Deferred Sales and Maintenance Outage Challenge Carbonxt’s Cash Flow Outlook
Carbonxt Group Limited reported a strong 72% revenue increase to $3.8 million in Q2 FY26, driven by robust demand and strategic progress at its Kentucky facility, which is poised to triple group sales. The company also increased its stake in New Carbon Processing, advancing its North American growth ambitions.
- 72% revenue growth to $3.8 million in Q2 FY26
- Activated Carbon Pellet sales deferred due to maintenance outage
- Kentucky facility construction completed, commissioning underway
- Ownership in New Carbon Processing increased to 46.7%
- Regulatory tailwinds from US EPA PFAS standards support demand
Revenue Growth Amid Operational Challenges
Carbonxt Group Limited (ASX – CG1) has delivered a notable 72% increase in customer receipts for the December 2025 quarter, reaching $3.8 million compared to $2.2 million in the same period last year. This growth underscores the company’s strengthened market position despite a 29.4% decline in Activated Carbon Pellet (ACP) sales due to a maintenance outage at its Black Birch plant. The outage, caused by delays in third-party servicing, temporarily deferred $900,000 in ACP sales into the following quarter.
Kentucky Facility – A Game-Changer on the Horizon
Construction of Carbonxt’s Kentucky activated carbon facility is now complete, including the kiln’s insulation, refractory lining, and initial heat treatment. The commissioning phase is underway, with remediation works addressing operational stability and redundancy. This facility is expected to be transformational, potentially tripling group sales and enabling entry into the liquid-phase activated carbon market; a sector significantly larger than the company’s traditional air-phase segment.
The Kentucky plant’s design targets premium-grade activated carbon production for PFAS filtration, wastewater treatment, and industrial emission control. These markets are buoyed by tightening US Environmental Protection Agency (EPA) regulations, which maintain strict maximum contaminant levels for harmful PFAS compounds, driving sustained demand for high-performance filtration solutions.
Strategic Investment and Ownership Consolidation
Carbonxt has increased its ownership in New Carbon Processing, LLC to 46.7% following a US$750,000 convertible note funding in October 2025 and a $600,000 share placement in January 2026. The company is progressing toward a 50% stake, positioning New Carbon Processing as a cornerstone of its North American growth strategy. These capital raises have bolstered Carbonxt’s balance sheet, supporting ongoing commissioning activities and working capital needs.
Regulatory Momentum and Market Outlook
The US EPA’s reaffirmation of stringent PFAS standards, including a compliance deadline extension to 2031, continues to underpin demand for Carbonxt’s activated carbon products. Powdered Activated Carbon (PAC) sales remain steady, supported by long-term contracts such as with ReWorld. The broader activated carbon market is forecast to grow at a compound annual growth rate of 5–9% through to 2030, driven by regulatory pressures and increased industrial activity.
Carbonxt’s US-based manufacturing footprint and leaner cost structure position it well to capitalise on potential trade policy shifts favouring domestic producers. The company anticipates margin expansion in FY26 as it scales production and leverages its enhanced product mix.
Looking Ahead
With commissioning progressing and deferred sales expected to be caught up in the current quarter, Carbonxt is on track for full-year profitability. The Kentucky facility’s commercial production and first revenues are targeted for early 2026, marking a pivotal step in the company’s growth trajectory within the US activated carbon market.
Bottom Line?
As Carbonxt moves closer to full production at its Kentucky facility, investors will watch closely to see if the company can sustain its revenue momentum and capitalise on regulatory-driven demand.
Questions in the middle?
- Will the Kentucky facility meet its early 2026 commercial production target without further delays?
- How will Carbonxt’s increased ownership in New Carbon Processing influence operational control and profitability?
- What impact could evolving US trade policies have on Carbonxt’s competitive position against imported activated carbon?
