Cielo Waste Solutions (CMC) Q4 2024 earnings summary

Executive summary

• Cielo Waste Solutions remains in pre-revenue, R&D stage, focusing on commercializing waste-to-fuel technology and recently acquired exclusive Canadian rights to Enhanced Biomass to Liquids (EBTL) and Biomass Gas to Liquids (BGTL) technologies from Expander Energy.

• The company reported a net loss of $12.3 million for the year ended April 30, 2024, a significant improvement from the $36.2 million loss in 2023, mainly due to lower impairment and financing costs.

• Working capital deficit improved to $8.2 million from $12.4 million year-over-year, but material uncertainty remains regarding the company's ability to continue as a going concern.

• Major milestones include the planned Carseland Facility, a $300 million project with phased development, and a binding LOI to acquire Rocky Mountain Clean Fuels' assets for $125 million, aiming to accelerate commercialization.

• The company discontinued the Dunmore Facility project to focus resources on Carseland.

Financial highlights

• Net loss for FY2024 was $12.3 million, down from $36.2 million in FY2023, driven by a $21 million reduction in impairment expense and lower financing, G&A, and R&D costs.

• Total assets increased to $54.9 million from $29.4 million, mainly due to the $42.3 million technology acquisition.

• Total liabilities rose slightly to $13.7 million from $14.6 million, with new loans and convertible debentures offset by debt repayments from asset sales.

• Cash used in operations was $4.2 million; cash used in investing was $1.5 million; cash provided by financing was $4.9 million.

• No revenue from commercial operations; rental income decreased to $0.2 million due to asset sales.

Outlook and guidance

• Focus is on completing the Carseland Facility, with Phase I construction expected to start in late 2024 and commissioning in 2026, subject to financing and FID.

• The RM Asset Acquisition, if closed in September 2024, will provide near-term revenue potential and access to a government grant of up to $20.8 million.

• Cielo must secure significant additional financing for both corporate and project-level needs; options include equity, debt, and strategic partnerships.

• The company expects continued negative cash flow during development and does not anticipate paying dividends in the foreseeable future.