Published On: March 3rd, 2023
Carbonxt Group Limited (ASX: CG1) (Carbonxt, or the Company) has set its sights on building a new activated carbon facility in Kentucky, United States. The Company has forged a strategic joint venture with Kentucky Coal Processing LLC to bring this plant to fruition. In the second quarter of FY 2023, the two companies will finish the engineering feasibility work for the new plant. The final legal documentation is set to conclude soon. This plant is estimated to enhance Carbonxt’s production capacity from ~16,000 tonnes to over 25,000 (+57%). It would benefit the Company by decreasing pellet production costs and increasing margin growth. This project presents Carbonxt with an opportunity to leverage investments in pollution reduction technologies in the US market.
Figure 1: Carbonxt Group Ltd HY23 Results
Updates on revenue
- In 1H23, Cabonxt’s revenue stood at AUD 8.9 million, which declined 10% compared to AUD 9.9 million in 1H22. Revenue dropped due to maintenance for new equipment installation at the Arden Hills and Black Birch manufacturing facilities.
- Activated carbon pellets revenue was 23%, down from 1H22. This decline was due to scheduled downtime at the Arden Hills facility and a minor decrease in seasonal demand from the Company’s important AC pellets customer.
- Revenue from Powdered Activated Carbon (PAC) increased by 6% compared to last year (1H22), primarily driven by higher volumes from the Company’s largest PAC customer. Carbonxt extended the contracts of all Powdered Activated Carbon (PAC) customers.
- The gross margin for 1H23 is 28%, down from 36% in 1H22.
- In 1H23, shipping and operating costs both rose compared to 1H22. A slight increase is noticed in operating costs (~ 2%), and shipping costs increased about 20% in 1H23 compared to 1H22. Shipping costs are 10.9% of sales compared to 1H22 at 8.2%.
Figure 2: Carbonxt Group Ltd Financial Overview
Carbonxt Group Ltd: Financial Position
Carbonxt Group Ltd has a debt facility of AUD 5.5 million from Pure Asset Management. During the Annual General Meeting held in November 2022, management approved another debt facility of AUD 15 million with Pure Asset Management. The proceeds of AUD 9.5 million will be used to fund the new facility in Kentucky after paying the existing debt facility of AUD 5.5 million that matures in April 2023. During 1H23, Carbonxt secured AUD 8.5 million by issuing 85 million fully paid ordinary shares. The Company held AUD 6.2 million in cash and cash equivalents as of December 31st, 2022.
Carbonxt Group Limited Managing Director Warren Murphy
Carbonxt Group Ltd Managing Director Mr Warren Murphy is an experienced executive managing acquisitions and financial deals within the energy, resources, and infrastructure industries. He expressed his opinion regarding the 1H23 result, “We are pleased with the group’s operational developments in 1H23, which leave Carbonxt well placed to capitalise on major tailwinds in the US market for pollution reduction and water treatment technologies. These were highlighted by achieving several crucial near-term objectives concerning advancing the Company’s strategic Joint Venture with Kentucky Carbon Processing, LLC to construct a market-leading processing facility for activated carbon products.”
Figure 2: Carbonxt Group Limited Managing Director Mr Warren Murphy
Investors Outlook
- Carbonxt’s stock price is AUD 0.066 per share with a 52-week range of AUD 0.066 to AUD 0.286; the stock volume (4-week average) is 480,345 as of February 28th, 2023
- The market capitalisation of the Company is AUD 18.2 million as of February 28th, 2023
- The Company has completed maintenance and installation upgrades in Arden Hills and Black Birch production facilities. This strategic initiative has positioned the Company for enhanced margin growth in Calander Year (CY) 2023
- The new Kentucky manufacturing facility Joint Venture (JV) terms are finalised with legal formalities. The Company is targeting the rapid scale of construction development in CY 2023
- Kentucky Plant operations will contribute positively to the Company’s production capacity
The Company
Carbonxt Group Limited is a cleantech company specialising in manufacturing and selling activated carbon (AC) products for industrial processes. These activated carbon products capture contaminants in air purification, wastewater treatment, and other liquid and gas markets. As a publicly traded company, Carbonxt Group Ltd generates revenue from AC product development, provision, and sales.
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