Investing.com
Published May 13, 2025 09:51AM ET
Co2 Capsol AS, with a market capitalization of 60.34 million USD, reported a strong revenue increase for the first quarter of 2025, reaching 24.9 million Norwegian kroner, marking a 28% rise year-over-year. Despite this growth, the company faced a pre-tax loss of 16.1 million Norwegian kroner. The stock price reacted negatively, falling by 2% to 9.8 NOK after the earnings announcement. This decline comes as the company reported higher operating expenses and a decrease in cash reserves. According to InvestingPro , where you'll find expert research reports and detailed financial metrics that can help inform your investment decisions.
Jakob, SVP Investments and Strategy, CapSol Technologies: Good day, everyone, and welcome to CapSol Technologies investor update for q one twenty twenty five. My name is Jakob and since the May, I've been part of the team at Capsule Technologies as SVP investments and strategy. Over the last decade, I've held several positions in finance, most recently as head of investor relations at a formerly publicly listed technology company. At Capsol, I am excited to contribute to scaling the business and unlocking its potential while connecting with investors. I am joined today by our CEO, Wendy Lam, and our CFO, Ingeberg.
Wendy will start off by taking us through our q one highlights and an operational review. Ingeberg will then take us through the financials, and Wendy will conclude with some closing remarks. Please note that this presentation is being recorded and will be published on our website after the presentation. We will be taking questions at the end of the presentation, and you can type in your questions anytime during the presentation. I now hand the word over to you, Wendy.
Wendy Lam, CEO, CapSol Technologies: Good day, everyone, and welcome to our q one twenty twenty five update. And thank you, Jakob, for kicking us off. We are excited to have you on the Capsule growth journey. In q one, we reached a defining moment, not just for Capsule, but for the carbon capture industry as Stockholm Exergy made the final call to move forward with the world's first large scale post combustion BEX project using our technology. This breakthrough validates our cost and energy efficient solution while also showing that carbon capture projects with Capsule's technology can be bankable.
In other areas, we are also making progress. This is a picture of one of our CapsuleGo demonstration units in action at Mala Anagi, a biomass plant in Sweden. We just completed this campaign successfully with our partner Sumitomo Foster Wheeler. We're also very proud to have successfully completed our first campaign in the cement sector with Schwenk, and we've already started deploying the next campaigns for Schwenk and Wholesome. In addition, we have signed an LOI and are negotiating the final contract for the next Capsago campaigns.
The results of the Stockholm Exergy milestone and our work in the field is that we are seeing accelerated commercial traction, including in The US with BECCS and gas turbines. Now let me summarize again who Capsol is. We are one of the very few publicly listed carbon capture technology companies in the world. We offer licensing of carbon capture technology with inherent heat recovery and generation in one system. Our system is all electric, easy to implement without need for additional steam, and uses HPC, hot potassium carbonate, a safe and environmentally friendly solvent.
All of this enables capture costs that can be 20 to 60% lower than solutions using amines. This is driven by some of the lowest energy consumption numbers in the industry for systems at this scale. As mentioned, we have continued our mobile demonstrations at our customers, capturing c o two from live industrial plants. We now have just over just under nineteen thousand hours of demonstration experience and on our ninth campaign. We have the most experience in the world using HPC for post combustion carbon capture on industrial flue gases, and we are expanding the industries we serve.
Our main focus has been on BECS or bioenergy with carbon capture and storage, energy from waste, cement, and gas turbines. Refineries and pulp and paper are examples of other industries we are seeing growing interest in amongst others. We are remaining focused with a team in Germany, Norway, and North America. However, we do see growing interest from other regions. Now on to q one highlights.
We have closed the quarter with some exciting developments. First, we continue to show strong pipeline growth and momentum across industries. What is most exciting is that Stockholm Exergy is moving ahead with Capsule's technology. Year on year, we had 28% revenue growth and over 70% mature pipeline growth to over 22,000,000 tons of annual c o two capture capacity. Commercial traction continues across a variety of segments in Europe and in The US.
Second, as we develop the business, we are also seeing significant EBITDA potential in 2026 and beyond. Our project pipeline includes 13 projects with six and a half million tons of CO two capture per annum that have potential to reach FID in 2026. This represents over 300,000,000 NOK of licensing revenue potential that goes largely to the bottom line. A risk adjusted forecast shows potential for 60,000,000 NOK in EBITDA in 2026, but we note that the range is wide. Third, we are working on new services to drive future value for the business.
We have strengthened our position as a carbon capture technology leader with our new lab and developing services to support customers in their operations. With these activities, we can further innovate the capture process and chemistry. Although Capsule's solution is commercially ready, we are just at the beginning of the optimization potential of the solution. We've already scoped out potential of recurring revenue of €2 or more per ton of CO two capture from operational services in the future. With the foundation we have invested in and built over the past year, we are poised to continue making strides in the industry and create value for our shareholders.
So next, I'd like to highlight the value we are creating for our customers with an example. When you compare the savings we can achieve with Capsule Solutions versus the license fee, you can see a payback of less than one year. This is based on 20 to 60% lower capture cost than amine based solutions and a license fee of 10 to €15 per ton of installed capacity. In this example, we assume 12 and a half euros as a license fee. The example case here is based on a cement carbon capture project with 800,000 tons of capture capacity per year.
At that capacity, the one time capsule license fee, assuming 12 and a half euros per ton, is about a hundred 20 million NOK. On the other hand, the savings on this project can be a hundred 80,000,000 NOK per year when you consider the inherent heat recovery and the lower energy use. Comparing this one time license fee of a hundred 20,000,000 to the savings of a hundred 80,000,000 NOK, you can see that the payback time for the license can be less than one year of operation. And the case can be even more interesting when we look at X or waste energy plants where we can generate additional heat, which can produce more revenues for our customers. And then for simple cycle gas turbines, our solution can also generate additional electricity.
Next, I'd like to provide a view of the market. With Capsule's value proposition, we see a very attractive growth path based on various market outlook scenarios. There are varying estimates of how much c o two capture capacity will be operational by 2050. Some of these estimates are based on net zero targets, others are based on announced pledges, and other estimates are based on more conservative views, such as from DNV. What we are certain of is that carbon capture is a must have solution for any decarbonization target.
There is no scenario without it to prevent c o two from being added to the atmosphere or to remove it. As we progress from 2030 to 2050, we expect that the post combustion carbon capture share of the market will increase from around 41 to 50%. This includes industrial processes and power generation. Within this total addressable market, Capsule is defining a conservative serviceable market of 25 to 40% based on our technology competitiveness and geographical presence. Overall, Capsule can see a path to four to 6% and upwards total market share based on today's business model.
Considering a conservative view of the market and our pipeline, we have a licensing revenue potential of 3,000,000,000 NOK between 2025 and 2035, and this is about the same as the potential revenue in our current mature project pipeline. So what do we think is driving market growth? In addition to national commitments and company targets, we are seeing some strong drivers for why CCS remains a must have decarbonization solution for the future. Let me highlight three of these. First, we are seeing strong growth in the voluntary carbon markets where companies are paying for carbon removals to offset their own emissions.
Companies like Microsoft, Frontier, Google, and Amazon are entering into agreements to buy future carbon removal credits, which help to fund projects. These kinds of purchases have been increasing over the years. We are barely into May, and we already saw an 11,000,000 tons of c o two volume purchased, which is a large increase from last year. And we are very proud that Stockholm Exergy, who licensed our technology, has some of the largest purchases on record. This includes Microsoft's purchases of over 5,000,000 tons of c o two over ten years of the plant's operation.
The second driver of the CCS market is carbon price trends, such as for the ETS or the emissions trading system in Europe. Free emissions allowances will be phased out, and it will no longer be allowed to emit for free in the coming years. The forecast consensus by many, including BNEF, is that prices can more than double by 2030 and triple by 2035. CBAM or carbon border adjustment mechanism will also no longer allow undecarbonized products such as cement to enter the EU without penalty. These dynamics are driving many of our customers to start CCS projects to stay competitive for the future.
Third, CCS is really globally endorsed. In The US, on Earth Day, April twenty second, the Trump administration named CCS along with nuclear and geothermal as important technologies for the future. During the same week, China's President Xi, for the first time, directly spoke on climate, announcing that they would set climate targets for 2035 to cover the whole economy and include all greenhouse gases. And the EU is also incentivizing clean technologies and industry. So next, I'd like to give a word on our business model within the growing CCS market.
Capsule's business model is scalable and capital light, yielding attractive returns. Here, you can see a timeline for a typical CCS project, which can be twelve to thirty six months long from engineering to FID. Capsule works directly with industrial companies at the beginning of the cycle with sales engineering, followed by paid feasibility or pre FEED studies. A demonstration campaign with our CapsuleGo is also a possibility along this journey before moving towards high value engineering pre FID work in the form of a PDP or process design package or FEED. After around FID is when the license fee of 10 to €15 per million tons of c o two installed capture capacity would be paid.
All of this is followed on by services we are working to introduce for the future. Our current business model with engineering, demonstration campaigns, and technology licensing targets a pretax profit margin of 40 to 60%. Next, a few words on the Stockholm Exergy milestone. With this project, Capsule has booked our first licensing revenue and cash. This future plant will capture 800,000 tons of c o two per year.
The c o two will be transported and stored at Northern Lights owned by Equinor, Shell, and Total Energies. And this is a great example of Norway making its mark on capture, transport, and storage for one of the world's largest BEX projects and marks a major milestone for the carbon capture industry. I already mentioned Microsoft's purchase of over 5,000,000 tons of carbon removal credits from this project. Microsoft did its due diligence for the purchase with a third party called Carbon Direct using newly developed criteria setting a standard for high quality carbon removals. And one of the deciding factors for Microsoft was the ability for the capture system enabled by Capsule to generate additional heat for the district heating system.
This project has further confirmed Capsule's technology for deployment and is opening up more opportunities for Capsule with industrial clients and project developers. We've already seen an increase in requests by customers to support their projects for the future. Looking at our mature project pipeline, we saw a 29% growth just from last quarter on this. And as mentioned earlier, over 70% growth year on year. We now have over 22,000,000 tons of c o two capture capacity from the customers where we have either had paid work or have supported project development.
These include five EU innovation fund applications and work in The US on BECS and gas turbine projects. The 22,000,000 tons was up from 21,000,000 tons in our press release last week after adjusting for a gas turbine project that has been progressing recently. In this funnel, we've also removed projects where we know they will not proceed. In total, this pipeline represents a total 3,000,000,000 NOK of total licensing revenue potential and the landscape of opportunity ahead. You can see by sector where the volume is coming from.
Cement is the largest, followed by energy from waste and BECS, and we're just starting the work on the other sectors and expect to see growth as we progress work in these areas. So zooming in, the mature project pipeline includes 13 projects with six and a half million tons of capture capacity that have the potential for FID in 2026. This represents over 900,000,000 NOK of potential total licensing revenue. Of this, about 300,000,000 NOK could be paid at FID. An FID is based on many factors, some out of our control.
So to risk adjust this, we account for whether the project proceeds or whether capsule is selected. And with this, our estimate is 60,000,000 NOK of potential EBITDA in 2026 based on licensing fees that largely go to the bottom line, recognizing that the range is wide. So as you have seen, we have some very strong growth potential, and we have a path towards breakeven. The investments we have made over the past year have increased awareness of Capsule as a mature alternative to incumbent solutions that can improve project economics. This is positioning us for higher value engineering work, including PDPs or process design packages or feeds as we get closer to licensing revenues.
With this path, we can see potential to break even in the next twelve months. And we will pace this considering what growth investment opportunities there are to stay competitive in a dynamic market where we are gaining share. We have a flexible cost base that will be balanced with activity levels, and we will maintain strict capital discipline as we progress work with customers on their first projects. To round off, I share a view for the future. As projects come to life, we have the potential to generate additional recurring revenues with services.
Examples include solvent services, performance monitoring, and remote support. We can already see an opportunity for €2 per ton of c o two capture or more in annual recurring revenues for basic solvent services alone. Beyond this, we are working on ways to innovate capture performance through r and d programs in our lab and from our field campaigns. All of this can add value for our clients and further reduce the cost of capture. And now I would like to pass it on to Inger Berg, our CFO, who will take us through our financial highlights.
Ingeberg/Inger Berg, CFO, CapSol Technologies: Thank you, Andy. In q one, we generated revenues of 24,900,000.0 Norwegian kroner, up 28% compared to q one last year. As we move closer to more FIDs and subsequent licensing revenues, the majority of revenue is still from demonstration campaigns and engineering services. We ended the quarter with a pretax loss of 16,100,000.0 Norwegian kroner. Operating expenses were 38,600,000.0 Norwegian kroner for the quarter.
This is up from the same period last year and reflects that we have invested in development and organization to enable winning more projects and generating more value per project. We are now an organization of the right size and with the right tools to deliver on what's ahead of us. Hence, we expect the cost base over the next four quarters to be lower than that of q one. Moving on to cash flow for the quarter. We started q one with a cash balance of 64,400,000.0 Norwegian kroner and ended the quarter at 58,500,000.0 Norwegian kroner, implying a cash outflow of 7,200,000.0 Norwegian kroner for the period.
The pretax loss of 16,100,000.0 Norwegian kroner was partly offset by depreciation of 4,700,000.0, finance income of 2.5, and working capital improvements of 9,300,000.0 Norwegian krone. It is worth noting that the capital go investment program is now completed, and we expect to see very limited CapEx spending going forward. Importantly, we see a clear revenue ramp up ahead driven by increased PDP and feed work as we approach project FIDs. This position us within reach of breakeven over the next twelve months. On that note, I give the word to Jacob that will talk about how we are going to leverage the recent milestones achieved.
Thank you.
Jakob, SVP Investments and Strategy, CapSol Technologies: Thank you, Inge. The world's first large scale bioenergy with carbon capture and storage project deploying capsules capture technology moved forward as Stockholm Exergy made a final investment decision at the end of q one twenty twenty five. This brings substantial validation to our technology, having a clear impact on the standing in the market, both in terms of dialogues we're having with potential customers, as well as potential partnerships. Our pipeline continues to grow, and traction is increasing with multinationals like Holzim and Suez. During the quarter, we made significant commercial progress with Capsule GT and added the first projects from The US to our mature pipeline.
On the back of these significant milestones, Capsule has retained Pareto Securities as financial adviser to explore paths to accelerate growth. This includes advancing ongoing discussions with potential strategic partners. Other growth capital options will be reviewed to meet growing demand from higher value clients with larger project portfolios. Furthermore, opportunities to expand the footprint in emerging markets will be assessed. All initiatives are part of our long term strategy to scale the business and deliver enhanced value to our shareholders.
With that, I'll hand the word back to you, Wendy, for the closing remarks. In
Wendy Lam, CEO, CapSol Technologies: summary, we are confident that Capsule is positioned for profitable growth. Our innovative technology platform enables lower cost and provides a strong alternative for customers looking to improve the economics of their CCS projects. Capsule's pipeline growth is outpacing the industry with over 22,000,000 tons of c o two capture capacity. This pipeline will convert to high value engineering and license revenues. For the future, services have the potential to add recurring revenue and build on our capital light business model.
In our execution, we have a flexible cost base to support capital discipline. And then finally, on the back of major milestones like the Stockholm Exer GFID and growing work in other sectors, we see promise for even greater growth and will explore value accretive strategic partnerships. Thank you all for joining us today, and I will pass it back to Jakob for our q and a.
Jakob, SVP Investments and Strategy, CapSol Technologies: Thank you, Wendy. Before we dive into the question, I'd like to remind the audience that if you have questions, you can submit them by email by writing to irinvestorweb dot n o. So our first question is best directed at you, Wendy. Regarding the statement that the company has engaged Pareto Securities to advance ongoing discussions with potential strategic partners and review growth financing options, could you offer some general insights into the key strategic benefits beyond capital infusion that the company is exploring through these potential partnerships?
Wendy Lam, CEO, CapSol Technologies: Great. Thanks for the question. It's a great question. We have, over the last year at Capsule, been working with a number of, potential partners, both on projects and exploring how we could move forward. So this engagement with Paretto actually gives us an opportunity to explore in a deeper, manner how these relationships can proceed.
Some of the benefits in working with strategic partners for a license of technology like us, could mean, technology collaborations to advance, the technology to make capture lower cost. It could mean advancing how we go to market. It could mean, better presence in certain geographies where we are actually starting to get more and more pull from. So there are a number of, advantages of exploring these kinds of relationships. And if you consider the competitive dynamics out there for various technologies, many of them are looking at this in a broad way.
So we see an opportunity on the back of these milestones that we have achieved to really go on with the fuller force in taking advantage of this.
Jakob, SVP Investments and Strategy, CapSol Technologies: Great. The the next question is also on the same theme, which has been answered, I think, but it has another element that is best directed at the Hoehringer. Do you still consider Capsule to be fully funded?
Ingeberg/Inger Berg, CFO, CapSol Technologies: Yeah. Thanks, Jacob. As we said in the presentation, as we now approach FIDs, we see a clear revenue ramp up from PDP and and FEED studies. This position us to reach breakeven within the next twelve months With the expected PDP sales and redeployment of our available capital go units, we have the sufficient funding.
Wendy Lam, CEO, CapSol Technologies: Yep. And maybe I can add to that. Building on the the milestones that we've had, we've seen tremendous momentum and, of course, line of sight to these FIDs that we mentioned in the project portfolio. At the same time, we are engaging Pareto and strategic partners to explore how we take a best advantage of that growth. We're also considering, risk management, and that's why we do have this flexible cost base as we mentioned in the presentation to do this in as responsible a way as possible, managing the momentum and the opportunity that we have.
Jakob, SVP Investments and Strategy, CapSol Technologies: Okay. Great. We had we have another question direct, which is best aim at doing that. Could you please take us through the calculation that brings you to 60,000,000 in the risk adjusted EBITDA in 2026? Yes.
Ingeberg/Inger Berg, CFO, CapSol Technologies: Thank you, Jacob. This is based on that we see 13 project with the possibility to reach FID in our mature portfolio. These 13 projects represents about 6,800,000 tons of annual capture capacity. The full value of those projects would be around 900,000,000 NOK. We do have a payment structure where you get the first one third of the payment paid at FID.
So that's the payment that would happen in '26. So that's 300,000,000 NOK unrisked revenue potential in '26 from this portfolio. Then we have gone through the portfolio, and each single project looked at different risk factors, including two main ones. Will the project move forward? Will we be awarded the license?
With that risk adjustment, we come down to EBITDA potential in 2026 of around 60,000,000. And as Wendy mentioned in the presentation, there is a a range around this with both upside and downside.
Jakob, SVP Investments and Strategy, CapSol Technologies: Great, Ingrid. We have another question. In the Q4 presentation, you included an illustration of cash development through 2025. The illustration showed that you had some NOK 20,000,000 of available revenue capacity on the Capsule Go. How much of this has been secured by now?
Ingeberg/Inger Berg, CFO, CapSol Technologies: None of this is still secured. We are in a number of negotiations now to to secure that capacity, quite advanced negotiations where one of them, we have also signed an LOI or an MOU. And, you know, those negotiation also brings us beyond the 20,000,000 extra in in in '25. It also brings revenue into next year. And
Wendy Lam, CEO, CapSol Technologies: maybe I'll also add with the Capsulego, we are entering sort of this new arena of deployment. I did mention at the beginning of the presentation how we've started now with the cement campaigns. And, we are learning a lot from these, and it is, bringing in some quite new interest in various geographies as well. So we are excited about some of the negotiations that we have going on to secure the final capacity.
Jakob, SVP Investments and Strategy, CapSol Technologies: Thank you, Wendy. This next question is for you, I think, Wendy. Mhmm. Could you elaborate on the portfolio of demo units? Are new demo contracts signed, and will any other units become idle soon?
Wendy Lam, CEO, CapSol Technologies: Yep. As always mentioned, we have three operating demonstration units. Two are now at being deployed for cement, both at Holzim and Schwenk. And the third one is under we have an LOI signed to secure the actual start of the next campaign. More will be revealed as soon as we finalize those details, and we will share that with all of you.
But I do want to also mention that the mobile demonstration units represent a very easy opportunity for industrial customers of ours to deploy and see the HPC process work in real life. And we are very proud to have now almost nineteen thousand hours of operating experience, making Capsule the company with the most experience with post combustion carbon capture, with HPC.
Jakob, SVP Investments and Strategy, CapSol Technologies: Yeah. We don't have any more questions at the moment. Let's give it a minute. So if you have further questions, please please send them away or send them to us. Okay.
No more questions. Well, with that, I think we'll we'll round off. Thank you for good questions and for listening in to this presentation. And that's all from us. Thank you.
Ingeberg/Inger Berg, CFO, CapSol Technologies: Thank you.
Wendy Lam, CEO, CapSol Technologies: Great. Thank you all for joining.
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