Carbonxt Nears Kentucky Plant Launch, Raises $2.5M, Boosts Sales and Margins
Carbonxt Group advances commissioning of its Kentucky activated carbon plant while securing $2.5 million in fresh capital and reporting strong sales growth and cost savings ahead of FY26.
- Kentucky activated carbon facility commissioning progressing, nearing production
- Raised $2.5 million via Share Purchase Plan, convertible notes, and placement
- Activated Carbon Pellet sales rebound; Powdered Activated Carbon sales strong under ReWorld contract
- Lease restructure at Black Birch reduces fixed costs by over 50%, improving cash flow
- Revenue up 49.8% quarter-on-quarter to $4.6 million; gross margin improved to 47%
Kentucky Facility Nears Production
Carbonxt Group Limited (ASX: CG1) has reported steady progress in commissioning its flagship activated carbon facility in Kentucky, a project developed through its investment in NewCarbon Processing, LLC. While commercial production has not yet commenced, the company is finalising critical electrical and insulation works, with mechanical completion achieved and operational launch imminent. Carbonxt currently holds a 40.3% stake with options to increase to 50%, positioning the facility as a future revenue and margin driver.
Capital Raises Support Expansion
During the March quarter, Carbonxt successfully completed a Share Purchase Plan (SPP) raising $1 million, supplemented by an additional $1.5 million raised through convertible notes and a placement. These funds are earmarked to support the Kentucky facility’s commissioning and expansion, as well as to bolster working capital. The capital injections reflect strong shareholder confidence and underpin the company’s growth ambitions in the US water treatment market.
Operational Improvements and Sales Momentum
Activated Carbon Pellet (ACP) sales rebounded sharply following the resolution of operational issues at a major customer, with volumes returning to expected levels. Powdered Activated Carbon (PAC) sales remained robust, driven by deliveries under a significant $24 million, four-year contract with ReWorld, which commenced in October 2024. These sales gains, combined with a lease restructure at the Black Birch PAC facility in Georgia that cut fixed lease costs by over 50%, have improved the company’s cash preservation and operational efficiency.
Financial Performance Strengthens
Carbonxt reported total revenue of $4.6 million for the quarter, a 49.8% increase over the prior period, with PAC sales accounting for 52% of revenue. Gross margins improved to 47%, up from 40% previously, supported by cost reductions of $1.5 million per annum implemented in the prior quarter. The company achieved positive EBITDA in each month of the quarter, reflecting disciplined cost management and an improved product mix.
Strategic Positioning Amid Regulatory Tailwinds
The company is well-positioned to capitalise on growing demand driven by new US Environmental Protection Agency (EPA) regulations targeting PFAS contaminants in drinking water. These regulations mandate compliance by 2029 and impact utilities serving over 130 million Americans. Carbonxt’s PAC and upcoming Granular Activated Carbon (GAC) production from the Kentucky facility align with these market needs, offering a competitive edge in a rapidly expanding segment.
Outlook and Market Dynamics
Looking ahead, Carbonxt anticipates a stronger FY26, supported by a restructured cost base, normalised ACP customer activity, and sustained PAC sales momentum. The Kentucky facility’s commissioning will triple production capacity and enable entry into the larger liquid-phase activated carbon market. Additionally, potential US trade policy shifts favouring domestic producers could enhance Carbonxt’s competitive positioning against imports from India, Sri Lanka, and China.
Managing Director Warren Murphy emphasised the company’s disciplined execution and strategic focus, highlighting the importance of shareholder support in funding growth initiatives and expanding presence in the US water treatment market.
Bottom Line?
With commissioning hurdles nearly cleared and fresh capital secured, Carbonxt is poised to accelerate growth as regulatory demand for activated carbon intensifies.
Questions in the middle?
- When exactly will the Kentucky facility commence commercial production and start contributing revenue?
- How will evolving US trade policies impact Carbonxt’s competitive advantage against imported activated carbon?
- What are the risks if regulatory adoption of PFAS treatment technologies slows or faces delays?
