Welcome to the EverGen Infrastructure second quarter 2024 earnings results presentation. During the presentation, all participants will be in a listen-only mode. Participants can submit questions via the Q&A box at the bottom of the screen, which will be answered following the presentation. As a reminder, this call is being recorded. Before we begin, I would like to direct all participants to our website at www.evergeninfra.com, where you will find a copy of the second quarter twenty twenty-four earnings presentation. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from results projected by those forward-looking statements. Additional information concerning factors that could cause actual results to materially differ is contained in the second quarter of twenty twenty-four Management Discussion and Analysis.
I will now turn the call over to Mischa Zajtmann, EverGen Infrastructure's President and Chief Executive Officer, to begin.
Thanks a lot, and thanks, everyone, for joining us today for what was another successful quarter for EverGen, as we delivered on some major milestones and continued to achieve significant revenue and EBITDA growth on a quarter-over-quarter basis. I'm really proud of our team as we complete the ramp-up of Fraser Valley Biogas and are delivering on additional upsides across our platform. With that, I'll pass it over to our CFO, Sean Hennessy, to go into some more detail on our Q2 financial results.
Thanks for that, Mischa, and welcome everyone to the Q2 2024 earnings call. So Q2 2024 continued from the momentum that we built in Q1, and again, as a result of the completion of the Fraser Valley Biogas RNG expansion in December and the commencement of RNG production at GrowTec in Q3 2023, as well as during this quarter, there were higher tipping fees from increased organic waste volumes at our Regina facility and improved pricing at our Pacific Coast Renewables facility. Our revenues increased 96% compared to Q2 2023. During the same period, our direct operating costs, after adjusting for depreciation, increased by 75%, which was about 10% higher than expected, and this was mainly driven by the timing of certain repairs and maintenance at the facilities.
As a result, our Adjusted EBITDA increased to CAD 1.1 million for Q2 2024, up from CAD 382,000 last year. Our net loss for Q2 2024 remained relatively consistent with the prior year, as the improved EBITDA was offset by an increase in depreciation and finance costs, both related to the completion of the Fraser Valley Biogas RNG expansion, as well as engineering-related overheads, as the project team from Fraser Valley Biogas temporarily transitioned into operations before deployment onto other projects. During Q2 2024, our working capital position returned to a surplus as we identified additional non-core assets available for sale. To summarize, Q2 was another strong quarter for EverGen, where a number of records were broken, including revenues, Adjusted EBITDA, Fraser Valley Biogas RNG production, consolidated RNG production, and incoming feedstock, incoming organic feedstock volumes.
This was all during a period where Fraser Valley Biogas is still ramping up to its nameplate capacity, and we were unsuccessful in monetizing carbon credits generated from as early as Q4 2023 due to regulatory delays. These will both serve as catalysts in future quarters as we continue to expect to drive revenues and earnings growth. I'll now hand it back to Mischa.
Thanks a lot. Thanks a lot, Sean. So with these results, we're really showing what the platform looks like as we bring our projects online and then ramp them up, and in Q2, we were really focused and successful in de-risking the Fraser Valley Biogas project. Going from first gas at the end of 2023 to record production in June shows just how far we've advanced. We also executed the 20-year Fraser Valley or Fortis offtake at Fraser Valley, along with significant long-term feedstock arrangements, really turning the Fraser Valley Biogas project into an infrastructure or an infratized infrastructure facility.
So with this significant de-risking of Fraser Valley, our development team is now focused on achieving the same model at our other core projects, most notably, getting to FID at Pacific Coast Renewables, GrowTec Phase Two, and Project Radius in Ontario. As September is just around the corner and with several significant milestones at our core projects ahead, we really expect it to be a big couple of months and an eventful end to the year with lots of news flow, and we've got our team really focused on delivering on these key milestones here at our development projects. Starting with PCR, where we've made a lot of progress.
PCR being Pacific Coast Renewables, where we made a lot of progress both on the engineering and permitting side, and continue to target FID by the end of Q3. As a reminder, we have CAD 10 million in grant funding secured from NRCan, as well as CAD 15 million in project finance from Roynat and EDC, where we consider this project to be fully funded as we complete our engineering and move towards cost certainty. So we can expect an update on that project by the end of Q3. Moving to GrowTec phase two, we're obviously continuing to advance that, the development of that project as well, and awaiting word on the approval of the Agricultural Clean Technology grant, which will essentially underwrite the expansion of the upgrading capacity at site.
Really, it's just a doubling of the throughput capacity with at the upgrader at our site there in Lethbridge, Alberta. We're also anticipating being in a position to announce FID by the end of Q3 at GrowTec as well. At Project Radius, we're still in the final stages of our financing process, which has gotten slightly delayed with the onset of summer, as well as some changes in the financing structure, which once executed, will ultimately be favorable and be on more favorable terms to the project and to EverGen. We're now targeting a mid Q4 FID as we look to wrap up the process.
So clearly, there are a lot of significant near-term milestones for us to achieve as we head towards the end of the year, and I'm really optimistic as our team remains completely focused on core project delivery. Along with all these positive catalysts, we expect to continue to deliver these positive financial results as FID or as Fraser Valley Biogas continues to move towards nameplate capacity. So with that, I'll turn it back over for Q&A.
All right. We have a couple of questions here in the chat. The first one: Can you provide an update and the expected timing for FID on GrowTec Phase Two and Project Radius?
Yeah. So as I mentioned, GrowTec Phase Two is, we're still targeting Q3 on that, and really, it's just a function of hearing back on the, on the ACT, the agricultural grant there. So once we hear back on that, we'll or which we anticipate, we'll get positive news on that. That will essentially get that expansion fully funded, put us in a position to announce FID by the end of Q3. And similarly, I think on Project Radius, I covered the sort of the some of the delays we've encountered there, but we still expect to be on track for FID in early to mid Q4 there.
For Q3, 2024, do you expect Fraser Valley Biogas and GrowTec's RNG production to be near or at nameplate levels?
Let's start with Fraser Valley Biogas. So for Fraser Valley, yeah, that's essentially what we're headed towards. When we announced record production, that was about 12,000 gigajoules for the month of June. And so, you know, we're still somewhat below full nameplate capacity at 160,000 gigajoules on an annualized basis. So, you know, there remains upside at the Fraser Valley Biogas facility, which allows us to continue to show that revenue growth on a quarter-over-quarter basis. We've now got the feedstock secured and worked through some of the operational kinks. By the end of Q3, the...
What we're targeting is to sort of exit Q3 on a run rate basis at something near nameplate capacity there.
Can you provide expectations for Fraser Valley Biogas, and total RNG gigajoules over the next two quarters?
Yeah, and I mean, as I mentioned, we're targeting and exiting Q3 at nameplate capacity there. And what we'd really like to deliver on is to be able to exit the year at something exceeding nameplate capacity. On a daily basis, the facility can produce or has produced over 550 gigajoules a day, which annualized is, you know, something approaching 200,000 gigajoules a year. So we think the facility itself is capable of delivering up to 200,000 gigajoules a year, so there's some upside there. And so we'd like to essentially exit the year on a run rate basis at something in excess of nameplate capacity.
When is the sale of the land owned at Fraser Valley Biogas expected to be sold, and what are the anticipated net proceeds?
So we're working with a couple of potential buyers for the land. Realistically, it's probably a thirty to sixty day process, and it's just about sort of monetizing an asset that right now we don't really derive any value from the land. We wanna focus on operations, and we don't really consider ourselves as real estate players. So we would anticipate being able to complete that sale in the next thirty to sixty days.
And in terms of value, you know, something close to what the appraised value is on, you know, on the balance sheet, in the sort of- let's call it something in the CAD 2.5-CAD 3 million range.
Can you discuss any type of seasonality we should expect in Q3 in regards to RNG and pipeline constraints?
So, yeah, that's an interesting question because, you know, really, when we incur pipeline constraints, it's generally in the summer months, so at Fraser Valley Biogas, we really, you know, when we were encountering our record production, or we were delivering our record production, we weren't really constrained at all in terms of Fortis's capacity to accept the gas, so we didn't really encounter any pipeline constraints in the summer months. GrowTec is a bit more constrained, and we've been working with ATCO to free up some additional capacity there, and again, in the summer months this year we've largely resolved those pipeline constraints for phase one and are working to resolve them for a future phase two.
Can you provide latest expectations on Prairie Sky Organics?
Yeah. So we're continuing to operate at the landfill site at the City of Regina. Prairie Sky Organics is, as a refresher, our Regina project, where we currently process all the organic waste from the City of Regina. We've identified a site adjacent to the landfill, so we can take advantage of all the synergies, the scale, a lot of the infrastructure that the landfill offers. And are anticipating building out the new site for spring of next year.
Can you provide an update on when you expect to receive the final permits for PCR?
Yeah, so we don't have exact timing on when we'll receive final permits. What I can say is we've essentially gotten positive feedback from all three permitting bodies associated with the PCR permits. So the Minister of Environment, the MOE, has essentially kind of given us the go-ahead on a verbal basis for the project, on in that, you know, the site is now environmentally compliant from a leachate and water discharge perspective. With the blessing of the MOE, we know we've got the support of the city. So essentially, you take that MOE positive feedback, and we've taken it, and, you know, it's essentially alleviated any concerns that the city previously had.
So we know we've got strong city support there, and ultimately, once you get your city support and your MOE support, it's a matter of getting it through the ALC. So I think we've eliminated the binary risk associated with the permitting and are now in a position to sort of accelerate the timing. So we anticipate being able to wrap up all the permitting in the next twelve months, but that doesn't impact our ability to... Given that it's not a binary risk, and that we've sort of gotten positive feedback from all three of the permitting bodies, we anticipate being able to deliver FID in Q3 and not having that impact that FID.
That concludes our question and answer period.
So with that, just closing out, I just wanted to thank everyone for the continued support. We wanna continue to you know, deliver positive results, or we're going to continue to deliver positive results on a quarter-over-quarter basis, essentially, as we exit each quarter on a run rate basis, wanting to, you know, significantly beat what we exited the last quarter at. And so we just wanna sincerely thank everyone for their support along the way, and we're, you know, we feel like we've really turned a corner and can continue to deliver positive results on a go-forward basis. So thanks, everyone.