Company is Uniquely Positioned with a Strong Cash Balance,
Reduced Operating Costs, Diversified Investment Portfolio and
Robust Sales Pipeline to Create Shareholder Value
Carbon Streaming Corporation (NEO: NETZ) (OTCQB:
OFSTF) (FSE: M2Q) (“Carbon Streaming” or the
“Company”) today reported its financial results for the
three and nine months ended September 30, 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 Wednesday,
November 15, 2023.
Carbon Streaming Founder and CEO Justin Cochrane stated: “In Q3,
Carbon Streaming continued to improve its operating cash flow
through successful ongoing reductions in operating costs. These
reductions are expected to deliver savings of over US$5 million per
annum. As we reach the end of the year and look towards 2024, the
Company remains committed to protecting our robust, debt-free
balance sheet, while executing on sales and supporting our project
partners.” Mr. Cochrane continued, “we believe that this approach,
coupled with our diversified portfolio of streams and royalties on
high-quality projects, uniquely positions us to benefit from future
increases in demand for voluntary carbon credits as the global
economy faces mounting pressure to decarbonize.”
Third Quarter Highlights
- Ended the quarter with $54.4 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
$1.8 million restructuring charge and a $3.9 million reduction in
operating expenses year-to-date. Additional restructuring
strategies are planned for upcoming quarters.
- Recognized net income of $0.7 million (net loss of $2.4 million
in Q3 2022).
- Adjusted net loss of $1.7 million (adjusted net loss of $5.3
million in Q3 2022) (see the “Non-IFRS Measures” section of this
news release).
- Operating loss of $0.8 million (operating loss of $5.3 million
in Q3 2022).
- Paid $2.1 million in upfront deposits for carbon credit
streaming and royalty agreements.
Financial Highlights Summary
(Dollar figures expressed in thousands of
US Dollars)
Three months ended September
30, 2023
Three months ended September
30, 2022
Nine months ended September
30, 2023
Nine months ended September
30, 2022
Carbon credit streaming
agreements
Revaluation of carbon credit streaming and
royalty agreements
$1,792
-
$(8,945)
-
Settlements from carbon credit streaming
and royalty agreements1
$13
-
$55
-
Purchased carbon credits
Revenue from sale of purchased carbon
credits2
$260
$27
$325
$29
Number of purchased carbon credits sold
(carbon credits)2
41,593
2,192
50,735
2,354
Other financial highlights
Other operating expenses
$2,609
$5,317
$9,344
$13,278
Operating loss
$(765)
$(5,301)
$(18,218)
$(13,295)
Net income (loss)
$718
$(2,409)
$(9,409)
$75,757
Earnings (loss) per share (Basic)
($/share)
$0.02
$(0.05)
$(0.20)
$1.62
Earnings (loss) per share (Diluted)
($/share)
$0.02
$(0.05)
$(0.20)
$1.54
Adjusted net loss3
$(1,699)
$(5,327)
$(5,361)
$(13,321)
Adjusted net loss per share (Basic and
Diluted) ($/share)3
$(0.04)
$(0.11)
$(0.11)
$(0.28)
Statement of financial position
Cash4
$54,401
$72,683
$54,401
$72,683
Carbon credit streaming and royalty
agreements4
$82,024
$78,698
$82,024
$78,698
Total assets4
$142,043
$156,939
$142,043
$156,939
Non-current liabilities4
$1,262
$889
$1,262
$889
1.
Relates to the net cash proceeds
generated from the Company’s carbon credit streaming and royalty
agreements.
2.
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.
3.
“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 Measure " section of this news release.
4.
Cash, carbon credit streaming and
royalty agreements, total assets and non-current liabilities are
presented as at the relevant tabular reporting date.
Portfolio Updates: Three months ended September 30,
2023
Feather River Reforestation Stream: In September 2023,
the Company and Mast Reforestation SPV I, LLC entered into a stream
agreement for the Feather River Reforestation project, the second
stream under the previously announced pipeline agreement. This
project is expected to remove approximately 50,000 tCO2e and
generate an equivalent number of carbon removal credits, referred
to as Forecasted Mitigation Units (“FMUs”) under the Climate Action
Reserve’s Climate Forward program with FMU issuance anticipated in
2025. During the quarter, the Company made upfront deposit payments
of $0.3 million. The Company will make additional upfront deposit
payments of up to $0.4 million (resulting in a total upfront
deposit of up to $0.7 million) as the Feather River Reforestation
project achieves site preparation, planting, and issuance
milestones.
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 total committed upfront deposit payments
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, the non-profit organization that manages the
Verified Carbon Standard program and its registry.
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
payments and a lower ongoing delivery payment. Additionally, the
Company also entered into a royalty agreement pursuant to which
Carbon Streaming will receive a revenue royalty on volume of
biochar sold from the project over its 25-year life.
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 delivered as the project achieves certain
development milestones.
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 earlier this year. 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
$3.9 million for the nine months ended September 30, 2023, when
compared to the prior-year period. Additionally, the Company has
restructured the commercial terms of the Nalgonda Rice Farming
Stream, Waverly Biochar Stream, and the Magdalena Bay Blue Carbon
Stream. 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.
Third Quarter 2023 Results Conference Call Details
The Company’s management team will host an interactive audio
call on Wednesday, November 15, 2023, 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 December 15, 2023.
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.
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 thousands of
US Dollars)
Three months ended September
30, 2023
Three months ended September
30, 2022
Nine months ended September
30, 2023
Nine months ended September
30, 2022
Revenue from sale of purchased carbon
credits
$260
$27
$325
$29
Number of purchased carbon credits sold
(carbon credits)
41,593
2,192
50,735
2,354
Average realized price per purchased
carbon credit sold ($/carbon credit)
$6.25
$12.32
$6.41
$12.32
Cost per purchased carbon credit sold
Management 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 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 thousands of
US Dollars)
Three months ended September
30, 2023
Three months ended September
30, 2022
Nine months ended September
30, 2023
Nine months ended September
30, 2022
Cost of purchased carbon credits sold
$208
$11
$254
$12
Number of purchased carbon credits sold
(carbon credits)
41,593
2,192
50,735
2,354
Cost per purchased carbon credit sold
($/carbon credit)
$5.00
$5.00
$5.00
$5.00
Non-IFRS Measures
Adjusted Net Loss and Adjusted Loss Per Share
The term “adjusted net income (loss)” in this MD&A is not a
standardized financial measures 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 income
(loss) 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 income
(loss) calculation and per share amounts. Adjusted net income
(loss) is used by the Company to monitor its results from
operations for the period.
The following table reconciles net and comprehensive income
(loss) to adjusted net income (loss):
(Dollar figures expressed in thousands of
US Dollars)
Three months ended September
30, 2023
Three months ended September
30, 2022
Nine months ended September
30, 2023
Nine months ended September
30, 2022
Net income (loss)
$718
$(2,409)
$(9,409)
$75,757
Adjustment for non-continuing or non-cash
settled items:
Revaluation of carbon credit streaming and
royalty agreements
(1,792)
-
8,945
-
Revaluation of warrant liabilities
(1,230)
(2,918)
(6,451)
(89,078)
Revaluation of derivative liabilities
-
-
(686)
-
Revaluation of convertible note
(558)
-
(558)
-
Impairment loss
1,044
-
1,044
-
Corporate restructuring
119
-
1,754
-
Adjusted net loss
$(1,699)
$ (5,327)
$(5,361)
$ (13,321)
Earnings (loss) per share (Basic)
($/share)
$0.02
$(0.05)
$ (0.20)
$1.62
Earnings (loss) per share (Diluted)
($/share)
0.02
(0.05)
(0.20)
1.54
Adjusted net loss per share (Basic)
($/share)
(0.04)
(0.11)
(0.11)
(0.28)
Adjusted net loss per share (Diluted)
($/share)
(0.04)
(0.11)
(0.11)
(0.28)
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 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 timing of carbon credit sales and cash flows;
timing of milestone payments; 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: volatility in prices of carbon credits
and demand for carbon credits; change in social or political views
towards climate change 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, including the ability of the Company to source
appropriate opportunities and enter into stream, royalty or other
agreements; dependence upon key management; reputational risk;
general economic, market and business conditions and global
financial conditions, including fluctuations in interest rates,
foreign exchange rates and stock market volatility; uncertainties
and ongoing market developments surrounding the validation and
verification requirements of the voluntary and/or compliance
markets; 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; 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,
including the COVID-19 pandemic; and the other risks disclosed
under the heading “Risk Factors” and elsewhere in the Company’s
Annual Information Form dated as of March 28, 2023 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114547585/en/
ON BEHALF OF THE COMPANY: Justin Cochrane, President
& Chief Executive Officer Tel: 647.846.7765
info@carbonstreaming.com www.carbonstreaming.com
Investor Relations investors@carbonstreaming.com
Media media@carbonstreaming.com
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