EverGen Infrastructure’s Q4 Results Highlight Growth Amid Persistent Challenges

EverGen Infrastructure Corp. (TSXV:EVG) reported its fourth-quarter and full-year 2024 financial results, revealing a stark contrast between robust revenue growth and significant net losses driven by non-cash impairments and operational headwinds. While the company’s Renewable Natural Gas (RNG) projects delivered record production and revenue gains, its GAAP net loss for the quarter surged to C$14.4 million, resulting in a diluted EPS of -C$1.02—a sharp deterioration from the -C$0.12 loss in Q4 2023. The full-year 2024 GAAP net loss reached C$17.1 million, or -C$1.20 per share, marking a stark departure from 2023’s -C$0.32 EPS.

Ask Aime: What's driving EverGen's surge in revenue but hefty losses?

Revenue Growth Outpaces Net Losses, But Impairments Weigh Heavily

The company’s revenue surged 37% year-over-year to C$3.2 million in Q4 2024, with full-year revenue climbing 69% to C$14.2 million. This growth stemmed from expanded RNG production at its Fraser Valley Biogas facility (completed in late 2023) and contributions from the GrowTEC project, which began operations in mid-2023. CEO Mischa Zajtmann emphasized these achievements, stating, “2024 results show evergen is progressing on its RNG growth objectives.”

However, the net loss was disproportionately inflated by non-cash impairment charges totaling C$14.4 million in Q4, primarily tied to Sea to Sky Soils Composting Inc. and GrowTEC. These impairments reflected lower-than-expected RNG volumes at GrowTEC’s Phase 2 and operational challenges at Sea to Sky. Additional pressures included:
- Weather disruptions: BC wildfires and extreme weather increased operating costs.
- Higher financing costs: Linked to debt tied to the Fraser Valley Biogas expansion.
- Equity-accounted losses: From Project Radius, a joint venture managed by EverGen.

Despite these challenges, Adjusted EBITDA improved significantly, rising to C$0.1 million in Q4 2024 (from nil in Q4 2023) and C$2.9 million annually, a 269% jump from C$0.8 million in 2023. This metric, which excludes non-cash items, underscores operational efficiency gains from higher RNG production and cost management.

Key Operational and Financial Metrics

• RNG Production: Surged 82% in Q4 2024 to 41,694 gigajoules (GJ), with full-year output hitting 160,027 GJ (+154% year-over-year). This reflects the success of recent infrastructure investments.
• Cash Position: Declined to C$414,000 as of December 31, 2024, from C$585,000 in 2023, with a persistent working capital deficit of C$950,000.
• Debt: Reduced slightly to C$26.1 million from C$28.0 million, signaling cautious management of liabilities.

Strategic Priorities and Risks

EverGen has outlined a path forward focused on:
1. Scaling RNG Infrastructure: Accelerating Phase 2 of GrowTEC and exploring new projects to capitalize on rising demand for RNG in Canada’s energy transition.
2. Cost Optimization: Reducing general administrative expenses and improving feedstock utilization to bolster cash flow.
3. Capital Raising: Addressing liquidity constraints through potential equity or debt financing.

However, risks remain prominent:
- Project Delays: GrowTEC’s Phase 2 RNG volumes have underperformed expectations, raising concerns about execution.
- Regulatory and Market Volatility: RNG pricing and feedstock availability depend on government incentives and energy commodity trends.
- Liquidity: The company’s limited cash reserves and working capital deficit could strain operations without additional funding.

Conclusion: A Company in Transition

EverGen’s Q4 2024 results paint a mixed picture. While its RNG strategy has generated strong revenue growth and improved Adjusted EBITDA, non-cash impairments and operational challenges have clouded profitability. Investors must weigh two critical questions:
1. Can RNG growth offset impairments? The company’s RNG production has nearly tripled since 2023, and with Canadian RNG demand expected to grow, EverGen’s projects could eventually turn the corner.
2. Will liquidity risks be resolved? With cash reserves at C$414,000 and a working capital deficit, securing financing is critical to fund ongoing projects and weather disruptions.

The stock’s post-earnings drop (-6.35%) reflects investor skepticism about near-term profitability. However, long-term believers in RNG’s role in Canada’s energy mix may find value in EverGen’s infrastructure assets. For now, the company remains a high-risk, high-reward play: bullish on RNG’s potential but vulnerable to execution risks and market volatility.

In summary, EverGen’s Q4 results highlight progress in its core RNG business but underscore the need for disciplined capital management and improved project execution to sustain investor confidence.