Published On: September 4th, 2023
Figure 1: Carbonxt Group Limited Logo
Carbonxt Group Limited (ASX: CG1) (Carbonxt or the Company), a pioneering force in custom activated carbon services, reports its FY2023 financial results. This clean-tech firm manufactures Powdered Activated Carbon (PAC) and Activated Carbon pellets (ACP) designed for applications in industrial air purification, wastewater treatment, and various liquid and gas phase markets. Carbonxt’s unwavering commitment to innovation and sustainability has yielded promising growth prospects in a challenging year.
In FY2023, Carbonxt Group Limited’s financial performance saw notable shifts compared to FY2022. The Company’s revenue for the fiscal year amounted to AUD 15.462 million, which declined 15.8% from the previous year compared to FY2022, primarily due to planned downtime for equipment updates at its activated carbon plants. Similarly, the gross margin experienced a reduction of 26%, reaching AUD 4.579 million. On a positive note, other income increased to AUD 0.553 million from AUD 0.482 million. While shipping costs increased slightly at AUD 1.667 million in FY2023, operating costs increased, reaching AUD 5.658 million. The EBITDA for FY2023 revealed a loss of AUD 2.193 million, and depreciation and amortisation costs for FY2023 were AUD 2.444 million. The net result was a net loss before tax of AUD 5.984 million, demonstrating a 34% change from FY2022’s AUD 4.459 million. Amid these figures, Carbonxt Group Limited Inc. remains persistent in its commitment to innovation and sustainable growth.
Figure 2: Carbonxt Group Limited Financial Overview
Despite the challenges faced in FY2023, Carbonxt’s management remains focused on achieving robust financial performance. The Company’s FY2023 gross margin of 30% is expected to improve to over 40% in FY2024 due to successful price increases and cost reduction measures. Operating costs increased in FY2023 due to utility and other factors, but Carbonxt remains committed to maintaining operational efficiency.
Figure 3: Carbonxt Group Limited Historical Annual Revenue
Divisional Operating Metrics Challenges
Activated Carbon Pellets
- Activated Carbon Pellet sales to the Company’s largest customer decreased from 4,000 tons in FY2022 to 2,600 tons in FY2023 due to an unforeseen outage at their operations and available in-hand inventory
- Pellet sales made up 65% of the total revenue in FY23, which was a slight dip from the 70% they contributed in the prior period
- In response to the forthcoming launch of operations at the Kentucky facility, where the Company will have the capacity to produce 5,000 tons per annum (equivalent to 50% of the total plant capacity of 10,000 tons) of high-quality pellets, a strategic decision was made
- The Company opted to shift its existing ACP facility to one-shift operations
Powdered Activated Carbon
- The manufacturing of affordable renewable powdered activated carbon has bolstered robust profit margins within the contaminant-reduction pellet product category
- Powdered activated carbon, or PAC, contributed to 35% of the total revenue and 54% sales volume
- The installation of a new mill in December 2022 has led to enhanced operational efficiencies and increased reliability
- Feasibility studies have been conducted to assess the viability of installing a second mill, which would serve as a backup for the current mill and potentially enable the production of up to 5,000 tons of PAC annually. The decision to proceed with this investment will depend on securing new offtake contracts and the progress of the Kentucky operations
Strategic Decisions and New Ventures
Carbonxt Group Limited has shifted to one-shift operations at its existing Activated Carbon Pellet (ACP) facility to enhance operational efficiency in meeting all its orders and cost-effectiveness saving over AUD 1.5 million in operating costs per annum. This move, along with the approaching commencement of operations at the Kentucky facility, positions the Company for significant growth. Carbonxt’s investment in NewCarbon Processing LLC (“NewCarbon”), an activated carbon facility in Kentucky, further emphasises its commitment to expanding its market presence.
Future Growth and Market Opportunities
With the growing concern over per and poly fluoroalkyl substances (PFAS) and the introduction of new regulations, Carbonxt Group Limited is strategically positioned to address the liquid phase of the activated carbon market. The new Kentucky facility aligns perfectly with the increasing demand for solutions for PFAS contamination. As the leading American Water Works Association representative group (AWWA) estimates a three-fold market growth with the introduction of PFAS rules, Carbonxt’s expansion plans are well-timed and promising.
About Managing Director, Warren Murphy
Figure 4: Mr Warren Murphy, Managing Director of Carbonxt Group Limited (CG1)
Managing Director Mr Warren Murphy is an esteemed executive with an impressive background in finance and brings rich experience from several industries. He is a highly influential energy, resource, and infrastructure expert. His leadership has resulted in numerous successful acquisitions and financings, including over 2,000 MW of Greenfield’s power stations. With a history as Co-Head of Babcock & Brown’s Australian Infrastructure & Project Finance Group and Head of Energy, Warren’s strategic expertise played a pivotal role in founding entities like Infigen Energy. His role as director extends to ASX-listed Alinta Limited, Sydney Gas Limited, and unlisted Coogee Resources Limited, showcasing his influence in shaping the industry landscape.
Investor Outlook
- The first quarter of FY2024 has started impressively, with revenues surpassing AUD 3 million, in contrast to the AUD 2.3 million earned in the previous quarter
- Strategic decisions, including streamlined operations and an initial investment of USD 5 million for a 33% stake in NewCarbon Processing LLC, a state-of-the-art Kentucky facility, showcase Carbonxt’s commitment to expansion and innovation in addressing environmental challenges
- The Company’s pivot towards addressing per and polyfluoroalkyl substances (PFAS) contamination aligns with growing market demand, strengthening its outlook in a changing regulatory landscape
- Carbonxt’s unwavering focus on operational efficiency, sustainable solutions, and forward-looking growth positions it as a resilient contender in the cleantech sector, offering investors an opportunity to support a company poised for emerging market trends and a cleaner, safer future
- Carbonxt’s stock is trading at AUD 0.070 per share as of September 1st, 2023, with 52-week trading range of AUD 0.046 – AUD 0.140
- The Company’s market capitalisation stands at AUD 19.27 million as of September 1st, 2023
- Carbonxt Group Limited offers investors an opportunity to support a company poised for emerging market trends
For more information, please visit Carbonxt’s official website, read more about carbonxt stock news and updates.
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