Q1 2025 Anaergia Inc Earnings Call
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Jerry: Hello, everyone and thank you for joining us for today's allergy at Q1, 'twenty 'twenty five conference call and webcast. My name is Jerry I'll be the operator today.
Jerry: During today's call. After the prepared remarks, there will be a Q&A session. If you'd like to register a question that please press star followed by one on your telephone keypad and see withdraw your question. It still followed by two.
Speaker Change: It's now my pleasure to hand over to Darlene web to begin. Please go ahead when you're ready.
Darlene Webb: Thank you very much operator, and good morning, everyone.
Darlene Webb: On today's call, we'll be discussing your energy is earnings the first quarter of 2025, which ended March 31st 2025.
Darlene Webb: If you're following along with our slides my comments are directed to the slides 123.
Speaker Change: On slide two you'll see that on our call today I'm joined by Mr. <unk> <unk> Chief Executive Officer.
Speaker Change: Mr. Greg woke energy as Chief Financial Officer, and Doctor Yummy, Shearson energy as Chief operating officer.
Speaker Change: Before beginning our formal remarks, we would like to refer you to slide three of the presentation, which contains the caution on forward looking information.
Speaker Change: And a note on the use of non <unk> measures.
Speaker Change: Listeners are reminded that today's discussion may contain forward looking statements that reflect current views with respect to future events.
Speaker Change: Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward looking statements.
Speaker Change: Energy does not undertake to update any forward looking statements, except as maybe required by applicable laws.
Speaker Change: Listeners are urged to review the full discussion of risk factors in the company's prospectus.
Speaker Change: <unk> filed with Canadian Securities regulators.
Speaker Change: And with that I'll turn the call over to itself.
Speaker Change: Thank you Sterling and good morning, everyone. We are now on slide four.
When I stepped into this role.
Speaker Change: NGL will do three things.
Speaker Change: The size of the business.
Speaker Change: Focus on execution and we saw financial discipline non months later, just what we're doing exactly that.
Speaker Change: Discipline.
Speaker Change: Pension and our strategic growth.
Speaker Change: We said, we would move towards a capital like model.
Speaker Change: Have we.
Speaker Change: We said, we would grow our capital sales business.
Speaker Change: Uh huh.
Speaker Change: We said, we would control cost and sympathize operation, we're doing exactly that.
Speaker Change: Moving to slide five.
Speaker Change: This quarter, we sold short progress we expect to make in several key areas. We are ahead of where we plan to be.
Speaker Change: Capital sales performance is a path.
Speaker Change: Our backlog has more than doubled.
Speaker Change: Prior to this same time last year.
Speaker Change: And that momentum continues to grow.
Speaker Change: This is not a one time event.
Speaker Change: Steady commercial activity.
Speaker Change: <unk> of our technology and our ability to deliver.
Speaker Change: We are now on slide six.
Speaker Change: In Q1, we took a deliberate steps to strengthen our capital market presence within energy are now trading on the OTC UX under the ticker <unk>.
Speaker Change: And art.
Speaker Change: This is danny enhances visibility.
Speaker Change: She proofs accessibility for U S investors.
Speaker Change: And aligns with our focus of building long term value through disciplined execution.
Speaker Change: We are now on slide seven.
Speaker Change: The message is clear right.
Speaker Change: Executing.
Speaker Change: We are growing.
Speaker Change: And we are entering this year with strong momentum.
Speaker Change: We could not have reached this point without the people who make it happen every day.
Speaker Change: <unk> no.
More than a strategy it is a shift in mindset.
Speaker Change: One is now fully embedded across the company.
Speaker Change: Our teams are aligned.
Speaker Change: Do you have a very clear.
Speaker Change: Gross.
Speaker Change: Every part of the business the focus is the same.
Speaker Change: Execution.
Speaker Change: Stability.
Speaker Change: Good results.
Speaker Change: The progress we are seeing is not the result of one or two decisions.
Speaker Change: It is a process it is a product of consistent follow through.
Speaker Change: Every day.
Speaker Change: We are not easing off.
Speaker Change: We are moving with purpose and maintaining the discipline the desk.
Speaker Change: <unk> got this far.
Speaker Change: We are proud of what we have accomplished to date.
Speaker Change: Signals are strong.
Speaker Change: We believe we are well positioned to continue building a stronger.
Speaker Change: And more resilient energy.
Speaker Change: So I'll take you through the numbers and execution.
Greg: I'll now turn the call over to Greg followed by any.
Thank you bill over Greg.
Greg: Thank you Seth and good morning, everyone let.
Greg: Let me take you through the financial results for the three months ended March 31, 2025 on slide eight and nine.
Greg: Revenue for the first quarter was $24 9 million, a modest decrease of <unk>, 4% or 93000 compared to the same period in 2024.
Greg: This minor decline is primarily due to a slightly.
Greg: Slightly lower capital sales and two revenue, partially offset by an increase in O&M services.
Greg: Regionally, we saw a decrease in revenue in APAC and Italy, While North America group supported by New capital sales projects and increased service activity.
Greg: Gross profit for the quarter was $5 4 million down 16, 6% or $1 1 million compared to $6 5 million in Q1 2024.
Greg: Overall gross margin for the quarter was 21, 7% down four three percentage points compared to 26% in the same period last year.
Greg: The overall decrease was driven mostly by lower profitability in the food segment that was partially offset by a larger increase in the capital sales gross profit.
Greg: Capital sales gross profit margin more than doubled to 26, 8% in Q1 2025 compared to 12, 1% in Q1 2024.
Greg: This is our core business in our new capital light model.
Greg: I'll take you over to SG&A.
Greg: SG&A expenses for Q1, 2025 were $17 2 million, an increase of three 4% or 569000 from $16 6 million in Q1 2024. The increase was primarily due to specific to nine 5 million reserve against accounts receivable balance.
Greg: Excluding that item SG&A would have declined 14, 3% to four.
Greg: 14, 3% to $14 $2 million, reflecting continued progress.
Greg: Ongoing cost reduction efforts.
Greg: Net loss for the quarter was $5 9 million, a $48 6 million.
Greg: <unk> 48, 6% or $5 7 million improvement compared to a net loss of 11.5.
Greg: $5 million in Q1 2024.
Greg: This was primarily driven by increased government grant income recognized during the quarter along with continued reductions SG&A expenses, excluding the specific accounts receivable reserve.
Greg: Adjusted EBITDA for the quarter was a loss of $3 9 million.
Greg: Reflecting an improvement of 34, 5% down $2 1 million from $6 million loss in the same period last year. This.
This improvement was primarily driven by the decrease in net loss as well as add backs are ibs income tax credit transaction costs in the first quarter.
Greg: Full year 2024 that did not reoccur in the current quarter.
Greg: <unk>.
Greg: Slide 10.
Greg: As of March 31.
Greg: 2025, our total revenue backlog increased 94% to a record of $200 million from $103 1 billion at year end 2024.
Greg: This increase reflects strong execution of new contracts in Q1.
Greg: Specifically in Italy, and North America.
Greg: All of our current backlog of $182 4 million is attributable to capital sales and $17 6 million to a long term O&M services.
Greg: This backlog as measured under our refined definition, which includes only signed capital sales contracts and three years of modeled revenue for multiyear O&M agreements.
Greg: We are we are highly encouraged by our growth in backlog and the project execution execution that will begin to follow.
Greg: In addition to this backlog growth in Q1 2025, we continue to be awarded other new significant contract wins, which we have publicly announced at the end of the first quarter. It reinforces the momentum we are seeing in key markets and supports our expectation for continued growth.
Greg: We are now on slide 11.
Greg: In Q1, we also successfully added financial arrangement that had been a valuable support tool for our growth.
Greg: On February five 2025, we entered into a new $13 9 billion line of credit with.
Greg: Royal Bank of Canada guaranteed by export development, Canada. The facility is valid through January 31, 2027, and is intended to serve as collateral for letters of credit required on certain capital sales contracts.
Greg: In summary, our Q1 performance reflects operational discipline and continued progress on our energy at two point out.
Greg: We delivered a meaningful improvement in net loss and adjusted EBITDA lowered SG&A costs, excluding the specific accounts receivable reserve and now have a record backlog that has nearly doubled since year end.
Greg: Our trajectory is clear we have reshaped our business with focus and intent to become capital light leaning into capital sales strategy and a return to our core a technology engineering and execution through the strength of our people.
Speaker Change: With that I'd now like to turn the call over to you needed for an update on operations and project execution.
Speaker Change: Thank you Greg we're now on slide 12.
Speaker Change: Our focus this quarter remained disciplined execution through delivering projects on time and on budget and deepening relationships with key partners and strategic markets.
Speaker Change: We are seeing the success reflected by our growing backlog and new opportunities coming to us, particularly from top tier customers with multi project orders.
Speaker Change: Let me walk you through several of the highlights.
Speaker Change: In Italy, we continue to build momentum in January we signed a binding agreement with <unk> to construct five new biomethane facilities across southern Italy.
Valued at more than $27 million.
Speaker Change: Disagreements these energy S. Applying our proprietary anaerobic digestion technologies and core critical equipment, while textile leads construction does.
Speaker Change: Plants are expected to be connected to the gasoline by mid 2026.
Speaker Change: In March we received formal notice to proceed from the city of federal Italy for a new municipal waste treatment facility.
Speaker Change: Valued at approximately $9 million. The facility will include anaerobic digestion to process more than 35000 tonnes of source separate organic annually.
Speaker Change: It is expected to generate approximately 31400 megawatt hours of biomethane per year.
Speaker Change: Which will be converted into renewable compressed natural gas vehicle fueling.
Speaker Change: Project further expands our municipal footprint in the region commissioning is targeted for mid 2026.
Speaker Change: And just days later, our Italian division signed contracts with entities owned by PJM to deliver two additional biomethane projects in northern Italy.
Speaker Change: Located in compatible.
Speaker Change: And there'll be a day each facility is expected to process more than 50000 tons of agricultural waste annually. Together. These projects represent a combined contract value of more than $46 million.
Speaker Change: Energy is serving the engineering procurement and construction contractor and technology provider for both sites, which are expected to be operational by mid 2026.
Speaker Change: Together these initiatives.
Speaker Change: Inefficiently strengthen our position in Italy, and demonstrate growing demand for energy solutions across both municipal and agriculture applications.
Speaker Change: They also reflect the growing momentum behind the Repower EU incentives aimed at accelerating renewable natural gas adoption across the European Union.
Speaker Change: Now over to Japan, our Singapore based subsidiary signed a letter of intent with <unk>.
Speaker Change: <unk> holdings, one of the country's leading engineering funds to deliver facility that will convert 61000 tons of organic waste annually and to $1 7 million cubic meters of renewable natural gas.
Speaker Change: With Japan's clean gas certificate system 2030 carbon neutral.
Speaker Change: Gas targets now in place, we are well positioned to support one of Asia is the most ambitious clean energy transition.
Speaker Change: In Singapore, we continued delivery of the integrated waste management facility, a multi phased capital project located at the towards the basin.
Speaker Change: The project is approximately halfway complete and once operational we will serve as the largest outlets for food waste recycling and Singapore. This initiative is part of Singapore's long term strategy to integrate waste and wastewater infrastructure.
Speaker Change: And in North America, we are advancing upgrades at the renewable energy anaerobic digesters or read facility at the University of California Davis supported by grants from Calgary cycle. This is more than 7 million project will increase throughput and system reliability. These.
Speaker Change: These improvements helped California, SP <unk> targets for methane reduction and organic waste diversion, while strengthening our long term partnerships with UC Davis.
Speaker Change: Across all active and planned sites, our customers are leveraging our deep knowhow and vertically integrated capabilities across engineering technology supply construction and operations to ensure project success.
Speaker Change: We are also continuing to advance our build own operate platform.
Speaker Change: On slide 13.
Speaker Change: Our southern California facility. So couple of methane continues to operate profitably and serves as the California's first co digestion plants injection gas to the grid in Q1, we completed upgrades that expand food waste could digestion capabilities.
Speaker Change: At the Rhode Island Bioenergy facility. The plant is running stable with continued ramp up and delivering renewable natural gas to Irving oil in Canada with participation in candidates clean fuels regulation.
It remains the largest anaerobic digester plant in new England.
Speaker Change: And our Booth segment revenue was $4 million down modestly from $4 1 million in Q1 2020 for the slight decline reflects the planned idling of our Charlotte facility in February a decision made to reduce operating losses and improve project economics as we prepare the site for future conversion to LNG.
Speaker Change: Both Charlotte and Riverside remaining development Charlotte continues and the temporary idled state as we complete permitting in advanced construction planning Riverside is progressing through Preconstruction with development work underway under an existing capital sale contract with the city.
Speaker Change: Besides remain important to our long term build on operate strategy and we are taking a disciplined approach to ensure their success together.
Speaker Change: Together these updates illustrate not only the progress we're making project by project, but also the consistency of execution that now reflects energy at two point out.
Moving to slide 14.
Speaker Change: None of this progress would be possible without the people who represent energy everyday onsite in meetings and on the front lines of delivering the face of our company to our customers and partners. The pride they bring to their work is reflective in the trust for earnings and in the momentum we are building around the world.
Speaker Change: They are focused on execution accountability and results is what drives energy of $2. Four two point of forward project by project milestone by milestone.
Speaker Change: Are you seeing the strength of that execution reflected in our backlog, which as you have heard now stands at $200 million that momentum is being driven by the consistent delivery of projects strong partner relationships and the confidence we are building in key markets. Our focus remains on converting that backlog into results efficiently reliably and at scale.
Speaker Change: With that I'll turn the call back to a soft for closing remarks with that.
Speaker Change: Thank you Steve.
Speaker Change: Good day results speak to more than a strong quarter.
Speaker Change: They reflect the cause.
Speaker Change: Company that is aligned.
Speaker Change: Disciplined and we will.
Speaker Change: Moving in the right direction.
Speaker Change: We are building momentum.
Speaker Change: Good noise.
Speaker Change: It promises.
Speaker Change: Adult.
Speaker Change: Yes, Jud tucano.
Speaker Change: He is north of people, it's a commitment.
Speaker Change: <unk> performance to accountability to delivering what we said we would do.
Speaker Change: No.
Speaker Change: No talk.
Speaker Change: Execution.
Speaker Change: With that I will turn back the call to you.
Speaker Change: Thank you.
Speaker Change: Operator, we can now open the call quick question.
Speaker Change: Thank you we will now start today's Q&A session. If you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Draw your question followed by team.
Speaker Change: Our first question today comes from Craig Irwin from Roth Capital Partners. Your line is now open. Please proceed.
Craig Irwin: Good morning, and thank you for taking my questions.
Speaker Change: So first I should start by saying congratulations on the on the impressive growth in backlog.
Speaker Change: A big achievement.
Now, if we dig down into into the bookings there.
Speaker Change: You gave us three projects.
Speaker Change: That are pretty pretty substantial <unk> thermo and then.
Speaker Change: Northern Italy.
Speaker Change: Mispronounced.
Speaker Change: Partners names there so.
Speaker Change: <unk> $46 million.
Speaker Change: Our bookings.
Speaker Change: If we actually take those out I mean, you doubled sequentially right, but if we take those out it looks like you still have a mid teens growth rate sequentially.
Speaker Change: In the backlog.
Speaker Change: Can you maybe talk to us a little bit about the diversity of projects that you're booking equipment for.
Speaker Change: Are these projects smaller in nature or larger.
Speaker Change: And.
Speaker Change: Is this kind of a positive event from something that you think sustained over over the next few quarters.
Speaker Change: Alright.
Speaker Change: The projects, we are we have actually a mix and match. Okay. We have some projects that are smaller we have quite very large projects.
Speaker Change: We already signed.
Speaker Change: And.
Speaker Change: The growth of 90%.
Speaker Change: The market is booming and we are.
Speaker Change: Right on the correct path.
Speaker Change: And making sure that energy.
Speaker Change: Is known to everyone. So as far as we're concerned.
Speaker Change: This is if people. If this is a year that we can we can show our growth.
Speaker Change: You need maybe you can help me here.
Speaker Change: Yes of course, alright, thanks for the question.
Speaker Change: So a couple of a couple of points to highlight the backlog reflects.
Speaker Change: Trailing bookings that were still executing.
Predominantly from North America, and Europe from 24 carrying into 'twenty five.
Speaker Change: And the projects that you see now being books are we do believe that they are going to be sustained for multiple quarters and the reason being is that we're seeing a trend.
Speaker Change: Multi project orders from single customers, particularly in the case of Europe and also in the U S municipal segments.
Speaker Change: An example of.
Speaker Change: Some of the announcements that we've made are.
Speaker Change: Major players utilities or Ipcc's in Europe that have committed to.
Speaker Change: During multiple projects to three nine type numbers.
Speaker Change: And we're seeing this tailwind to continue in Europe, particularly backed by the.
Ah Repower EU incentives and increasing demand, particularly in the Bay area region that is very much untapped and we're very strategic positions E Berry in Italy.
Speaker Change: Sustainability certificates of sustainability.
Speaker Change: So as far as project size.
Speaker Change: We don't expect any change in in follow on fees.
Speaker Change: Future bookings of projects that are both in the.
Speaker Change: Sub $10 million and in the above 20.
Speaker Change: As we move forward both both as I said in the private agricultural sector as well as the municipal sector.
Speaker Change: Okay.
Understood understood. So then you use the word unique untapped, which I kind of like.
Speaker Change: Can you maybe frame out for us how busy you are.
Speaker Change: Addressing potential customer projects north of $25 million in potential commitment.
Speaker Change: Yes of course.
Speaker Change: Can't give specifics for projects, we haven't announcements of course, but.
Speaker Change: Certainly there is.
Speaker Change: Large regions.
Speaker Change: The places in Europe, particularly where we are building now that I say untapped because there are.
Speaker Change: Feedstocks.
Speaker Change: These regions are fairly underdeveloped as far as just counted digesters.
Speaker Change: Portugal, Spain, Italy in particular.
Speaker Change: And are back now in the case of Italy by a <unk>.
Speaker Change: Continued government support for.
Speaker Change: Government backed incentive scheme that has continued.
For for a number of years now and that we are taking advantage and leveraging for our customers.
Speaker Change: As well as our presence there with references that are that are successful and being known as the dominant player with.
Speaker Change: Industry, leading experience so the driver in Italy is really the government back incentive scheme that the government has continued to support.
Speaker Change: And then bear yet, Portugal and Spain.
Speaker Change: There is really an untapped market and we are very strategically positions.
Speaker Change: Much fewer digest is in this area they haven't traditionally been backed by government.
Speaker Change: Programs, but they but there is strong incentive from Repower EU directive.
And demand for that.
Speaker Change: Renewable natural gas or Biomethane as we call it in Europe is booming.
Speaker Change: And so it's leading major players like major utilities to get into the space, who are partnering with us because of our experience and so to say to state. The obvious we are extremely busy particularly in Europe.
Speaker Change: And our main focus is sustainable.
Speaker Change: Sustainable growth ensuring that we are.
Speaker Change: Getting the resources in place that we can execute successfully because it's an unprecedented wave that we're seeing in these markets again places that.
Speaker Change: Historically <unk> had few few project counts.
Speaker Change: [laughter].
Speaker Change: Understood understood. So then financials question right.
Speaker Change: I know you've worked hard this last year to bring down.
Speaker Change: Your operating expenses and to make sure that we're in.
Speaker Change: You are spending money, it's directly facing the opportunities that.
Speaker Change: Can deliver incredible returns.
Speaker Change: The 17, two in SG&A in the quarter is that really sort of a fair base level of spending for us to expect.
Speaker Change: Maybe an increase over the next couple of quarters.
Speaker Change: 2025 unfolds, but was there anything maybe onetime in nature, where we could see.
Speaker Change: CNA spending trend down.
Yes, yes correct.
Speaker Change: Yes for the quarter, we had we.
Speaker Change: We did we did a reserve or for specific accounts receivable about close to $3 million. So if you take that out our run rates in the 2014 range.
Speaker Change: For the quarter I would say our run range.
Speaker Change: Going forward, it's somewhere probably a little bit a little bit north of that but it's probably.
Speaker Change: I'll, let 15 ish or something if they wanted to level set it may be slightly under but.
Speaker Change: That's where we see it in general we don't really give guidance but.
Speaker Change: If you take this quarter and you take that one time out and you see where we're at for the quarter and we don't expect increases in SG&A, we expect to continue to.
Speaker Change: Work on reductions there and.
Speaker Change: Just right size the business as we move forward. In addition to the other comment we have.
Speaker Change: We have.
Speaker Change: Increased spending in areas, such as sales and Thats why it geographically, we continue to spread out our footprint.
Speaker Change: Talk about project work.
Speaker Change: Large projects as you noted and we also have a lot of smaller projects a lot of EP type work. So.
Speaker Change: From our standpoint, the E&P work will do anywhere in the world because we can do with many of our locations from the U S from Italy from Singapore and use our engineering services from from those places are equipment salesman can be shipped in for that for the.
Speaker Change: The product side of it so we really enjoy the EP side of the work and that could be $5 million to $10 million type projects.
Speaker Change: That's a really good comfort zone for us it's good work.
Speaker Change: And we like that especially what areas. We don't have we can do EPC and we'll do that in the U S and some in Europe. That's only because we have we know the contractors that can do the larger projects for us.
Speaker Change: Outside of that the <unk> work that we received throughout the world with seed money, we planted in different regions is very instrumental for US now we can.
Speaker Change: Further reach and we can now leverage all of the opposite that we have in the engineering side and in our procurement can happen and then we send some people over for the commissioning part of it.
Speaker Change: That's really.
Speaker Change: The global strategy.
Speaker Change: And we will take on the bigger projects like I said it in the U S and Europe.
Speaker Change: Excellent excellent then last question if I may I know your first quarter.
Speaker Change: Is often impacted by either mix or.
Speaker Change: The early shipments into new projects that are going to be a more material contribution over the year.
Speaker Change: Can you maybe talk us through the sequential or year over year margin progression.
Speaker Change: Was there anything specific in there.
Speaker Change: From a project basis from a mix basis.
There was a delta versus these other comparable quarters.
Speaker Change: <unk>.
Speaker Change: How do you feel about the margin trajectory over the course of the year.
Speaker Change: We're very positive on the margins over the rest of the year. This quarter overall margins were down a little bit as it has noted.
Our capital sales margins remain.
Speaker Change: Obviously, we were at 26, 8% in this quarter. If you look at the MDA MD&A, which was up last night, but.
Speaker Change: That really where we where we suffered a bit this quarter was just some of our <unk> assets or as we continue to ramp up on a few of those.
Speaker Change: So that has been a little bit of a drag on our overall margins, but our core business of <unk>.
Speaker Change: <unk> sales.
Very strong we're very very comfortable.
Speaker Change: Where we're at on the margin side of that business and as you see in our backlog. That's the majority of our of our forward work. So.
Speaker Change: The <unk> assets will continue to ramp up.
Speaker Change: And become more of a contributor to our overall margin but.
Speaker Change: A little bit of a drag that we had in the first quarter on our overall gross margins, but again, our cap sales margin, which is early but we're moving towards business is very strong.
Speaker Change: Understood and actually if I can squeeze one last one in.
Speaker Change: I have not yet seen it in the MD&A I need to review it more carefully but did.
Speaker Change: Did you share at 12 month backlog number four.
Speaker Change: The $200 million print that you gave us I mean is there is there anything you can share if it's not in the in the MD&A discussion.
We don't share our forward looking backlog number obviously, but because we don't know where we're going to end up at but we know internally, but we don't share that piece. However.
Speaker Change: Those projects that we have on there the duration of those can be.
Speaker Change: We're from I mean, some of the smaller <unk>, where it could be probably like eight eight months 12 months, maybe somewhere in that range and the other bigger projects could be.
Speaker Change: 18 months to 24 months, so theres a run off and as you know our construction there has that come about bell curve as you start ramping up it's a little bit slow at first and then get heavily into estimate at the end there is always a slower tail but.
Speaker Change: That's where we see it so this is.
Speaker Change: Our goal is to continue to build backlog continue to actually start execution on projects that we just were awarded as well as our core business and then and then that pipeline of backlog growth.
Speaker Change: We'll have that consistency to our numbers and our growth over time and Thats really the strategy here and I think as <unk> mentioned the market is very very young in this in this area.
Speaker Change: Opportunities are everywhere.
Speaker Change: Our geographical footprint now.
Speaker Change: Getting better and better for us to see what's available in markets that we were not in before again with a low risk EEP type project work that we can come in with it.
Don: Really it's a really good morning Don.
Don: Great well congratulations on the strong business capture.
Don: Look forward to seeing you guys.
Don: Generally some profits I think that's not too far out so thank you.
Greg: Thanks, Greg.
Speaker Change: Thank you. Our next question today comes from Adam <unk> from Longbow Capital. Your line is now open. Please go ahead.
Adam: Thanks, very much and thanks.
Speaker Change: Thanks, everybody for the call so far.
Speaker Change: First question, just going back to the margin point I did wonder it does feel like <unk> done really very much a quarter story, but looking forward I wonder are there any particular supply chain issues.
Speaker Change: Or are there areas of concern for you or even areas, which we might might see things improving in either side of the business.
Speaker Change: And then my second question, just a little more general one the Italian projects you have using agricultural feedstock or anything is on the biogas don't write programs one using cover crops.
Speaker Change: Cover cycling.
Speaker Change: Or are they just really all just pure agricultural waste. Thanks.
Speaker Change: Projects are indeed ultra wave.
Speaker Change: Yes, yes, the projects are agricultural waste predominantly.
Speaker Change: And.
Speaker Change: Some issues certainly happening.
Speaker Change: Risks.
Speaker Change: Mitigated quite extensively.
Speaker Change: We introduced advantage.
Speaker Change: Is global presence and procurement options we have.
Speaker Change: We always keep the rolodex of multiple vendors that <unk> should ship in the event of a delay or supply chain issue with any particular pieces of equipment.
Speaker Change: Because you know, we're also vertically integrated and manufacture ourselves key components, which gives us much more control on on.
Speaker Change: Schedule and quality of delivery.
Speaker Change: And helps us navigate too.
Speaker Change: <unk> priorities and thirdly, and lastly that the.
Speaker Change: One of the biggest powers. We have here is the buying power with multiple projects and so the scale is.
Speaker Change: As a tool to our benefits of improving margins on our projects with multiple simultaneous.
Speaker Change: Simultaneously orders with discounts as an example, and.
Speaker Change: Giving us.
Speaker Change: Greater advantage than we've had in the past to control supply chain mitigate risks of supply chain costs.
Speaker Change: But im not going to mobile phones.
Speaker Change: I mean, one area, we've seen in the past from some of the people with compressor costs.
To the extent that.
Speaker Change: That's an issue for you but.
Speaker Change: Been a problem in the past and are you seeing is coming down.
Speaker Change: The answer is yes prices demand is going up so.
Speaker Change: As I said, particularly in Europe. So, yes, we are dealing with.
Speaker Change: Cost variability we.
Speaker Change: We have strategies with multiple vendors in multiple geographies that we can procure manufacture.
Speaker Change: And ultimately we've also done a pretty good job of pre ordering to lock in our orders in our inventory.
Speaker Change: Yeah, and advance to mitigate those risks because we have high confidence as evidenced by the releases in Q1.
Speaker Change: Large orders coming down the pipeline.
Speaker Change: Sure sure.
Speaker Change: Great that's really helpful. Thanks.
Speaker Change: Okay.
Tony: Thank you we have nice by the questions in the queue at this time, so I'll hand back over to Tony for some closing comments.
Tony: Thank you again, operator, and thank you everyone.
Tony: As always for additional information or should you have any questions. Please contact the IR team IR at <unk> Dot com.
Tony: Our business online at <unk> Dot com.
Tony: Thank you all again for your time today.
Speaker Change: Operator, you can now end the call.
Speaker Change: Thank you that concludes today's call you may now disconnect your lines.
Speaker Change: [music].