a project pipeline exceeding
$1 bln, providing solid visibility over the near and medium term.
Reported backlog continues to understate the broader revenue opportunity, in our view, as larger framework agreements such as the €184 mln Spanish biomethane program are only partially captured today pending project-level releases (two additional projects out of 16 were contracted in Q1). In addition, backlog recognition incorporates only executed contracts and assumes approximately three years of O&M revenue, despite underlying contract durations that typically extend five to 15 years.
