Published On: February 1st, 2024
Carbonxt Group Limited (ASX: CG1) (the “Company” or “Carbonxt”) has announced its December quarterly updates highlighting significant progress in the construction of its flagship Activated Carbon production facility in Kentucky, USA. The Company is now focusing on commissioning activities and near-term sales.
Figure 1: Carbonxt Group: The Activated Carbon Producer
Quarterly Operational Overview
- Customer receipts for the quarter were A$3.3 million, with a 28% decrease from the prior quarter and down 16% from the same quarter a year ago due to timing differences in orders from the largest Pellet Customer, resulting in a material cash inflow during the September quarter. Cash flow from operations was a loss of A$0.3 million. This quarter reflects higher gross margins than the previous quarter. Also, the operating cost was reduced, product pricing increased across the portfolio and inventory levels reduced
- The Powdered Activated Carbon (PAC) segment has reported a 28% year-over-year growth in sales revenue, driven by higher product prices and a slightly different customer mix. Revenue from Powdered Activated Carbon (PAC) experienced a seasonal reduction. Still, the Company negotiated several contract extensions at higher pricing during the quarter, including an increase of A$1.5 million per annum for one customer. Customer mix is changing with less impact on power generation facilities in the segment, reflecting the robust market condition for the PAC products
- Activated Carbon Pellets (ACP) sales were shrunk by 58% compared to the previous quarter due to outages at the largest pellet customer’s facility. Production adjustments were made to reduce operating costs. The last quarter’s inventories depleted significantly to achieve lower production costs and improve the balance sheet. The exact position has continued in the March quarter as the restart of operations at our largest pellet customer
- A$0.6 million placement for sophisticated and professional investors, followed by an oversubscribed 1:9 rights issue at A$0.06, completed in January, raising a total of A$1.84 million
- The commissioning of the flagship Kentucky plant to test plant performance is currently in progress. Production advancements are expected in the next quarter
- Carbonxt Group Limited continues to focus on its core activities, developing and manufacturing environmental technologies to ensure compliance with air and water emission requirements while removing harmful pollutants
Investments and Related Party Payments
The construction of the Activated Carbon facility in Kentucky remains on track, with all major construction equipment delivered. Activities focus now on commissioning and business commencement tasks, including key staff hires and sales efforts.
Initial discussions with industrial pellet customers have progressed well, with prices and volumes aligning with expectations. The payment rates to the continuing directors are unchanged from the previous year.
Managing Director Mr Warren Murphy said,
“The December quarter was highlighted by solid execution across our existing operations, alongside key construction milestones being met for the group’s flagship Activated Carbon production facility in Kentucky. With commissioning works and sales discussions for Kentucky progressing well, the Company believes that the NewCarbon facility presents an opportunity to drive a significant re-rating of Carbonxt’s growth and earnings profile amid a supportive US regulatory environment driving strong demand for water purification solutions.
With construction now approaching completion, we look forward to providing an update on production and sales from Kentucky in the coming weeks. When the NewCarbon facility comes online, the material scale-up of Carbonxt’s production capacity will occur amid solid market conditions for activated carbon products, as evidenced by the group’s recent contract extensions and price increases for sales from existing operations.”
Figure 2: Carbonxt Managing Director Mr Warren Murphy
Managing Director Mr Warren Murphy boasts a wealth of experience and notable achievements from diverse sectors. Murphy has established himself as a critical figure in the energy sector with prominent roles at the Australian Infrastructure and Project Finance Group, Alinta Limited, and Sydney Gas Limited.
Managing Director Warren Murphy‘s leadership has been instrumental in taking Carbonxt Group Limited towards continuous growth and success.
Investor Outlook
- A strong interest in Carbonxt’s capital raising, including the oversubscribed rights issue, shows confidence in the company’s strategic direction.
- Despite facing challenges in customer receipts and decreased cash flow from operations, the Carbonxt quarter result reflects higher gross margins than the previous one. Operating costs were also reduced, indicating efficiency improvements contributing to better profitability.
- Carbonxt Group Limited is committed to sustainable growth in the environmental technology sector through proactive measures addressing challenges and capitalising on opportunities
- As the Kentucky facility nears total operational capacity, the company anticipates further positive momentum in the coming quarters.
- Carbonxt’s share price traded at AUD 0.098 per share as of January 31st, 2024, with a 52-week range of AUD 0.045 – 0.120 per share
- Carbonxt’s market capitalisation is AUD 33.16 million as of January 31st, 2024, with 315.88 million issued shares
About Carbonxt Group
Carbonxt Group Limited (ASX: CG1) is a key player in the energy sector that specialises in producing advanced activated carbon products for industrial pollution control. The company’s dedication to efficient manufacturing logistics, utilisation of advanced corrosion prevention technology, and tailoring solutions to address specific pollutant capture requirements sets it apart in the industry.
Under the guidance of Managing Director Warren Murphy, Carbonxt Group Limited is strategically positioned for continued growth and a significant impact on the industrial pollution control sector.
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