EverGen Infrastructure Corp. reported a nine per cent year-over-year decline in revenues, to $2.2 million, in Q2 2023 amid continued expansion at its renewable natural gas (RNG) facilities.
EverGen (EVGN-X) is an independent renewable energy producer which acquires, develops, builds, owns and operates a portfolio of RNG, waste-to-energy and related infrastructure projects.
The drop in revenue was primarily attributed to lower RNG production at its Fraser Valley biogas facility during the construction period of one of its expansion projects.
"Our recent achievements underpin EverGen’s successful transition into the execution phase of our core expansion projects,” Chase Edgelow, EverGen’s CEO, said in a statement.
“This, coupled with the substantial funding support we recently received for the Pacific Coast RNG project, validates our leadership and commitment to our stakeholders while furthering Canada’s energy transition goals.”
EverGen’s Q2 results
Vancouver-based EverGen owns and operates four facilities through its subsidiaries Pacific Coast Renewables Corp., Sea to Sky Soils and Composting Inc., Fraser Valley Biogas Ltd., and Grow the Energy Circle Ltd. (GrowTEC), in which it has 67 per cent ownership.
It holds a 50 per cent interest in Project Radius, which is a late-development-stage portfolio of three on-farm RNG projects in Ontario set to begin construction in 2024.
It is collectively capable of producing approximately 1.7 million gigajoules of RNG per year.
“We're extremely excited with the successful injection of RNG at our GrowTEC facility in Alberta, and as well as continuing to move forward with our Fraser Valley Biogas project (with) approximately $2.8 million of cap ex additions during the quarter,” Sean Hennessy, EverGen’s chief financial officer, said during a quarterly call with investors.
“In Q2 2023, a cash position of $9.5 million was bolstered through the drawdown of the previously announced debt facility, and those funds are being used partially to finance the Fraser Valley Biogas project.”
In June, the company received $10.5 million from Natural Resources Canada’s Clean Fuels Fund to support the addition of anaerobic digestion at its Pacific Coast Renewables facility, designed to produce approximately 185,000 gigajoules of RNG per year.
In Q2, the company produced 6,422 gigajoules of RNG and 920 megawatt-hours of electricity.
EverGen recorded a net loss of $0.9 million, up from $0.5 million in Q2 2022, mainly due to the recognition of $0.8 million of insurance proceeds from Q2 2022. This was partially offset by a decrease in direct operating costs and general and administrative expenses.
It also recorded an adjusted EBITDA of $0.4 million, which the company states is consistent with Q2 2022.
EverGen recently completed construction at its GrowTEC property and is about “halfway through” to ramping up production. Combined with Fraser Valley Biogas, where another expansion is underway, the facilities will increase built-out capacity to 240,000 gigajoules.
“With both of those two key projects under our belts, we're set to deliver $8 to $10 million of EBITDA from bought-and-paid-for assets,” Edgelow said during the call, “and that's really the crux of this exciting time for EverGen.”
EverGen’s future outlook
The company plans to reach 420,000 gigajoules in production capacity, which will be aided by Project Radius and its other planned expansions:
- The Fraser Valley Biogas’ expansion will double its production to approximately 160,000 gigajoules of RNG annually, with construction expected to be complete in September.
- GrowTEC expanded to 80,000 gigajoules of RNG capacity, with a second expansion planned to 140,000 gigajoules.
- An application has been submitted for Sea to Sky to expand capacity from 40,000 gigajoules to 60,000 gigajoules.
“I think really what we used Q2 to do was to set the stage for growth in the back half of this year,” Edgelow said.
The company's August 2023 Corporate Presentation, reports Canadian RNG market potential is about 1.3 billion gigajoules annually. It states EverGen’s pipeline of over 25 projects is approximately eight million gigajoules per year.
Edgelow said at any given time there are around “eight to 10” projects EverGen is pursuing.
They could be projects like Fraser Valley Biogas, an existing facility in need of optimization; greenfield projects like Radius where the company would likely bring in a co-investor; or assets held by other companies unable to pursue development.
“We're seeing a number of assets out there that are available to us and we've seen ample opportunity for additional growth outside of our existing portfolio,” Edgelow said. “So we will continue to evaluate those opportunities, look to do accretive transactions.”