Company is Uniquely Positioned with a Strong Cash Balance, Reduced Operating Costs, Diversified Investment Portfolio and Robust Sales Pipeline to Create Shareholder Value
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TORONTO — 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.
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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 heet, 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-IFS 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
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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”, includin 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 equivalentnumber 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 it 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.
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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, anincrease 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 deliver 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-yearperiod. 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.
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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 mnagement 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 envionment, 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.
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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 delivere under the Company’s carbon credit streaming agreements, and only incorporates revenue from the sale of purchased carbon credits.
