- Carbonxt is experiencing growing demand for its PAC and AC Pellets, backed by increased economic activity in the United States.
- In September quarter, customer receipts increased by 81% quarter-on-quarter.
- Industry related supply shortages, hot summer weather and high natural gas prices have driven the sales of Carbonxt products.
- The Company is positioned well for continued growth and addressing demand from its existing customer base while maintaining margins.
- Pipeline of orders is building from new and existing customers.
- Carbonxt raised AU$1.04 million during the reported period.
US-focused cleantech company Carbonxt Group Ltd (ASX:CG1) has made a strong start to FY22, with improved sales and positive operating cash flow recorded in September 2021 quarter.
Delivering an excellent performance, the Company secured quarterly customer receipts of AU$4.9 million, beating the AU$4.2 million forecast provided in August by 16%. The customer receipt figures for the September quarter represent an increase of 81% on the prior quarter.
Underlying operating cash flow was an inflow of AU$0.1 million, highlighting a significant turnaround from the FY21 trend averaging AU$0.4 million outflows.
Source: CG1 update, dated 14 October 2021
The robust sales numbers were achieved against the backdrop of domestic trucking and international ocean freight challenges.
Several new PAC customers also contacted the Company as they were not able to be serviced by one of its key competitors reflecting issues related to production.
The Company continues to witness strong global opportunities due to an increased global focus on ESG and emissions reduction. Moreover, Carbonxt’s activated carbon expertise, commercialisation experience and novel renewable materials provide the Company a competitive edge.
Powdered Activated Carbon (PAC) witnesses significant demand
Revenue from Powdered Activated Carbon (PAC) edged up by 52%, driven by higher PAC demand, reflecting industry related supply shortages, hot summer weather and high natural gas prices.
During the period, demand for PAC was high amidst increased economic activity in the United States, which emerged from the worst of the COVID-19 pandemic. At the same time, the country’s warmer weather has also contributed to the increased demand for PAC products.
PAC used for mercury removal in coal-fired power plants saw significant demand due to increased coal usage in electricity production as natural gas prices made a blistering run, breaking several years record.
Amidst the strong demand for bagged versus bulk products, Carbonxt’s Black Birch facility is building out its bagging ability to expand packaging options for PAC products.
Activated Carbon Pellet (ACP) achieves robust figures
Activated Carbon Pellet (ACP) also remained high in demand, with the ACP revenue jumping 189% quarter-on-quarter in the September quarter.
The Company has reported that despite its AC Pellet production being at maximum capacity, demand from several customers remains unmet due to limitations in production availability.
The inbound demand for pellets from Carbonxt has also increased, driven by higher pricing in pellets imported from overseas.
During the period, the Arden Hills facility rolled out an additional shift and plans to continue operating three shifts in the near term.
Moreover, the Company is keenly eyeing construction of the new pellet facility at Kentucky to support acceptance of new customer orders, with work expected to commence soon.
Research & Development remains high in focus
Net cash outflows from investing activities were AU$0.2 million, with investments aligned towards Research and Development (R&D) and pellet engineering technologies
Focus on Pellet Engineering Technologies
Carbonxt is developing improved methods of extrusion to optimise pellet specifications aligned with customer requirements. The Company continues to streamline its pellet formulations whilst building on a knowledge portfolio of carbon and binder combinations. It would help to enhance Carbonxt’s pellet engineering services to quickly develop customised pellet formulas and recipes.
Furthermore, evaluations are ongoing for its new and additional sources of US-made base carbons to build a platform of high-performing economic raw materials that can be used in activated carbon pellets for a wide array of industrial applications.
R&D initiatives made headway
Recently, to prevent the propagation of Florida Red Tide algal blooms, Carbonxt’s R&D team concluded laboratory tests to deploy new activated carbon formulations. The test results, which have been very promising, has highlighted that those algae could be eliminated within two hours of exposure to the Carbonxt product, leading to more advanced testing applications. The test was supported by a US government grant of US$0.1 million.
Outlook for Carbonxt Business
The 2022 fiscal year has hit the ground running with the Company’s current manufacturing facilities meeting customer demand.
While there is significant momentum for new and expanded orders for PAC and AC Pellets, the Company intends to only accept new ACP sales on confirmation of the Kentucky facility operating date. The decision is taken so as to protect margins and maintain the current cost base.
Commenting on Carbonxt’s next steps, Managing Director Warren Murphy said, “We are now firmly focused on growth and meeting growing demand by bringing the Kentucky manufacturing facility on line with construction pending, and pursuing opportunities for our cleantech in the water and wastewater sectors where there is considerable scope for the Company. Product innovation and refinement through R&D is also an ongoing focus for us. We look forward to providing shareholders with regular updates on progress throughout the current quarter and beyond.”
CG1 stock was trading at AU$ 0.265 on 19 October 2021 (AEDT 02:15 PM), up approximately 2% from its last close.