Carbonxt Group Limited advances its Kentucky activated carbon facility with increased ownership and imminent kiln commissioning, while securing $1 million in convertible notes to support growth. The company reports steady revenue and strong market positioning amid tightening US EPA PFAS regulations.
- Ownership in Kentucky facility increased to 43.7% after US$1 million investment
- Kentucky kiln commissioning expected in August, tripling production capacity
- Quarterly revenue steady at $4.3 million with positive EBITDA in second half FY25
- Raised A$1 million via convertible notes from major shareholder for working capital
- Strong demand driven by tightening US EPA PFAS water treatment regulations
Kentucky Facility Nears Operational Launch
Carbonxt Group Limited (ASX – CG1) has taken a significant step forward in its strategic growth plan with the Kentucky activated carbon facility nearing completion. The company increased its ownership stake to 43.7% following a US$1 million investment, marking the first tranche of a planned US$3.25 million commitment. Mechanical completion has been achieved, with kiln electrical testing and control wiring finalized. The final phase of kiln insulation is expected to conclude in August, paving the way for commissioning and production start.
This facility is pivotal for Carbonxt, as it is designed to triple the company’s production capacity and enable entry into the high-value liquid-phase activated carbon market, a sector substantially larger than its current air-phase focus. Despite some delays in commissioning, the board remains confident in the asset’s long-term value, especially as peer operators are investing heavily in similar capacity plants.
Financial Performance and Capital Raising
Carbonxt reported quarterly revenue of $4.3 million, a modest 8% decrease from the previous quarter, maintaining gross margins at 47%. The company achieved positive EBITDA in every month of the second half of FY25, reflecting improved cost control and operational efficiencies. Activated Carbon Pellet volumes stabilized after a rebound in the prior quarter, while Powdered Activated Carbon sales remained robust, supported by long-term contracts such as with ReWorld.
To support working capital and growth initiatives, Carbonxt successfully raised A$1 million through convertible notes issued to major shareholder Phelbe Pty Ltd. The notes carry a 9.5% interest rate and a conversion price of A$0.08 per share, with an incentive of one unlisted option per share issued upon conversion, pending shareholder approval. This capital injection is expected to underpin the company’s operational scaling and the Kentucky facility’s commissioning.
Regulatory Tailwinds and Market Positioning
Carbonxt is well-positioned to capitalize on tightening US Environmental Protection Agency (EPA) regulations targeting PFAS contamination in water supplies. The EPA’s reaffirmation of strict maximum contaminant levels for hazardous PFAS chemicals is accelerating demand for high-performance activated carbon products. With three US-based production facilities, Carbonxt offers a vertically integrated, tariff-free supply chain that appeals to utilities and industrial clients seeking reliable domestic sources amid potential trade policy shifts.
The company’s strategic focus on both air and water purification markets aligns with growing environmental and regulatory pressures. The Kentucky facility’s commissioning will enable Carbonxt to expand into the liquid-phase carbon market, which is several times larger than its current market segment, positioning the company for meaningful revenue and margin growth in FY26.
Corporate Developments and Outlook
Alongside operational progress, Carbonxt announced key corporate changes, including the appointment of Laura Newell as Company Secretary and the resignation of Non-Executive Director Imtiaz Kathawalla. These changes come as the company streamlines governance to support its next growth phase.
Looking ahead, Carbonxt enters FY26 with a leaner cost structure, stable product volumes, and strong commercial momentum driven by regulatory demand and domestic supply advantages. The company’s ability to bring the Kentucky facility online and scale production will be critical to unlocking its growth potential in the expanding activated carbon market.
Bottom Line?
With the Kentucky facility’s commissioning imminent and regulatory demand intensifying, Carbonxt is poised for a transformative FY26; though execution risks remain.
Questions in the middle?
- When exactly will the Kentucky facility achieve full commercial production?
- How will the company manage the remaining $2.25 million investment tranches for majority ownership?
- What impact will potential changes in US trade policy have on Carbonxt’s competitive positioning?