Base Carbon Inc. (BCBN), a prominent Canadian financier in the global voluntary carbon markets, has recently released its Q2 2023 financial results. This announcement has resulted in a significant increase of +30% in the company’s share price, driven by an impressive net income of $104.1 million. These results mark a crucial transition for Base Carbon as it moves from the development stage to generating free cash flow. The company generates revenue by providing upfront capital to carbon projects. Let’s take a closer look at their two major projects and the financial highlights.
One of Base Carbon’s major projects is the Vietnam Household Devices Project. In 2022, the company committed to funding the production and distribution of 850,000 fuel-efficient cookstoves and 364,000 water purifiers for rural families in Vietnam. As of June 30, 2023, payments totaling $18.9 million have been made, covering 91% of the Vietnam Project’s capital. The project’s first Verified Carbon Units (VCUs) were issued in Q2 2023, and there are plans for more issuances every six months for the next decade.
Another significant project undertaken by Base Carbon is the Rwanda Cookstoves Project. In January 2022, the company signed an agreement to distribute 250,000 cookstoves in Rwanda. The project is now fully funded, with payments totaling $8.825 million. The cookstoves have already been delivered, and the first carbon credits are expected to be issued in late 2023.
Michael Costa, the CEO of Base Carbon, expressed his excitement about the company’s progress, particularly regarding the monetization of the Vietnam Project’s first carbon credits. He emphasized the transition to generating free cash flow and mentioned that the company will focus on reinvesting cash flows into their project pipeline. Costa also hinted at several upcoming announcements.
Moving on to the financial highlights of the second quarter of 2023, Base Carbon ended the quarter with $9.96 million in cash and cash equivalents, representing a $1.4 million increase compared to Q1 2023. In terms of the Vietnam Project, the company issued and delivered the first tranches of 1,116,221 Verified Carbon Units (VCUs), resulting in a full contractual settlement of $6.4 million. The realized net gain from this settlement was $1.95 million.
Base Carbon reported a net income of $104.1 million for the second quarter of 2023, translating to $0.85 in earnings per share. Additionally, the company purchased 3,046,700 common shares for cancellation, with the potential to acquire an additional 7,974,471 common shares over the next 12 months.
As for the Vietnam Project, the capital deployment is now 91% complete, and the remaining capital expenditures are expected to be fully deployed by the end of 2024.
For more information, the full press release can be found on the company’s website.
These financial results and project updates highlight Base Carbon’s success in the voluntary carbon markets and its commitment to funding impactful projects that contribute to carbon reduction and sustainability efforts.