All financial information is in Canadian dollars.
Dive Brief:
- Anaergia secured an agreement to sell ownership of its biogas upgrading plant in Riverside, California, to an unspecified buyer. Anaergia also entered a contract for engineering, procurement and construction as well as one operations and maintenance at the facility moving forward.
- The company is planning to build an organic waste-to-renewable-natural-gas codigestion facility at the Riverside Water Quality Control Plant. It expects to start up most EPC activities next year and continue through 2027.
- Anaergia has been moving away from its owned assets in favor of a capital-light approach, driving revenue amid a long term strategic pivot. In an investor presentation last week, executives highlighted the company’s improved gross profit and 32.5% margin in the second quarter of this year.
Dive Insight:
Anaergia has shied away from owning assets after running up against policy headwinds in California. It spun off and sold the Rialto Bioenergy Facility last year, but Anaergia reached an agreement to continue operating the facility with its new owner, Sevana Bioenergy.
Anaergia also continues to own the SoCal Biomethane plant operating at the Victor Valley Wastewater Reclamation Authority facility in California, in addition to other facilities in North America. Last month, the company reached a 20-year offtake agreement for the Victor Valley codigestion facility's RNG with utility Southwest Gas.
The Riverside project has also been in the works for multiple years. Last year, Anaergia reached a $13.3 million agreement with the city of Riverside to supply the equipment for the codigestion facility. It had previously reached an agreement to upgrade existing anaerobic digestion technology at the plant.
The company has tracked a growing revenue backlog that it expects will continue to fund operations via contracts, like the one with Riverside. Anaergia began the year with $104 million in revenue under contract and reached $244 million by the end of the second quarter.
CEO Assaf Onn also noted $43.8 million in new contracts announced since the end of Q2 in a statement accompanying the earnings results. He expects that will further boost revenues.
"We are enthusiastic about the ongoing transition and remain confident that the most promising developments are yet to come," Onn said in a statement.
Profit margins rose substantially year over year to 32.5% in the second quarter. That reflects improvements in all three company segments: capital sales, build-own-operate and operation maintenance services.
North America still represents 61% of Anaergia’s revenue, but the company continues to pursue new contracts in multiple countries. That includes signing a binding letter of intent with European firm Capwatt in April to build nine facilities that produce biomethane from agricultural waste. That contract is expected to deliver $60 million in revenue.
