Dec. 4 at 12:47 PM
$ANRGF Another Canadian dealer launches coverage
We are initiating coverage on Anaergia Inc., (ANRG:TSX) with a Buy rating and
a
$5.50/sh PT.
Growing Pipeline and Backlog – We estimate that the backlog currently stands
at
$330M+, up from
$287M at the end of last quarter and
$103M at the end of
last year. The pipeline is robust, with over
$1B in near-term opportunity which
we would expect to be added to the backlog over the coming years.
Furthermore, we anticipate a multi-billion-dollar opportunity as ANRG
capitalizes on being the sole full turnkey provider of RNG systems to regulatory
incentivized regions such as Europe and California (REPowerEU, SB1383/1440),
and fortune 500 companies in support of ESG initiatives.
Q3 Inflection – Anaergia’s Q3 results represented a meaningful inflection point
in the company’s turnaround, reflecting both the strength of the new capitallight
model and accelerating momentum. Revenue increased 77% y/y to
$51M, driven by increases in capital sales activity in Italy and North America,
while gross profit more than doubled (up 146% y/y) and margins expanded by
810 bps y/y to 29%. A key highlight was delivering positive adjusted EBITDA of
$2.6M, a
$9M improvement from the prior year and its first positive result in
several years, demonstrating that the operational reset, cost discipline, and
margin enhancement strategies are taking effect. We anticipate momentum
to continue through Q4, as we are modelling
$62M in revenue and
$4M in
adjusted EBITDA (taking ANRG adj. EBITDA positive for FY25). As the company
continues to scale and execute its backlog, we would anticipate ~
$280M in
revenue,
$9M+ in adj. EBITDA for FY26, notably approaching a 10% adjusted
EBITDA margin by Q4/26 with growth into the 10-15% range through FY27
Key Catalysts – Q4 results in March, contract wins, backlog execution,
realization of its
$1B+ pipeline, and positive net income are meaningful
catalysts through FY26
