Carbonxt Group (ASX:CG1) Boosts Margins in HY25, Eyes Expansion with Kentucky Plant

Highlights

• The Powdered Activated Carbon (PAC) segment accounted for 67% of sales volume and 53% of revenue in HY25.
• The Activated Carbon Pellets (ACP) segment represented 33% of sales volume and 47% of revenue in HY25 with expectations for growth in the upcoming half.
• Gross margin rose to 49% in HY25, up from 44% in HY24 and 28% in HY23.
• In December 2024, the Kentucky Plant achieved mechanical completion.
• The company is focused on full-scale launch of Kentucky plant and expansion into the waste-to-energy and water purification markets.

Carbonxt Group Ltd (ASX:CG1), a US-focused cleantech company, achieved significant milestones during the period ended 31 December 2024 (HY25). The company saw improved margins and made notable progress at its upcoming Kentucky Activated Carbon facility, co-owned with Kentucky Carbon Processing, LLC (KCP). Additionally, the Powdered Activated Carbon (PAC) segment demonstrated significant growth.

Financial Performance Overview

In HY25, the company recorded revenue of AU$7.4 million, with the Powdered Activated Carbon (PAC) segment accounting 67% of sales volume and 53% of revenue. This represented a 13% increase in revenue over the previous corresponding period, fuelled by the commencement of the ReWorld Waste contract.

The Activated Carbon Pellets (ACP) segment accounted for 33% of sales volume and 47% of revenue, with expectations for a higher contribution in the second half of FY25.

In HY25, Carbonxt’s gross margin increased to 49%, up from 44% in HY24 and 28% in HY23, reflecting successful pricing strategies and reduced operating costs achieved through optimised manufacturing processes at the Arden Hills facility.  

Kentucky Plant Development Update

A key milestone for Carbonxt was the mechanical completion of its new activated carbon plant in eastern Kentucky, the USA, in December 2024.

The plant is designed with an initial capacity of 10,000 tons per annum, with the potential to scale up to 20,000 tons with minimal additional investment.

Carbonxt has invested US$6.75 million into NewCarbon Processing, LLC (NewCarbon), in partnership with Kentucky Carbon Processing, LLC (KCP), securing a 40.3% ownership stake as of 31 December 2024. The company also holds options to increase this stake to 50% with an additional US$3.25 million investment.

Capital Raises and Funding Updates

To support ongoing operations and future growth, Carbonxt successfully raised capital through several offerings:

• AU$3.02 million raised through the issue of 46.4 million shares at AU$0.065 per share, with associated unlisted options.
• An additional AU$1.0 million raised through the issue of 17.1 million shares at AU$0.06 per share.
• On 17 February 2025, a share purchase plan (SPP) was announced, targeting AU$2 million at AU$0.06 per share, with shares to be issued on 20 March 2025.

These funds provide Carbonxt with the flexibility to scale production, explore new partnerships, and drive product innovation.

Strategic Focus and Future Outlook

Looking ahead, Carbonxt’s top priority is the full-scale operational launch of the Kentucky plant. In the short term, the company will focus on optimising coal processing and completing high-temperature wiring installations to enhance efficiency.

The company is focused on expanding its footprint in the waste-to-energy and water purification sectors, capitalising on evolving regulations surrounding mercury and PFAS contamination. Furthermore, Carbonxt remains committed to exploring new product innovations and forging partnerships that support its long-term sustainability and profitability objectives.

With growing demand for its products, the mechanical completion of the Kentucky Activated Carbon facility, planned production ramp-up, ongoing cost optimisation, and successful capital raises, Carbonxt expects to see improvement in financial performance in the coming quarters.

CG1 shares traded at AU$0.06 on 28 February 2025.