Anaergia Reports Fourth Quarter and Fiscal 2023 Financial Results

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BURLINGTON, Ontario — Anaergia Inc. (“Anaergia”, the “Company”, “we”, “us” or “our”) (TSX: ANRG), a company that offers integrated waste-to-value solutions to reduce greenhouse gases (“GHGs”) by cost-effectively turning organic waste into renewable natural gas (“RNG”), fertilizer, and water, today announced its financial results for the three-month and the twelve-month periods ended December 31, 2023. All financial results are reported in Canadian dollars unless otherwise stated.

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“While there was a delay in the delivery of the financial statements, largely resulting from accounting and financial reporting impacts associated with the restructuring activities and transformation of the Company, we are encouraged to report that 2023 was a year of transition as our strategic review process is positively impacting the Company,” noted Assaf Onn, CEO of Anaergia. “Recent key developments, include the closings of the first two tranches of a previously announced three-tranche strategic investment in Anaergia by Marny Investissement SA.,” Mr. Onn added.

Fiscal 2023 Financial Results

Financial highlights:

• Revenue for the fourth quarter of 2023 was $33.4 million, which is lower than revenue of $41.0 million reported for the same period in the previous year. For the year ended December 31, 2023 (“Fiscal 2023”), revenue decreased 9.2%, or $14.9 million, to $147.0 million compared to revenues in 2022. The decrease was driven mainly by lower Capital Sales revenue in the third quarter of 2023 due to a combination of some projects nearing completion, some projects facing customer and vendor delays, and delays in new project signings.
• Gross profit of $3.5 million for the fourth quarter of 2023 increased by 84.4% compared to results in the prior year. The increase was due to the impact of newer contracts with higher margins in North America. Gross profit of $19.7 million for Fiscal 2023, decreased 26.1% compared to $26.7 million in gross profit in the prior year.
• Net loss for the fourth quarter of 2023 was $34.1 million, compared to a net loss of $41.3 million for the same period in the previous year. The net loss for Fiscal 2023, increased to $192.8 million when compared to a net loss of $79.0 million for the prior year. The increase was mainly due to a loss related to the deconsolidation of the Rialto Bioenergy Facility (“RBF”) during the second quarter of 2023, estimated credit loss expenses taken during Fiscal 2023 (which included a loss on certain inter-company loans in the second quarter of 2023 that were determined to be no longer recoverable and subsequently sold to Arjun Infrastructure Partners in the third quarter of 2023 as part of the on-going strategic review), a single event where a letter of credit related to a terminated operation and maintenance contract was drawn, and a larger loss from operations due to increased selling and general administrative expenses.
• Adjusted EBITDA¹ for the fourth quarter of 2023 was ($7.7) million an improvement from adjusted EBITDA of ($18.9) million in the fourth quarter of the previous year. Adjusted EBITDA decreased to ($34.9) million for Fiscal 2023, from ($26.2) million in the prior year. The decrease for the year was due to a decline in gross profit and to increased operating expenses.

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For a more detailed discussion of Anaergia’s results for the three-month and twelve-month periods ended December 31, 2023, please see the Company’s financial statements and management’s discussion & analysis, which are available at https://www.anaergia.com/investor-relations and on the Company’s SEDAR+ page at www.sedarplus.ca.

Other Significant Developments

Strategic Investment by Marny Investissement SA

On December 18, 2023, the Company announced a $40.8 million equity investment by Marny Investissement SA (“Marny”) by way of an arm’s-length, multi-tranche, non-brokered private placement (the “Strategic Investment”).

Marny, through Marny Holdco Inc. (“Marny Holdco”), agreed to subscribe for an aggregate of 102,000,000 units of the Company (“Units”) at a price of $0.40 per Unit with each Unit consisting of one subordinate voting share of the Company (“Subordinate Voting Shares”) and 1/5 of one Subordinate Voting Share purchase warrant of the Company (each a “Warrant”). Each Warrant will entitle Marny Holdco to purchase one additional Subordinate Voting Share at an exercise price of $0.80 for a period of three years following the closing of the first tranche. The Unit subscription price of $0.40 represented a 57% premium to the 10-day volume weighted average price of the Subordinate Voting Shares on the Toronto Stock Exchange (“TSX”) as of December 15, 2023.

On February 2, 2024, the Company announced that the first tranche of the Strategic Investment had closed with the issuance of 31,250,000 Units for gross proceeds of $12.5 million.

On April 1, 2024, the Company announced that the second tranche of the Strategic Investment had closed with the issuance of 34,000,000 Units for gross proceeds of $13.6 million.

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The closing of the third tranche is anticipated to follow the lifting of the FFCTO (as defined below).

Failure-to-File Cease Trade Order

On April 8, 2024, the Ontario Securities Commission issued a failure to file cease trade order (the “FFCTO”) against the Company due to its failure to file the continuous disclosure materials required by National Instrument 51-102 – Continuous Disclosure Obligations for Fiscal 2023. The FFCTO prohibits the trading by any person of any securities of the Company in Canada, including trades in the Subordinate Voting Shares made through the TSX. The FFCTO is not expected to be lifted until after the Company’s continuous disclosure materials for the interim period ended March 31, 2024 (the “Interim Filings”) are filed. The Company is working diligently to complete the Interim Filings and expects to be in a position to file such on or about July 6, 2024. The Interim Filings were due May 15, 2024.

Senior Leadership Change

The Company is announcing the resignation of its Chief Financial Officer, Andrew Spence, immediately following the First Quarter Interim Filing. Mr. Spence’s decision was based strictly on personal reasons and was not the result of any dispute or disagreement with the management or Board of Directors regarding policy, accounting matters or management practices.

Concurrently, Anaergia is appointing Gregory Wolf, CPA, MST, as its Interim Chief Financial Officer. Mr. Wolf brings over 25 years in executive leadership to the role, with extensive experience in financial management, strategic planning and operational oversight. With a proven track record in global operations, international accounting, audit, and corporate tax he has successfully led financial transformations and guided companies through complex transactions. Mr. Wolf holds a Bachelor of Science in Accountancy and a Masters in Taxation from Northern Illinois University, as well as a CPA certification from the University of Illinois.

In the meantime, Anaergia will commence an executive search for a new Chief Financial Officer. Mr. Spence will assist with Mr. Wolf’s transition and thereafter will be available in a limited advisory capacity to support a seamless transition process.

Non- International Financial Reporting Standards (“IFRS”) Measures

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures, including “Adjusted EBITDA” and “EBITDA” to provide investors with supplemental measures. Management also uses non-IFRS measures internally in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements. Management believes these non-IFRS measures are important supplemental measures of operating performance because they eliminate items that have less bearing on operating performance and highlight trends in the core business that may not otherwise be apparent when relying solely on IFRS measures. Management believes such measures are useful as they allow for assessment of our operating performance and financial condition on a basis that is more consistent and comparable between reporting periods. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

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Definitions of non-IFRS measures used in this press release are provided below. A reconciliation of the non-IFRS measures used in this press release to the most comparable IFRS measure can be found below under “Reconciliation of Non-IFRS Measures”.

“Adjusted EBITDA” is defined as net earnings before finance costs, taxes and depreciation and amortization adjusted for our normalized proportionate interest in our BOO assets and one-time or non-recurring items, stock-based compensation expense, asset impairment charges and write downs, gains and losses for equity-accounted investees, foreign exchange gains or losses, restructuring costs, Enterprise Resource Planning (“ERP”) customization and configuration costs, litigation and other claims settlements, gains and losses resulting from changes in certain balance sheet valuations (such as derivatives and warrants), acquisition costs and costs related to our initial public offering, including estimated incremental auditing and professional services costs incurred in connection with our initial public offering.

“EBITDA” is defined as net income before finance costs, taxes and depreciation and amortization.

About Anaergia

Anaergia was created to eliminate a major source of GHGs by cost effectively turning organic waste into RNG, fertilizer and water through the use of proprietary technologies. With a track record of delivering innovative projects, Anaergia is uniquely positioned to provide solutions to today’s most pressing resource recovery challenges using a broad portfolio of proven technologies and multiple project delivery methods. Anaergia is one of the world’s only companies with a proprietary portfolio of end-to-end solutions that integrate solid waste processing as well as wastewater treatment with organics recovery, high efficiency anaerobic digestion, RNG production and recovery of fertilizer and water from organic residuals. The combination of these technologies enhances carbon-negative biogas, clean water and natural fertilizer production, utilizes a minimized footprint and lowers waste and wastewater treatment costs and GHG emissions.

For further information please see: www.anaergia.com

Forward-Looking Statements

This press release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information may relate to future plans, expectations and intentions, results, levels of activity, performance, goals or achievements, other future events or developments and may include, without limitation, information regarding our financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, plans and objectives. Particularly, information regarding our future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “may”, “will”, “would”, “should”, “could”, “expects”, “plans”, “intends”, “estimate”, “believes”, “likely”, or “future” or the negative or other variations of these words or other comparable words or phrases. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. Forward-looking statements in this press release include, among other things, statements relating to financial condition and results of operations; statements regarding the Company’s ongoing strategic review; statements regarding the anticipated closing of the third tranche of the Strategic Investment; statements regarding the lifting of the FFCTO; statements regarding the filing of the Interim Filings; and statements regarding the appointment of an interim Chief Financial Officer.

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Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that we considered appropriate and reasonable as of the date such statements were made. It is also subject to known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk factors described in the Company’s annual information form and management’s discussion and analysis for the year ended December 31, 2023. Certain assumptions in respect of our ability to execute on our expansion plans; our ability to obtain or maintain existing financing on acceptable terms; that the third tranche of the Strategic Investment will close once the FFCTO is lifted; our ability to file the Interim Filings within the specified timeline; our ability to employ an interim Chief Financial Officer; and our ability of realizing the anticipated benefits of such are material factors underlying forward-looking information and management’s expectations.

The purpose of the forward-looking statements in this press release is to provide the reader with a description of management’s current expectations regarding the Company’s financial performance and may not be appropriate for other purposes. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only to opinions, estimates and assumptions as of the date made. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as of the date of this press release, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Reconciliation of Non-IFRS Measures

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¹ “Adjusted EBITDA” is a non-IFRS measure.

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Contacts

For media and/or investor relations please contact: IR@Anaergia.com

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