Carbon Streaming Corporation (Cboe CA:
NETZ)
(OTCQB:
OFSTF) (FSE:
M2Q)
(“
Carbon Streaming” or the
“
Company”) today reported its financial results
for the fiscal year ended December 31, 2023. All figures are
expressed in United States dollars, unless otherwise indicated. The
Company will host a live audio call at 11:00 a.m. ET on Thursday,
March 28, 2024.
Carbon Streaming Founder and CEO Justin Cochrane
stated: “In 2023, Carbon Streaming was able to improve its
operating cash flow through the successful implementation of
ongoing reductions in operating costs. As of December 2023, we have
achieved savings of over $7.5 million for the fiscal year when
compared to the previous 12-month period, and we expect to continue
targeting additional cost saving opportunities in the future.” Mr.
Cochrane continued: “As we look towards 2024, the Company remains
committed to protecting our robust, debt-free balance sheet and
exploring strategic opportunities, while executing on sales and
supporting our project partners.”
Annual Highlights
- Ended the year with $51.4 million
in cash and no corporate debt.
- The Company initiated a corporate
restructuring plan, which remains ongoing, focused on personnel
reductions, optimizing its cash position, and protecting its
balance sheet, resulting in a $7.5 million reduction in operating
expenses for the fiscal year compared to the prior twelve month
period and a $1.8 million restructuring charge.
- Recognized net loss of $35.5
million for the year (compared to net income of $2.4 million for
the six month period ended December 31, 2022).
- Adjusted net loss of $7.6 million
for the year (compared to an adjusted net loss of $11.1 million for
the six month period ended December 31, 2022) (see the “Non-IFRS
Measures” section of this news release).
- Operating loss of $45.0 million for
the year (compared to an operating loss of $6.3 million for the six
month period ended December 31, 2022).
- Paid $9.1 million in upfront
deposits for carbon credit streaming and royalty agreements.
Quarterly Highlights
- Recognized net loss of $26.1
million for the quarter (compared to net income of $2.4 million in
Q4 2022).
- Adjusted net loss of $2.2 million
for the quarter (compared to an adjusted net loss of $5.7 million
in Q4 2022) (see the “Non-IFRS Measures” section of this news
release).
- Operating loss of $26.8 million for
the quarter (compared to an operating loss of $1.0 million in Q4
2022).
- Paid $2.1 million in upfront
deposits for carbon credit streaming and royalty agreements.
Financial Highlights
Summary
(Dollar figures expressed in USD thousands) |
Three months ended December 31, 2023 |
Three months ended December 31, 2022 |
Year ended December 31, 2023 |
Six month period ended December 31, 2022 |
Year ended June 30, 2022 |
Carbon credit streaming agreements |
|
|
|
|
|
Revaluation of carbon credit streaming and royalty agreements |
$ |
(23,952 |
) |
$ |
4,800 |
|
$ |
(32,897 |
) |
$ |
4,800 |
|
$ |
- |
|
Settlements from carbon credit streaming and royalty
agreements1 |
|
- |
|
|
- |
|
|
55 |
|
|
- |
|
|
- |
|
Purchased carbon credits |
|
|
|
|
|
Revenue from sale of purchased carbon credits |
$ |
841 |
|
$ |
1,059 |
|
$ |
1,166 |
|
$ |
1,086 |
|
$ |
147 |
|
Number of purchased carbon credits sold (carbon credits)2 |
|
205,723 |
|
|
122,995 |
|
|
256,458 |
|
|
125,159 |
|
|
25,162 |
|
Average realized price per purchased carbon credit sold ($/carbon
credit) |
|
4.09 |
|
|
8.61 |
|
|
4.55 |
|
|
8.68 |
|
|
5.84 |
|
Cost per purchased carbon credit sold ($/carbon credit) |
|
4.53 |
|
|
5.00 |
|
|
4.62 |
|
|
5.00 |
|
|
5.00 |
|
Other financial highlights |
|
|
|
|
|
Other operating expenses |
|
2,691 |
|
|
6,221 |
|
|
12,035 |
|
|
11,539 |
|
|
17,638 |
|
Operating loss |
|
(26,784 |
) |
|
(976 |
) |
|
(45,002 |
) |
|
(6,278 |
) |
|
(17,617 |
) |
Net (loss) income |
|
(26,092 |
) |
|
4,765 |
|
|
(35,501 |
) |
|
2,355 |
|
|
(12,900 |
) |
(Loss) earnings per share (Basic) ($/share) |
|
(0.55 |
) |
|
0.10 |
|
|
(0.75 |
) |
|
0.05 |
|
|
(0.34 |
) |
(Loss) earnings per share (Diluted) ($/share) |
|
(0.55 |
) |
|
0.10 |
|
|
(0.75 |
) |
|
0.05 |
|
|
(0.34 |
) |
Adjusted net loss3 |
|
(2,225 |
) |
|
(5,727 |
) |
|
(7,586 |
) |
|
(11,055 |
) |
|
(17,617 |
) |
Adjusted net loss per share (Basic and Diluted) ($/share)3 |
|
(0.05 |
) |
|
(0.12 |
) |
|
(0.16 |
) |
|
(0.24 |
) |
|
(0.47 |
) |
Statement of financial position |
|
|
|
|
|
Cash4 |
|
51,416 |
|
|
70,345 |
|
|
51,416 |
|
|
70,345 |
|
|
93,238 |
|
Carbon credit streaming and royalty agreements4 |
|
60,122 |
|
|
83,998 |
|
|
60,122 |
|
|
83,998 |
|
|
65,681 |
|
Total assets4 |
|
117,111 |
|
|
158,489 |
|
|
117,111 |
|
|
158,489 |
|
|
163,467 |
|
Non-current liabilities4 |
|
1,083 |
|
|
2,068 |
|
|
1,083 |
|
|
2,068 |
|
|
399 |
|
- Relates
to the net cash proceeds generated from the Company’s carbon credit
streaming and royalty agreements.
- The
Company holds an inventory of carbon credits, which were acquired
separate and apart from carbon credits delivered under the
Company’s carbon credit streaming agreements.
- “Adjusted
net loss”, including per share amounts, is a non-IFRS financial
performance measure that is used in this news release. This measure
does not have any standardized meaning under IFRS and therefore may
not be comparable to similar measures presented by other issuers.
For more information about this measure, why it is used by the
Company, and a reconciliation to the most directly comparable
measure under IFRS, see the “Non-IFRS Measures" section of the
Company’s Management’s Discussion & Analysis (“MD&A”).
- Cash,
carbon credit streaming and royalty agreements, total assets and
non-current liabilities are presented as at the relevant tabular
reporting date.
Portfolio Updates: Year ended December
31, 2023
New investments and portfolio
restructuring
Magdalena Bay Blue Carbon Stream: In July 2023,
the Company amended the terms of the Magdalena Bay Blue Carbon
Stream. Under the amended terms of the stream, the Company will
receive the greater of 300,000 carbon credits or 30% of carbon
credits generated by the project on an annual basis, an increase
from the previous terms (which were the greater of 200,000 carbon
credits or 20% of the carbon credits generated by the project on an
annual basis). This also resulted in a $3.0 million increase in
upfront deposit payments to be made as the project achieves certain
development milestones.
Waverly Biochar Stream and Waverly Biochar
Royalty: In July 2023, the Company amended the terms of the Waverly
Biochar Stream, resulting in a $1.6 million increase in the upfront
deposit amount and a lower ongoing delivery payment. Additionally,
the Company also entered into the Waverly Biochar Royalty pursuant
to which Carbon Streaming will receive a revenue royalty on volume
of biochar sold from the project over its 25-year life. Following
the amendment, the Company announced an agreement to provide
Microsoft with carbon credits from the Waverly Biochar Stream of up
to 10,000 carbon credits per year.
Nalgonda Rice Farming Stream: In July 2023, the
Company amended the terms of the Nalgonda Rice Farming Stream,
resulting in a $0.8 million decrease in the upfront deposit amount
and a higher ongoing delivery payment. Additionally, in September
2023, the project completed its submission of the first validation
report for the Nalgonda Rice Farming methane avoidance grouped
project to Verra.
Sheep Creek Reforestation Stream: In May 2023,
the Company and Mast Reforestation SPV I, LLC
(“Mast”) signed a pipeline agreement and a stream
agreement for the Sheep Creek Reforestation Project, the first
stream under the pipeline agreement. During the year, the Company
made total upfront deposit payments of $1.4 million. The Company
will make additional upfront deposit payments of up to $2.4 million
as the Sheep Creek Reforestation Project achieves site preparation,
planting, and issuance milestones.
Feather River Reforestation Stream: In September
2023, the Company and Mast entered into a stream agreement for the
Feather River Reforestation project, the second stream under the
pipeline agreement. During the year, the Company made total upfront
deposit payments of $0.3 million. The Company will make additional
upfront deposit payments of up to $0.4 million as the Feather River
Reforestation project achieves site preparation, planting, and
issuance milestones.
Key portfolio milestones
Cerrado Biome Stream: The final approval of the
project was confirmed in December 2022, and the Company received
its first issuance of 316,781 carbon credits in early 2023. With
the first issuance, the Company made an upfront deposit payment of
$66.0 thousand to the project partner for reaching this milestone.
Sales of carbon credits from the project continue, with the Company
generating net cash flows from the stream during the
year.
Community Carbon Stream: For the year ended
December 31, 2023, Carbon Streaming made upfront deposit payments
totaling $4.7 million to Community Carbon, as it reached various
milestones for the portfolio of projects, including device
deployment target for its Uganda cookstoves project. The Company
received first carbon credits from the Ugandan cookstoves project,
the Ugandan water purification project and the Tanzania cookstove
project during the year.
Strategy
Carbon Streaming is focused on executing its
sales strategy through the marketing and selling of carbon credits
and continuing to acquire select additional streams and royalties
to diversify and complement its portfolio of projects.
In executing its sales strategy, over the long
term and on a company-wide basis, the Company continues to expect
to retain on average 15% to 25% of cash flows (with stream-specific
retention varying) generated from the sale of the carbon credits
acquired from its carbon credit streaming agreements, subject to
fluctuation based on the realized price from carbon credit sales
and the specific terms of the stream agreements. Through an ongoing
delivery payment under the terms of a stream agreement, a project
partner is typically entitled to receive the balance of the net
proceeds from the sale of carbon credits (i.e., on average 75% to
85%).
Outlook
In 2023, Carbon Streaming began repositioning
itself for long-term success and sustainable shareholder value
creation as the voluntary carbon market faced headwinds. In
response, the Company initiated a corporate restructuring in 2023.
The focus of the restructuring has been, and will continue to be,
on cash flow optimization through the reduction of operating
expenses and a reassessment of our existing streams and royalties
in light of the evolving voluntary carbon market. To date, the
steps taken by the Company have resulted in significant reductions
to ongoing operating expenses and amendments to stream agreements.
For example, the Company’s other operating expenses have decreased
by $7.5 million for the fiscal year ended December 31, 2023 when
compared to the previous twelve-month period. Additionally, in
2023, the Company amended the terms of the Nalgonda Rice Farming
Stream, Waverly Biochar Stream and Magdalena Bay Blue Carbon
Stream, and amended the terms of the Sheep Creek Reforestation
Stream in early 2024. The Company will continue to look for
opportunities for cash flow optimization and will provide
additional details as more initiatives are put in place.
Carbon Streaming also aims to continue growing
and diversifying its portfolio with leading project developers and
to be a partner of choice for buyers seeking to support
high-integrity carbon projects. Voluntary carbon markets have the
potential to mobilize finance to address the gaps in funding for
climate projects and act as a complementary tool to other climate
action activities. Carbon Streaming believes that its strategy will
position the Company as an industry leader who will be a go-to
source of carbon credits in the voluntary market.
2023 Results Conference Call
Details
The Company’s management team will host an
interactive audio call on Thursday, March 28, 2024, at 11:00 a.m.
ET to provide a brief company update. Participants may join by
dialing +1 416-764-8658 or toll free from North America at +1
888-886-7786. An audio replay of the conference call will be
available on the Company website until 11:59 p.m. ET on April 28,
2024.
About Carbon Streaming
Carbon Streaming aims to accelerate a net-zero
future. We pioneered the use of streaming transactions, a proven
and flexible funding model, to scale high-integrity carbon credit
projects to advance global climate action and additional United
Nations Sustainable Development Goals. This approach aligns our
strategic interests with those of project partners to create
long-term relationships built on a shared commitment to
sustainability and accountability and positions us as a trusted
source for buyers seeking high-quality carbon credits.
The Company’s focus is on projects that have a
positive impact on the environment, local communities, and
biodiversity, in addition to their carbon reduction or removal
potential. The Company has carbon credit streams and royalties
related to over 20 projects around the world, including
high-integrity removal, reduction and avoidance projects from
nature-based, agricultural, engineered and community-based
methodologies.
To receive corporate updates via e-mail, please
subscribe here.
ON BEHALF OF THE COMPANY:Justin
Cochrane, President & Chief Executive Officer Tel:
647.846.7765info@carbonstreaming.com www.carbonstreaming.com
Investor
Relationsinvestors@carbonstreaming.com
Mediamedia@carbonstreaming.com
Performance Measures
Average realized price per purchased
carbon credit sold Management uses the “average realized
price per purchased carbon credit sold” performance measure to
better understand the price realized in each reporting period for
carbon credit sales. Average realized price per purchased carbon
credit sold is calculated by dividing the Company’s revenue from
sale of purchased carbon credits by the quantity of purchased
carbon credits sold. Average realized price per purchased carbon
credit sold does not incorporate proceeds from the sale of carbon
credits delivered under the Company’s carbon credit streaming
agreements, and only incorporates revenue from the sale of
purchased carbon credits.
(Dollar figures expressed in USD thousands) |
Three months ended December 31, 2023 |
|
Three months ended December 31, 2022 |
|
Year ended December 31, 2023 |
|
Six month period ended December 31, 2022 |
|
Year ended June 30, 2022 |
Revenue from sale of purchased carbon credits |
$ |
841 |
|
$ |
1,059 |
|
$ |
1,166 |
|
$ |
1,086 |
|
$ |
147 |
Number of purchased carbon credits sold (carbon credits) |
|
205,723 |
|
|
122,995 |
|
|
256,458 |
|
|
125,159 |
|
|
25,162 |
Average realized price per purchased carbon credit sold ($/carbon
credit) |
$ |
4.09 |
|
$ |
8.61 |
|
$ |
4.55 |
|
$ |
8.68 |
|
$ |
5.84 |
Cost per purchased carbon credit
soldManagement uses the “cost per purchased carbon credit
sold” performance measure to assess the Company’s profitability in
relation to the average realized price per purchased carbon credit
sold and believes that certain investors can use this information
to evaluate the Company’s performance in comparison to other carbon
credit streaming companies. Cost per purchased carbon credit sold
is calculated by dividing the Company’s cost of purchased carbon
credits sold, excluding inventory write-downs, by the quantity of
purchased carbon credits sold. Cost per purchased carbon credit
sold does not incorporate ongoing delivery payments from the sale
of carbon credits delivered under the Company’s carbon credit
streaming agreements, and only incorporates the cost of purchased
carbon credits sold.
(Dollar figures expressed in USD thousands) |
Three months ended December 31, 2023 |
|
Three months ended December 31, 2022 |
|
Year ended December 31, 2023 |
|
Six month period ended December 31, 2022 |
|
Year ended June 30, 2022 |
Cost of purchased carbon credits sold |
$ |
982 |
|
|
$ |
614 |
|
$ |
1,236 |
|
|
$ |
625 |
|
$ |
126 |
Less: Inventory write-down |
|
(50 |
) |
|
|
- |
|
|
(50 |
) |
|
|
- |
|
|
- |
|
|
932 |
|
|
|
614 |
|
|
1,186 |
|
|
|
625 |
|
|
126 |
Number of purchased carbon credits sold (carbon credits) |
|
205,723 |
|
|
|
122,995 |
|
|
256,458 |
|
|
|
125,159 |
|
|
25,162 |
Cost per purchased carbon credit sold ($/carbon credit) |
$ |
4.53 |
|
|
$ |
5.00 |
|
$ |
4.62 |
|
|
$ |
5.00 |
|
$ |
5.00 |
Non-IFRS Measures
Adjusted Net Loss and Adjusted Loss Per
ShareThe term “adjusted net loss” in this news release is
not a standardized financial measure under IFRS and therefore may
not be comparable to similar measures presented by other companies
where similar terminology is used. These non-IFRS measures should
not be considered in isolation or as a substitute for measures of
performance, cash flows and financial position as prepared in
accordance with IFRS. Management believes that these non-IFRS
measures, together with performance measures and measures prepared
in accordance with IFRS, provide useful information to investors
and shareholders in assessing the Company’s liquidity and overall
performance.
Adjusted net loss is calculated as net and
comprehensive (loss) income and adjusted for the revaluation of
carbon credit streaming and royalty agreements, the revaluation of
warrant liabilities, the revaluation of derivative liabilities, the
revaluation of the convertible note, impairment loss and the
corporate restructuring which the Company views as having a
significant non-cash or non-continuing impact on the Company’s net
and comprehensive (loss) income calculation and per share amounts.
Adjusted net loss is used by the Company to monitor its results
from operations for the period.
The following table reconciles net and comprehensive (loss)
income to adjusted net loss:
(Dollar figures expressed in USD thousands) |
Three months ended December 31, 2023 |
Three months ended December 31, 2022 |
Year ended December 31, 2023 |
Six month period ended December 31, 2022 |
Year ended June 30, 2022 |
Net (loss) income and comprehensive (loss)
income |
$ |
(26,092 |
) |
$ |
4,765 |
|
$ |
(35,501 |
) |
$ |
2,355 |
|
$ |
(12,900 |
) |
Adjustment for non-continuing or non-cash settled items: |
|
|
|
|
|
Revaluation of carbon credit streaming and royalty agreements |
|
23,952 |
|
|
(4,800 |
) |
|
32,897 |
|
|
(4,800 |
) |
|
- |
|
Revaluation of warrant liabilities |
|
(79 |
) |
|
(6,458 |
) |
|
(6,530 |
) |
|
(9,376 |
) |
|
(4,717 |
) |
Revaluation of derivative liabilities |
|
- |
|
|
766 |
|
|
(686 |
) |
|
766 |
|
|
- |
|
Revaluation of convertible note |
|
- |
|
|
- |
|
|
(558 |
) |
|
- |
|
|
- |
|
Impairment loss |
|
- |
|
|
- |
|
|
1,044 |
|
|
- |
|
|
- |
|
Corporate restructuring |
|
(6 |
) |
|
- |
|
|
1,748 |
|
|
- |
|
|
- |
|
Adjusted net loss |
|
(2,225 |
) |
|
(5,727 |
) |
|
(7,586 |
) |
|
(11,055 |
) |
|
(17,617 |
) |
(Loss) earnings per share (Basic) ($/share) |
|
(0.55 |
) |
|
0.10 |
|
|
(0.75 |
) |
|
0.05 |
|
|
(0.34 |
) |
(Loss) earnings (loss) per share (Diluted) ($/share) |
|
(0.55 |
) |
|
0.10 |
|
|
(0.75 |
) |
|
0.05 |
|
|
(0.34 |
) |
Adjusted net loss per share (Basic and Diluted)
($/share) |
|
(0.05 |
) |
|
(0.12 |
) |
|
(0.16 |
) |
|
(0.24 |
) |
|
(0.47 |
) |
Cautionary Statement Regarding Forward-Looking
Information
This news release contains certain
forward-looking statements and forward-looking information
(collectively, “forward-looking information”) within the meaning of
applicable securities laws. All statements, other than statements
of historical fact, that address activities, events or developments
that the Company believes, expects or anticipates will or may occur
in the future, are forward-looking information, including, without
limitation, statements regarding the Company’s strategic positing
and generation of shareholder value; the Company’s expected
restructuring strategies and expense reductions and savings from
operating cost reduction measures; statements with respect to cash
flow optimization; its sales strategy; supporting the Company’s
carbon streaming and royalty partners; timing and the amount of
future carbon credit generation and emission reductions and
removals from the Company’s existing streaming and royalty
agreements; statements with respect to the projects in which the
Company has streaming and royalty agreements in place; statements
with respect to the Company’s growth objectives; and statements
with respect to execution of the Company’s portfolio and
partnership strategy.
When used in this news release, words such as
“estimates”, “expects”, “plans”, “anticipates”, “will”, “believes”,
“intends” “should”, “could”, “may” and other similar terminology
are intended to identify such forward-looking statements. This
forward-looking information is based on the current expectations or
beliefs of the Company based on information currently available to
the Company. Forward-looking information is subject to a number of
risks and uncertainties that may cause the actual results of the
Company to differ materially from those discussed in the
forward-looking information, and even if such actual results are
realized or substantially realized, there can be no assurance that
they will have the expected consequences to, or effects on, the
Company. They should not be read as a guarantee of future
performance or results, and will not necessarily be an accurate
indication of whether or not such results will be achieved. Factors
that could cause actual results or events to differ materially from
current expectations include, among other things: general economic,
market and business conditions and global financial conditions,
including fluctuations in interest rates, foreign exchange rates
and stock market volatility; volatility in prices of carbon credits
and demand for carbon credits; change in social or political views
towards climate change, carbon credits and ESG initiatives and
subsequent changes in corporate or government policies or
regulations and associated changes in demand for carbon credits;
limited operating history for the Company’s current strategy; risks
arising from competition and future acquisition activities;
concentration risk; inaccurate estimates of growth strategy;
dependence upon key management; impact of corporate restructurings;
reputational risk; failure or timing delays for projects to be
registered, validated and ultimately developed and for emission
reductions or removals to be verified and carbon credits issued
(and other risks associated with carbon credits standards and
registries); foreign operations and political risks including
actions by governmental authorities, including changes in or to
government regulation, taxation and carbon pricing initiatives;
uncertainties and ongoing market developments surrounding the
validation and verification requirements of the voluntary and/or
compliance markets; due diligence risks, including failure of third
parties’ reviews, reports and projections to be accurate;
dependence on project partners, operators and owners, including
failure by such counterparties to make payments or perform their
operational or other obligations to the Company in compliance with
the terms of contractual arrangements between the Company and such
counterparties; failure of projects to generate carbon credits, or
natural disasters such as flood or fire which could have a material
adverse effect on the ability of any project to generate carbon
credits; volatility in the market price of the Company’s common
shares or warrants; the effect that the issuance of additional
securities by the Company could have on the market price of the
Company’s common shares or warrants; global health crises, such as
pandemics and epidemics; and the other risks disclosed under the
heading “Risk Factors” and elsewhere in the Company’s Annual
Information Form dated as of March 27, 2024 filed on SEDAR+ at
www.sedarplus.ca.
Any forward-looking information speaks only as
of the date of this news release. Although the Company believes
that the assumptions inherent in the forward-looking information
are reasonable, forward-looking information is not a guarantee of
future performance and accordingly undue reliance should not be put
on such statements due to the inherent uncertainty therein. Except
as may be required by applicable securities laws, the Company
disclaims any intent or obligation to update any forward-looking
information, whether as a result of new information, future events
or results or otherwise.
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