Earnings call transcript: Bergen Carbon Solutions strengthens position amid market growth in Q1 2025

Bergen Carbon Solutions (BCS) revealed a significant reduction in its cash burn rate and maintained a strong cash position in its first quarter 2025 earnings call. The company, which focuses on innovative carbon products, reported progress in operational efficiency and product development. Although specific earnings per share (EPS) and revenue figures were not disclosed, the company highlighted key advancements in its technology and market positioning. Following the earnings call, BCS shares rose by 5.43%, reflecting investor confidence in the company’s strategic direction and market potential. According to InvestingPro data, the company maintains a "GOOD" overall financial health score of 2.86 out of 5, with particularly strong momentum metrics.

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Key Takeaways

• Bergen Carbon Solutions reduced its yearly cash burn rate by 53%.
• The company holds a solid cash position of NOK 160 million with zero debt.
• BCS is enhancing its product lineup with four carbon products and advancing its battery technology.
• The global electric vehicle market’s growth offers significant opportunities for BCS.
• The company’s stock rose by 5.43% post-earnings call.

Company Performance

Bergen Carbon Solutions has demonstrated resilience and strategic foresight in the first quarter of 2025. By reducing its cash burn rate and maintaining a strong cash position, the company has positioned itself well for future growth. The focus on developing carbon products such as Carbon Nanotubes (CNT), Carbon Black, Graphene, and Graphite aligns with the increasing demand for sustainable materials in the burgeoning electric vehicle market. BCS’s emphasis on reducing dependency on external testing and enhancing in-house capabilities further strengthens its competitive edge.

Financial Highlights

• Cash burn rate reduced by 53% to NOK 9.7 million.
• Maintained a strong cash position of NOK 160 million.
• Zero debt and satisfactory equity position.
• Increased testing efficiency and doubled battery coin cell production.

Market Reaction

Following the earnings call, Bergen Carbon Solutions’ stock price increased by 5.43%, closing at 3.88. This movement reflects positive investor sentiment, driven by the company’s strategic advancements and potential in the growing electric vehicle market. The stock is trading closer to its 52-week high of 8.34, indicating strong market confidence. InvestingPro data shows the stock has delivered impressive returns, with a 56.39% gain over the past year, though technical indicators suggest the stock may be entering overbought territory.

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Outlook & Guidance

Looking ahead, Bergen Carbon Solutions remains focused on technology development and commercialization. The company is exploring various strategies, including technology licensing, partnerships, joint ventures, and potential own production. Ongoing discussions with European and Asian battery companies and CO2 emitters suggest potential avenues for growth and collaboration. InvestingPro analysts anticipate sales growth in the current year, though profitability remains a key challenge. The company’s revenue has shown a steady 4% CAGR over the past five years, indicating consistent market expansion.

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Executive Commentary

CEO Odd Serumssnes emphasized the company’s strategic focus, stating, "We are a technology development company, not a research organization." He also noted the rising demand for carbon materials, adding, "We believe carbon will increase in price. And this is good news for all CCUS companies." The importance of their battery lab was highlighted with, "Our battery lab has proved to be very important and probably more important than we were envisaging."

Risks and Challenges

• Meeting all CNT specifications remains a challenge.
• The company must navigate the competitive landscape of the carbon materials market.
• Dependence on successful commercialization strategies poses potential risks.
• Market volatility and macroeconomic pressures could impact growth prospects.

Q&A

During the Q&A session, analysts inquired about the company’s ability to meet CNT specifications and its focus on battery application performance. The management reiterated its commitment to exploring multiple commercialization strategies and noted stable interest from potential partners. Potential future revenue from carbon credits was also discussed, highlighting an additional revenue stream.

Bergen Carbon Solutions continues to make strides in its strategic objectives, with a clear focus on innovation and market expansion. The company’s advancements in carbon technology and strong market positioning suggest promising growth prospects in the evolving electric vehicle market.

Full transcript - Bergen Carbon Solutions AS (BCS) Q1 2025:

Odd Serumssnes, CEO, Bergen Carbon Solutions: Good morning, and welcome to Bergen Carbon Solutions presentation I will present the latest status of the company and our recent progress to our, what we call it, cutting edge CCU technology development. I’m Odd Serumssnes, and I’m CEO of the company. The agenda is as follows: introduction and, for some, I would say, repetition of the main principles of our equity story I will go through the highlights of the last quarter, status of our technology development, summarizing the presentation and ending up with Q and A. As one of very few true CCU companies, BCS continues to offer an attractive value proposition based on local development of sustainable carbon.

And this carbon is a key component in almost all batteries, which today is produced with a massive greenhouse gas footprint, and most of it is produced in China. Through our CO2 consuming electrolysis technology, we developed a carbon powder, such as carbon nanotubes, synthetic graphite, graphene and carbon black. All these carbon allotropes we produce are critical for various battery chemistries. As a technology development company, our current business focus presented here today is obviously very technical. We are adapting a process window in order to be able to produce a consistent and, what we say, a well defined carbon powder.

Documenting precise repeatability of the process window is very, very important for us in order to take the next step going forward. And again, electrification through the global growth in the battery market is indeed a megatrend, and megatrends are always important to watch. Never take your eyes away from that. In five years from now, 50% of all new cars sold are electrical vehicles on a global scale. In Europe alone, it’s 70%, and in China, Ninety Percent.

So the world’s massive electrification transformation needs more batteries, hence, the global battery demand will significantly increase. And the main growth is expected to happen as a consequence of lower prices and higher battery quality. And in 2025, we have just started to see the effect of the increased battery market. This growth will take place regardless of the geopolitical uncertainty we now see. And the growth will also be based upon increased focus going forward on developing sustainable and locally produced carbon and carbon material as the dependencies towards Chinese supply of critical raw material is considered by many for being too high.

And I would say Norway has good fundamentals for production of critical battery components based upon their long term material technology know how and process experience from other industries. And the fundamentals for our process is simple and based on exactly that, splitting CO2 into oxygen and carbon through an electrolysis process, emitting the oxygen and harvesting the carbon on the cathode side of the process. And we do this by consuming CO2 and with a reduced power consumption compared to other unconventional fossil based carbon production. It sounds simple, but it’s difficult. As the global trend evolves towards lower priced, higher performance batteries, the demand for specialized nanostructured additives are expected to increase substantially.

And here we have an example. You do estimate that the Tesla Model three and Y alone will need roughly six kilos of conductive additives for each battery. And Tesla produced almost 1,700,000 of these models last year, meaning that the estimated need for carbon nanotubes only for these models will be close to 10,000 tonnes. And the good news is that as new and more effective battery chemistries are evolving, so is the demand for advanced conductive materials like CNT, meaning that if Tesla is changing their battery chemistries from today’s LFP or NMC chemistries to a future battery chemistry like lithium sulfur, the amount of CNT needed will double to roughly 20,000 tonnes. And if you apply this equation to the global supply of electrical vehicles of 1,700,000, the total CNT demand will be in the order of 100,000 to 200,000 tonnes.

So in many ways, we can summarize by stating that the more advanced the CNT based additives, which is allowing the producers to make cheaper and higher performance batteries. So the competitive materials we are producing is essential for the development of the new battery chemistries. I have said it before, and I will repeat it. Our technology is indeed novel. It’s sustainable and offers a local alternative to the CNT production taking place other places of the world, which is being produced with large emissions.

And the electricity consumption is a fraction of existing production methods. And in a scaled production, implementing our new process steps, we believe we can’t compete on cost. In a geopolitical context, BCS basically ticks all the boxes in a world where the price for CO2 emissions will probably increase. And as we have seen recently, governmental protective incentives for sustainable and local production will be formed to stimulate industries like ours. I would say, following the turmoil from the last one hundred days, we have witnessed how fast the geopolitics are changing.

All these potential restrictions to free trade will further emphasize restrictions to free trade will further emphasize the importance of securing local supply chains. And in this complex geopolitical landscape, we strongly believe that our equity story is increasingly attractive, as our ability to produce critical raw material locally is becoming more and more important. We have already proved our ability to produce valuable carbon directly from flue gas during our Enova funded project a couple of years back. And I would say this is indeed a true full scale CCU project and shows there are alternatives to more typical CCS project, where the need for costly infrastructure and long distance transportation of CO2 is eliminated. Then going through the main points from last quarter.

I can report an overall positive development during Q1 in four bullets. We have developed a significantly faster technology development speed, I will say, due to efficient, stable and parallel electrolysis runs. We are now doing full in house characterization and testing for both carbon materials and battery chemistries. And the performance testing ongoing for the time being is for two battery chemistries, LFP and lithium sulfur, both with VCS carbon nano structures. Results continues to be promising.

And this ongoing C and T testing is done in cooperation with global battery manufacturers. And as we touched upon last quarter, we have reduced our cash burn rate considerably, and we are now able to report a 53% reduction from Q1 in 2024. And I would say that our financial numbers confirms solidly that we continue to have the finances in place to execute on our strategic plan. A 53% reduced yearly cash burn rate in one year gives now a cash burn this quarter of less than NOK 10,000,000 of NOK 9,700,000.0. And we still have a solid cash position, NOK 160,000,000, still zero debts and a satisfactory equity position.

Then I’m going over to the status of our technology development. To commercialize new technology, producing a new version of a well known product with a fundamental new process is not only complex, it’s also a time consuming exercise. And we obviously aim to become directly competitive on price and quality towards the fossil alternatives out there already dominating the market. And we are bringing in new product into an existing market, a market where the battery manufacturers are not only busy competing on bringing the best performance batteries to the market, but also to complete their CapEx investments in order to increase their ongoing production capacity. In this demanding macro landscape, we have to clearly demonstrate a minimum entry level by documenting actual performance testing of our materials in real life battery applications in our battery lab.

And as you know, there is a certain link between a high technology entry barrier, as we’re seeing in this market, and the difficulty for others to copy it. So for us, it’s still all about further developing our technology defined, as you know, into three stages: transforming the CO2 into solid carbon through our electrolysis process. This is the first step. Achieve a stable and well defined technology platform by optimizing our input parameters. The second step is the post electrolysis phase, where we are separating and filtering out the carbon as well as cleaning off the electrolyte, enabling us to recycle it.

This is a very important part of our OpEx picture. So the more we’re able to reuse of the electrolyte, the better OpEx situation we have. And the third step is characterizations and further testing our carbon product into different battery chemistries in order to verify the performance and benchmark it to other product. In this first step, and most important step, the electrolysis phase. And for this equipment, it’s all about operability, size and speed.

And the smaller volume we test in, which we now do, the faster we get the results and the cheaper our testing process is. So during 2024, we have been investing into new testing equipment, and we now have four different sized cells from small 0.2 liter volume cells to 100 liter volume cells, Same principle function, but for slightly different purposes. And as a consequence of our new testing equipment, and also as a result of our very effective organization, we are now able to harvest 15 test runs per week. This means three batches of test results per day, and this is already 3x the testing efficiency as we had for only six months ago. And from this increasing in testing performance, we now do great leaps in our technology progress, great leaps.

And we expect that this equipment setup is sufficient for us to conclude on our technology platform development going forward. And as such, we do not expect any further major investments for equipment. The second step is a separation step, where we are separating the carbon material from the electrolyte and rinses and recycling it. And we have already developed a method for 95% or more electrolyte recycling, as I said, cutting costs and increasing competitiveness. And what we now see is that the output of this electrolyte cleaning is actually documenting a better quality than virgin electrolyte.

And we have a patent filed and is pending with a European intention to grant expected to be received in 2025. Despite being a fairly small company, the technical complexity of what we do is rather advanced. We aim to reduce the testing result feedback loop as much as possible in order to gain faster development progress. And we are, therefore, very well equipped, as you can see it from this slide. This is an overview of all the test and characterization equipment we now have.

And we are categorizing our characterization labs into two groups: the carbon powder laboratory and the process characterization laboratory, where all this equipment brings valuable feedback in terms of particle structure, size and composition of our powder, as well as bringing process related feedback in terms of gas content and composition of the electrolyte. These are all key characterization equipment in order for us to learn, understand, develop and evolve our process forward towards the commercialization. We have previously reported that our battery lab has produced over 100 coin cells, and that number is now more than doubled. So we have great progress in our battery testing. Initial focus has been on lithium sulfur batteries, but now the focus has shifted to LFP batteries.

So we are now testing carbon materials with global LFP and lithium sulfur battery manufacturers. That’s interesting. Application testing is done based on this chemistry received from the battery manufacturers, and we’re adding our carbon material to it. And we are seeing promising results this quarter from both the chemistries, both the LFP, lithium iron phosphate, and the lithium sulfur battery chemistries. So it’s getting more and more clear for us that our battery lab is an important showroom for our innovation and our ability to develop a faster route to the market.

So in order to summarize the results of the last quarter, I would say the technology development progressed well during the quarter with 3x more testing efficiency. We have stable operations and improved process understanding. We strengthened our internal capabilities. We’re now performing full in house testing, both for raw materials and for battery laboratory, which really reduces our dependencies on external environments. And the progress in the battery applications in both the chemistries I mentioned is good.

And we are doing now ongoing CNT tests in corporations with other global battery manufacturers. We have finances in place. We have good cost disciplines, reduced the burn rate considerably, and we’re maintaining that going forward. And strategic direction is continued to be focused on technology development, product customization and securing technology agreements with industrial players going forward. And I’m ending this presentation by the recent award to Bergen Carbon Solutions of Speciale Prisen issued from Norsk Industries and Siemens, where we are declared as being Nordgis’ smartest industry with drift.

That’s a great honor, great achievement. So that ends my presentation, and we’re now going over to questions and answers. Thank you.

Moderator/Analyst: Okay. Some of the first questions we have received is about the product and the commercialization of the technology. So what is the achieved number of square meters per gram with stable quality of the product?

Odd Serumssnes, CEO, Bergen Carbon Solutions: Okay. I have a pretty long answer to this. But I mean, surface area per gram, that is only one of the several CNT specifications we have received from the market. And for some of these requirements, we are closer than others. As previously informed, I would say, for this particular requirement, we are not there yet, even though we have done some good progress.

However, it is important to reiterate the point that we are really running a novel technology, and it’s not been applied ever before at this scale before. And as such, and this is something we are learning more and more, we are making a CNT with different characteristics and different properties than the conventional fossil based CNT out there. And this is quite new learning, I would say. And another point, when we now are testing it in concrete battery applications, the performance shows good results. So in sum, I would say we are less focused on the strict CNT specifications, but we are more focusing now on verifying the impact of our CNT in real life battery application testings for several chemistries.

So if the performance is good as it looks and it meets the requirement of a local and green carbon, and of course, at the right cost, We believe we have an interesting business case, disregarding meeting the specs or not. So if we continue that route, we will probably introduce a new product specification if we continue to see such good performance.

Moderator/Analyst: In what year does BCX expect to commercialize the products they have been researching

Odd Serumssnes, CEO, Bergen Carbon Solutions: for multiple

Moderator/Analyst: years now or will remain in the R and D phase for the foreseeable future?

Odd Serumssnes, CEO, Bergen Carbon Solutions: We don’t like that research terminology. We are a technology development company. We are not a research organization. And I believe I said this a few times, and I reiterated, we are a technology development company. We are not a research company.

We are not a production company. So what we do, again, has never been done before. And then we have reached a sufficiently mature enough process and a more stable product, there are several alternatives to commercialize our strategy directions. That could be in terms of technology licensing, it can be in terms of partnerships, joint ventures with industrial players, or it can be our own production. I will not give a time estimate today for when we have this in place.

It’s all a consequence of our technology development speed, which is good, and how early we are able to mature.

Moderator/Analyst: Okay. Does PCS consider itself as one of the forwarding or innovative players in this industry?

Patas Minstali, Analyst, Nona Securities: Yes.

Moderator/Analyst: Which partners are you currently working with in hopes of reaching long term agreements?

Odd Serumssnes, CEO, Bergen Carbon Solutions: I mean, obviously, we cannot name officially companies older than the ones we have announced. But again, we are in dialogue with several companies, both European and Asian, both battery companies, which have focused on the product and the need of a green and locally produced raw material as well as another category of potential partners, which are the large CO2 emitters. They’re more interested to get rid of their large CO2 volumes than actually the product. So that’s two different categorized clients. But I would say that our ideal partner is industrial within the battery space, with a keen interest not just in the product, but also the technology and the methodology we are working in accordance to.

Moderator/Analyst: I guess the next question is based upon our recent award with Specialpresent. How and what how is BCS cooperating with Siemens?

Odd Serumssnes, CEO, Bergen Carbon Solutions: I mean, I I I’m sure you’re right. This is linked to Specialpresent. I mean, we have not announced anything regarding towards Siemens. So I wouldn’t comment specifically on that.

Moderator/Analyst: Okay. We have also received some questions with regards to the financial goals. I think they are handled during the presentation. On operations, what is your current product capacity and utilization rate at the facilities at Versailles? Can you provide an update on that?

Odd Serumssnes, CEO, Bergen Carbon Solutions: Yes. I know this was important for a few years ago. I mean, again, we are back to development, technology development company status. We don’t have focusing on production volumes today. We are producing much less than what we could do.

We are focusing on small volumes, high quality C and T, and this is something we will do for some time going forward. And we don’t spend time or at least not much time on expansions or factory designs, etcetera, going forward. This is something which will come when we are ready.

Moderator/Analyst: What new contractual commitments like binding offtake agreements or a letter of intent have you secured this quarter, particularly within the battery and automotive industry?

Odd Serumssnes, CEO, Bergen Carbon Solutions: I mean, what we are securing of contracts, MOUs, LOIs or whatever, we are announcing. So I say haven’t announced anything. There’s nothing new in this field. But again, I can confirm we have interesting discussions with several companies.

Moderator/Analyst: Are there any new carbon based products under development with commercial potential within the upcoming years?

Odd Serumssnes, CEO, Bergen Carbon Solutions: I think they are more we have enough on our plate as it is actually. I would say that we have four principally different carbon products we are developing: CNT, Carbon Black, Graphene and Graphite.

Moderator/Analyst: Then we have a couple of questions related to financing and ESG regulations. Number one, do you foresee the need for additional equity or debt financing in the near future?

Odd Serumssnes, CEO, Bergen Carbon Solutions: I mean, as we are rigged today, we are well financed, as we have touched upon. And we believe that it’s okay for executing our current strategy. I guess that’s what I want to say around that.

Moderator/Analyst: Okay. With regards to ESG and regulations, will BCS be able to generate revenue from selling, let’s say, carbon credits or participation in EU ETC? I mean, do you see that?

Odd Serumssnes, CEO, Bergen Carbon Solutions: Yes. I mean, this is a big question. We believe carbon will increase in price. And this is good news for all CCUS companies. More expensive it is to consume CO2 and emit it, the better it is for the competition level for CCUS companies.

And we are such a company. So

Moderator/Analyst: And the last question prerecorded is, is the beer container still operational?

Odd Serumssnes, CEO, Bergen Carbon Solutions: The beer container was used as the Innova CCU project I touched upon. This is a couple of years back. I mean the equipment there is dismantled, and we are using that for different purposes. So that kit has not been maintained as it was.

Moderator/Analyst: Okay. Thank you. With us today, we have Patas Minstali from Nona Securities. I think you also have some questions, Patas.

Patas Minstali, Analyst, Nona Securities: Yes. Thank you. Thanks for a great presentation, Anna. It’s exciting to follow you. Did I understand you correctly that you have actually doubled the production of the COIN batteries?

Odd Serumssnes, CEO, Bergen Carbon Solutions: More than doubled. Yeah.

Patas Minstali, Analyst, Nona Securities: More than doubled. And this will probably continue? Yes. So your sort of production speed and testing speed has increased quite a lot.

Odd Serumssnes, CEO, Bergen Carbon Solutions: Yes. So even though we have reduced head count in NOAs, we are looking for resources into that particular field as well. So we will strengthen that part of the organization. So I would say that, our battery lab has proved to be very important and probably more important than we were envisaging.

Patas Minstali, Analyst, Nona Securities: I see. And more important than maybe the testing with your partners then. Yeah. Yeah. But the fact that altogether now?

Odd Serumssnes, CEO, Bergen Carbon Solutions: Partners? Four partners? It’s three, actually.

Patas Minstali, Analyst, Nona Securities: Three? Mhmm. Yeah. Yeah. Well, this will probably, increase the the data amount

Odd Serumssnes, CEO, Bergen Carbon Solutions: Yeah.

Patas Minstali, Analyst, Nona Securities: To a huge extent and probably under so you will be able to have quite a big advancement then quarter by quarter.

Odd Serumssnes, CEO, Bergen Carbon Solutions: So as I said, we are harvesting more than three times results per day now than what we just did for a few months ago. So we have really increased our output.

Patas Minstali, Analyst, Nona Securities: I see. So and how do you sort of picture yourself in the future? What’s the most likely outcome? Will you outlicense, or do you think you will be acquired by a big industrial player? Or do you think that p the maybe the p industry will be interested?

And do you have discussions with all those parties?

Odd Serumssnes, CEO, Bergen Carbon Solutions: No. We have mostly, we have discussions with we have discussions with a lot of different environments. I would say that we are focusing on being best in class of what we do and making attractive technology for an attractive product, which is needed. And I think from there on, there can be many routes, I would say. But I as I said, I think the most interesting environments we talk to are the ones which are appreciating the technology we’re developing, not just the product.

The fact that this is a very interesting route to developing lot of carbon materials, which the world needs.

Patas Minstali, Analyst, Nona Securities: Are you seeing an increase in the interest from non Chinese

Odd Serumssnes, CEO, Bergen Carbon Solutions: That’s pretty stable. Players? Pretty stable, actually.

Patas Minstali, Analyst, Nona Securities: And no no nothing has happened

Odd Serumssnes, CEO, Bergen Carbon Solutions: No. Haven’t seen any change. But of course, there has been a period now where European battery industry has been struggling. And they have more on their plate in terms of expansion, ramping up, etcetera, etcetera. So if I could say something, maybe we have seen higher interests or the European interest has been replaced by more Asian companies,

Patas Minstali, Analyst, Nona Securities: I would say. That’s it for myself. Thank you.

Moderator/Analyst: Okay. Then that concludes the Q and A.

Odd Serumssnes, CEO, Bergen Carbon Solutions: Okay. Thanks for attending, and have a good day.

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