Carbonxt Group Limited (ASX:CG1) (‘Carbonxt’ or ‘the Company’), a US-focused clean-tech company, announced a significant 40% upgrade to its FY25 revenue guidance. This boost results from fundamental developments, including new contracts and the near completion of its Kentucky production facility. With many promising updates, the Company anticipates significant growth in the coming months, indicating its financial health and potential for investors.
Figure 1: Carbonxt Group Limited Logo
Key Contracts and Revenue Growth
Carbonxt Group Limited has demonstrated exceptional market penetration through strategically essential contracts. These contracts, including the Wisconsin Public Services Partnership (WPS) and the newly announced Reworld contract, collectively underpin its robust revenue trajectory, providing a diversified and stable revenue stream.
Wisconsin Public Services Partnership (WPS)
The Company’s most significant and longstanding customer, Wisconsin Public Services (WPS), has committed to a substantial purchase order valued at $3.6 million for the second half of FY25. This includes a binding purchase order for Activated Carbon Pellets (AC Pellets) worth $1.8 million, to be recognised in Q3FY25.
This engagement builds upon a $4.3 million sales contract from May 2024, completed on up-front payment terms. The partnership goes beyond mere transactional business, with WPS deploying Carbonxt’s proprietary AC Pellet product in their innovative ReACT (regenerative activated coke technology) emissions control systems.
The ReACT technology represents a sophisticated multipollutant control approach, simultaneously removing Nitrogen Oxides (NOx), Sulfur Oxides (SOx), and mercury (Hg) from coal-fired plants.
Reworld Contract
A newly announced $24 million, 4-year contract with Reworld commenced on 1 October 2024, with anticipated revenues of approximately $3.6 million in H2FY25. This contract positions Carbonxt to supply Powered Activated Carbon (PAC) to most of Reworld’s US thermomechanical treatment facilities.
The PAC will be deployed across most of Reworld’s U.S. thermomechanical treatment facilities (TTFs), which rely on activated carbon technology to eliminate mercury, dioxins, and furans. Carbonxt will manufacture and supply the PAC from its Black Birch facility in Georgia, using reclaimed wood-based materials to produce its carbon products.
Beyond these headline contracts, Carbonxt has also achieved a notable 7.1% price increase across its municipal client base. This increase, a reflection of strong demand and market confidence in Carbonxt’s activated carbon solutions, has prompted Carbonxt to revise its H2FY25 revenue guidance to $10 million, representing a remarkable 40% increase from the comparable period in the previous financial year. Notably, this guidance excludes potential revenues from the upcoming Kentucky plant, suggesting even further upside potential.
Investor’s Visit to Kentucky Facility
Figure 2: Kentucky Plant Construction
Carbonxt is nearing a significant milestone with the completion of its Kentucky manufacturing facility, a joint venture with New Carbon Processing LLC. Designed to produce premium activated carbon for North American markets, this state-of-the-art plant recently hosted PURE Asset Management (PAM), Carbonxt’s primary capital provider, for an on-site construction update.
During the visit, PAM representatives observed critical progress, including completed cooling systems, final kiln heating preparations, and advanced cabling installations between the kiln and control room. This transparency demonstrated Carbonxt’s operational readiness and inspired confidence among critical investors. With construction in its final stages, the facility is set for initial test runs in December and full-scale production ramp-up in early 2025.
Market Opportunities and Regulatory Support
The regulatory landscape in the United States remains a strong catalyst for Carbonxt’s growth. Despite recent administrative changes, the Environmental Protection Agency (EPA) emphasises stringent pollutant control measures, notably concerning PFAS (per- and poly-fluoroalkyl substances). PFAS, known as “forever chemicals,” are harmful pollutants that require advanced removal technologies, with activated carbon identified as the best available solution.
Figure 3: Current activated carbon market and annual cost to remove PFAS from drinking & wastewater
Carbonxt’s products, including Granular Activated Carbon (GAC), are ideally suited to meet these regulatory demands. The Kentucky plant’s initial output of 10,000 tons will represent a fraction of current demand, showcasing significant opportunities for market expansion. Additionally, with many U.S. states introducing legislation limiting PFAS levels, the demand for high-quality activated carbon products is expected to soar, aligning perfectly with Carbonxt’s capabilities.
Overall, the timing couldn’t be more suitable. With new EPA regulations targeting PFAS (“forever chemicals”) and a growing market for activated carbon solutions, Carbonxt is strategically positioned. Industry analysts forecasted the global market value of activated carbon to surge to around 15.17 billion U.S. dollars by 2030. For companies like Carbonxt, this projected growth represents more than a market opportunity
Investor Outlook
The Company’s strong market positioning, innovative technologies, and unwavering commitment to sustainability underscore its growth potential. With 371,337,476 issued shares trading at AUD 0.061 as of November 27th, 2024, Carbonxt’s AUD 23.39 million market capitalisation reflects its financial resilience and capacity to seize emerging opportunities, providing stakeholders with a sense of reassurance and alignment with the Company’s values.
Key Highlights:
- Significant Revenue Growth: FY25 revenue guidance for H2 has been upgraded by 40% to $10.0m, excluding contributions from the Kentucky plant.
- New Orders Secured: Wisconsin Public Services has placed additional orders valued at $3.6m for H2FY25.
- Reworld Contract Commenced: A $24m, four-year agreement with Reworld began in October, contributing $3.6m to H2FY25 revenues.
- Kentucky Plant Progress: Final cabling and mechanical works are nearing completion, with production ramp-up scheduled for early CY2025.
- Future Sales Pipeline: Active discussions with potential partners are underway ahead of initial Kentucky plant sales.
- Market Standing: With a capitalisation of AUD 23.4 million and robust financials, Carbonxt is well-placed for expansion.
- Pricing Power: A 7.1% price increase for municipal contracts reflects strong demand and market confidence in Carbonxt’s activated carbon solutions.
For investors seeking exposure to the burgeoning cleantech sector, Carbonxt presents a compelling opportunity backed by strategic investments, robust demand, and a clear pathway for growth.
