Liquidity Woes Shadow Carbonxt’s Progress on Kentucky Activated Carbon Plant

Financial Performance and Operational Highlights

Carbonxt Group Limited has reported a mixed but cautiously optimistic set of results for the fiscal year ended 30 June 2025. The company recorded a 7.1% increase in revenues, reaching $16.2 million, driven primarily by a recovery in volumes from its largest customer and strategic price increases across its product portfolio. Despite this top-line growth, underlying EBITDA declined sharply by 85.2% to a loss of $462,563, reflecting ongoing cost pressures and investments in growth initiatives.

Nevertheless, the net loss after tax narrowed by 16.7% to $6.76 million, an improvement attributed to better gross margins and operational efficiencies, including reduced manufacturing shifts and a lease restructure at its Black Birch Powdered Activated Carbon (PAC) facility. The company achieved positive EBITDA in each month of the second half of FY25, signaling progress toward financial stability.

Kentucky Facility and Strategic Growth

A key development for Carbonxt is the near completion of its Kentucky liquid-phase activated carbon facility, operated through its joint venture NewCarbon Processing LLC. The company increased its ownership stake to 43.7% during the year via a $2.25 million investment, with plans to reach 50% subject to milestone achievements. Mechanical completion has been achieved, with final electrical and kiln works underway. This facility represents Carbonxt’s entry into the larger and higher-margin liquid-phase activated carbon market, expected to materially boost revenues and margins from FY26 onwards.

Carbonxt’s strategic positioning is further supported by tightening US Environmental Protection Agency (EPA) regulations on PFAS chemicals, which are driving increased demand for activated carbon products in water treatment. The company’s vertically integrated US production capabilities and renewable feedstock usage at Black Birch align well with growing environmental, social, and governance (ESG) priorities among utilities and industrial customers.

Liquidity and Going Concern Challenges

Despite operational improvements, Carbonxt faces significant liquidity constraints and covenant breaches under its Pure Asset Management loan facility. The company breached the minimum cash balance covenant during FY25, leading to classification of the $11.56 million loan as current liability. However, lender waivers have been secured through August 2025, providing temporary relief. Cash reserves declined sharply to $480,687 at year-end, down from $4.14 million the prior year, and operating cash outflows totaled $4.75 million.

To address these challenges, Carbonxt has launched a fully underwritten non-renounceable pro-rata entitlement offer expected to raise approximately $697,772 before costs. The company’s directors remain confident in its ability to continue as a going concern, contingent on successful capital raises, commissioning of the Kentucky facility, and sustained operational cash flow improvements.

Outlook and Market Position

Looking ahead to FY26, Carbonxt aims to bring the Kentucky facility into full production and capitalize on the expanding liquid-phase market. The company plans to leverage its PAC and granular activated carbon (GAC) products to capture a larger share of the PFAS treatment segment, while maintaining strict cost discipline to achieve positive cash flow and profitability.

With three US production sites either operational or near commissioning, and supportive regulatory tailwinds, Carbonxt is positioning itself for a pivotal year. However, the company must navigate competitive pressures, regulatory dependencies, and liquidity risks to realize its growth potential.