Zefiro Methane Corp. Provides Update on Recent Strategic Execution and Milestones Achieved

Executive Summary

• Zefiro projects Q3 2026 revenue of ~$10 M and a FY 2026 run‑rate of $40 M, reflecting strong growth under the new CEO/CFO team.
• Adjusted EBITDA for the first half of fiscal 2026 reached $3.8 M with net income turning positive at $300k, a dramatic turnaround from a $6.1 M loss in the prior period.
• The company reduced high‑interest debt by ~$2.8 M, completed a $92,956‑tonne carbon‑credit sale, secured >$25 M of Ohio government contracts, and expanded operations into Louisiana, now operating in eight states.

Key Details

• Revenue Outlook: Approx. $10.0 M expected for Q3 2026; FY 2026 revenue run‑rate targeted at $40.0 M.
• Financial Performance (first two full fiscal quarters 2025):
• Revenue: $22.2 M (+27% YoY).
• Gross Profit: $8.1 M (+108% YoY).
• Adjusted EBITDA: $3.8 M (increase of ~$6.3 M vs. prior period).
• Net Income: $300k (vs. a loss of $6.1 M in the comparable prior six months).
• Debt Reduction:
• January 2026 strategic transaction eliminated >$2.0 M high‑interest debt at parent level.
• Parent‑level debt cut 65.7% from $3.5 M to $1.2 M.
• Remaining $0.5 M high‑interest debt refinanced with a $0.3 M promissory note due 2027, funded by free cash flow.
• Carbon Credit Sales:
• Completed seventh carbon‑credit sale in Feb 2026; total sold to four buyers.
• Notable transaction: 92,956 t CO₂e offsets from a plugged well in Custer County, OK (ACR Project 959) delivered to Mercuria Energy America and EDF Trading.
• Ohio Government Contracts:
• Won ~37% of all State‑of‑Ohio Phase 1 Formula Grant funding under IIJA.
• Awarded >$25 M in contracts between Jun 2025–Feb 2026, including:
  • $19.6 M CMAR three‑year contract for marginal wells.
  • $4.5 M CMAR contract for orphan wells.
  • Belmont 6 project: $420,784.45.
  • Morrow 8 project: $522,233.
• Louisiana Expansion:
• Jan 2026 launched a three‑month energy infrastructure project near Lake Charles with >$5 M revenue potential.
• Footprint now spans PA, NY, OH, WV, KY, OK, VA, and LA (8 states).
• Methane Monitoring Program (West Virginia):
• Contract awarded July 2025; initial value $800k, later expanded to $1.3 M.
• Over 800 wells monitored under MERP to date.
• Leadership Team: CEO Catherine Flax and CFO Michael Downs (appointed Jun 2025) credited with transformational change; Luke Plants leads subsidiary Plants & Goodwin, Inc.

Notable Quotes

“Working with Catherine since she stepped into the CEO role has created a very proactive growth‑oriented environment that was needed to drive the business and capitalize on the immense opportunities in both segments of the business, environmental services and environmental markets.” – Luke Plants, CEO, Zefiro Environmental Services

“We’re actively working behind the scenes to prepare for ACR’s updated orphan well methodology… we are keen to build upon that momentum, keeping carbon credits a continued focus for us at Zefiro as a fully integrated environmental services company.” – Tina Reine, Chief Commercial Officer

Materiality Assessment: Material – Positive (the release contains substantive financial results, debt reduction, significant contract wins, and strategic expansion indicating material impact on the company's outlook).