Carbonxt Group (ASX:CG1) Raises H2 Revenue Guidance on New Contracts

Highlights

• CG1 achieved mechanical completion of production equipment at its Kentucky facility, with sample production set for the March quarter.
• Revenue guidance has been increased to AU$10 million for H2FY25, reflecting a 40% YoY increase.
• Full-scale delivery has commenced from the Black Birch facility under a four-year, AU$24 million contract, generating AU$6 million annually.
• CG1 secured additional orders totalling AU$3.6 million, including a binding AU$1.8 million activated carbon pellets (AC Pellets) order for Q3FY25.

Carbonxt Group Ltd (ASX:CG1), a US-focused cleantech company, made significant progress during the latest quarter ended 31 December 2024, particularly with its Kentucky activated carbon production facility in the US. The company secured additional purchase orders from WPS and began delivering Powder Activated Carbon (PAC) products under an extended four-year agreement with ReWorld. These transactions are expected to contribute to revenues in H2FY25.

Notably, the company raised its revenue guidance for H2FY25to AU$10 million, reflecting a 40% increase over the previous corresponding period.

PAC sales contribute 68% of total revenue

In the latest quarter, customer cash receipts reached AU$2.2 million, up 20% QoQ. PAC sales increased by 14% YoY, supported by new waste-to-energy supply agreements that commenced in December 2024. However, Activated Carbon Pellet (ACP) sales were down 32% YoY.

Total quarterly revenue stood at AU$3.1 million, with PAC sales contributing 68% of this total. Additionally, the company achieved annualised cost reductions of AU$1.5 million during the quarter, with further lease restructuring expected to enhance cost efficiencies in March 2025.

During the quarter, the company raised AU$1.03 million through a share placement.

Mechanical Completion of Kentucky Plant

Carbonxt successfully achieved mechanical completion of production equipment at the Kentucky Plant, marking a significant milestone in its strategy to expand production capacity. This aligns with CG1’s commitment to meeting the growing demand for premium activated carbon products across North America. Additionally, a third-party verification process has been completed.

Market interest in the plant’s output remains strong and several sales negotiations are currently in progress. The company plans to begin sample production in the March quarter, which will assist in finalising long-term offtake agreements with key customers.

The Kentucky facility is anticipated to make a significant contribution to revenue in the coming quarters.

Increased Investment in NewCarbon

Carbonxt has increased its investment in NewCarbon, raising its ownership stake to 40.3% through a US$1.25 million investment. The company retains the option to increase its ownership to 50% through three additional investment tranches totalling US$3.25 million.

Delivery of Expanded PAC Volumes to ReWorld

In October 2024, the company commenced full-scale delivery of additional PAC volumes to ReWorld from its Black Birch facility in Georgia. PAC will support ReWorld’s efforts to control emissions across its 17 U.S. waste-to-energy plants.

This marks the first phase of deliveries under CG1’s recently extended four-year contract with ReWorld, valued at AU$24 million. The transaction is expected to generate annual revenue of nearly AU$6 million for the duration of the contract, while delivering a significant boost to gross margins for the Black Birch facility.

Additional Purchase Orders Secured from WPS

Carbonxt has secured additional purchase orders from Wisconsin Public Service (WPS) totalling AU$3.6 million for 2HFY25. This includes a binding order for AU$1.8 million worth AC pellets, and the transaction will be recognised in Q3FY25.

These new commitments build on a previous AU$4.3 million sales contract signed in May 2024 for a six-month supply of activated carbon products, which was successfully fulfilled on up-front payment terms.

CG1 shares traded at AU$0.061 per share at the time of writing on 6 February 2025.