Carbonxt Group Ltd (ASX: CG1) (“Carbonxt” or “the Company”) has made solid progress in the December 2024 quarter, achieving major operational milestones and strengthening its financial position. The completion of the Kentucky facility, a successful capital raise, and strong Powdered Activated Carbon (PAC) sales set the stage for a promising 2025.
Kentucky Facility Reaches Mechanical Completion
On 18 December 2024, Carbonxt completed all mechanical works at its Kentucky activated carbon plant. This milestone positions the Company to ramp up production and meet rising demand across multiple industries. The Kentucky facility strengthens Carbonxt’s presence in the growing activated carbon market, with a strategic entry into the water treatment sector planned.
Managing Director Mr. Warren Murphy highlighted the significance of this milestone, stating, “The December quarter marks a major milestone for Carbonxt, with the mechanical completion of our Kentucky facility and a focus on ramping up production.”
The Company is now focused on optimising coal processing and completing high-temperature wiring installations to bring the plant online for full-scale operations.
Cost Management and Revenue Growth
Carbonxt reduced its operating expenses by $1.5 million annually, ensuring a stronger financial outlook. This disciplined cost management aligns with the Company’s goal of achieving positive cash flow in the coming quarters.
The Company also reported a 20% increase in customer cash receipts, reaching $2.2 million for the quarter. This growth reflects stronger sales performance and increased demand for activated carbon products.
PAC sales rose 14% year-on-year, driven by new waste-to-energy contracts that commenced in December 2024. These sales accounted for 68% of total revenue, reinforcing PAC’s importance to Carbonxt’s business.
However, Activated Carbon Pellet (ACP) sales declined by 32% compared to the same period last year. This decrease was due to prior pre-paid volumes from Wisconsin Public Service (WPS) in June 2024. Despite this temporary dip, ACP sales are expected to recover as deliveries to WPS ramp up in Q3 FY25.
Expanding Market Presence
Carbonxt continues to expand its reach in the waste-to-energy and water purification sectors. The Company aims to capitalise on regulatory trends related to mercury and PFAS contamination, which are driving increased demand for activated carbon solutions.
With the Kentucky facility nearing full-scale operations, Carbonxt expects to strengthen its market position and increase revenue from new product applications. The water treatment sector, in particular, presents a significant growth opportunity.
Recent Developments and Financial Review
Carbonxt Group Limited has secured notable new business, including additional purchase orders valued at $3.6 million from WPS for the second half of FY25. In addition, the company has entered into a $24 million, four-year contract with ReWorld, which commenced on 1 October 2024, and is expected to contribute $3.6 million to H2FY25 revenues. The Kentucky facility is also expected to generate further revenue, positioning Carbonxt for significant growth in the coming quarters.
Revenue & Earnings
- Total revenue for the quarter reached $3.1 million.
- Sales of powder-activated carbon (PAC) accounted for 68% of the total revenue.
- Carbonxt has raised its revenue guidance for FY25 by 40% for H2FY25.
Balance Sheet & Cash Position
- The company achieved cost reductions of $1.5 million per annum in the December quarter.
- Lease restructuring is expected to deliver additional cost efficiencies in the March 2025 quarter.
Investment in NewCarbon & Kentucky Facility
- Carbonxt invested US$1.25 million in NewCarbon, increasing its ownership to 40.3%.
- Three additional investment tranches, totalling US$3.25 million, remain, exercisable at Carbonxt’s discretion, to achieve 50%
- The mechanical completion of the Kentucky facility has been reached, with third-party verification now finalised.
Strong Financial Performance and Capital Raise
Carbonxt successfully raised $1.03 million through a share placement, issuing 17.1 million fully paid ordinary shares at $0.06 per share. The placement price represented a 4.7% discount to the five-day Volume Weighted Average Price (VWAP) of CG1 shares before the announcement.
Carbonxt also took another step towards increasing its ownership in the Kentucky facility, raising its stake to 40.3%. The Company retains rights to further investments that could boost its stake to 50%.
The Company plans to use the funds for general working capital and to support the Kentucky plant’s production ramp-up. Murphy expressed his confidence in the Company’s future, stating, “We’d like to thank our shareholders for their ongoing support and look forward to providing more updates as our commercial development plans for the Kentucky plant progress, early in 2025.”
About the Company and Market Outlook
Carbonxt Group Limited (ASX: CG1) is an innovative cleantech company focused on developing environmental technologies. These technologies are designed to help businesses meet air and water emission standards while removing harmful pollutants. Headquartered in the US, the company has a strong research and development focus, along with manufacturing facilities that produce activated carbon pellets and powder. Carbonxt is expanding its product range, particularly its pellet offerings, to meet the growing demand across various industrial sectors.
The global market for activated carbon is expected to reach USD 7.90 billion by 2025, with projections showing it could grow to USD 17.81 billion by 2034. This growth represents a compound annual growth rate (CAGR) of 9.46% from 2025 to 2034. In the Asia Pacific region, the activated carbon market is forecast to exceed USD 4.19 billion in 2025, with a CAGR of 9.57% during the same period.
Figure 2: Market Size of Activated Carbon from 2024 to 2034 (in USD Billion). Credit: Precedence Research
Investor Outlook
Carbonxt Group (ASX: CG1) is positioned for growth in 2025, backed by the Kentucky facility’s completion, rising PAC sales, and cost reductions. The Company’s stock trades at AUD 0.067, with a 52-week range of AUD 0.052 to AUD 0.120 and a market cap of AUD 26.03 million (as of January 31st, 2025).
Key catalysts include ramping up Kentucky operations, increasing WPS deliveries in Q3 FY25, and expanding into water treatment. A $1.5 million annual cost reduction strengthens cash flow.
Managing Director Warren Murphy stated, “Our disciplined cost management and strategic market positioning ensure we are well-placed for stronger revenue growth in 2025.” With improving financials and expanding markets, Carbonxt offers an attractive investment opportunity in the cleantech sector.
