Carbon Revolution Limited (“CBR”, “Carbon Revolution” or the “Company”) (ASX: CBR), a Tier 1 OEM supplier and a leading global manufacturer of lightweight advanced technology carbon fibre wheels, and Twin Ridge Capital Acquisition Corp. (“Twin Ridge” or “TRCA”) (NYSE: TRCA), a publicly traded special purpose acquisition company, announced today that they have signed a definitive business combination agreement and accompanying scheme implementation deed (“SID”) that is expected to result in Carbon Revolution becoming publicly listed in the U.S. via a scheme of arrangement.
Upon closing of the transaction, the ordinary shares and warrants of the merged company Poppetell Limited, to be renamed Carbon Revolution plc, are expected to trade on a national exchange in the United States, and Carbon Revolution’s shares shall be delisted from the ASX.
The transaction is anticipated to unlock critical investment capital to fund Carbon Revolution’s expansion of operations, which is required to meet its significant growth opportunity while accelerating the Company’s expected path to profitability.
Market Leader in Next-Generation Wheel Technology
Founded in 2007, Carbon Revolution is a global technology company and Tier 1 OEM supplier that has successfully innovated, commercialised and industrialised high-performance, technically advanced lightweight carbon fibre wheels for the global automotive industry.
Carbon Revolution is recognised as a leader in this sector, as validated by its contracts with Ford Motor Company (“Ford”), Ferrari NV (“Ferrari”), General Motors Company (“GM”), and Renault Group (“Renault”).
When new automotive technologies are introduced, penetration typically begins at the luxury or performance end of the market before transitioning to a point of full adoption as a mass market product. Carbon Revolution initially penetrated the performance and premium end of the market with cars that include Ford’s GT and Shelby Mustang GT350R and GT500, Ferrari’s 488 Pista, F8 Tributo, SF90 Stradale, 812 Competizione and 296 GTB, and Renault’s Megane RS Trophy R, and more recently GM’s Chevrolet Corvette Z06. Ford has recently announced an additional program with its 2024 Mustang Dark Horse.
The Company is well positioned to capture demand in new mobility with the global transition to electric vehicles. The Company’s carbon fibre wheels, which can be up to half the weight of aluminium wheels, are expected to help increase range, a critical barrier to EV uptake. Lighter wheels help offset large battery weight, enabling regulatory compliance with key weight class limits. Carbon Revolution’s wheels also provide better performance and handling than aluminium wheels as well as reduced noise vibration and harshness (NVH), while increasing options for aerodynamics, wheel sizing and styling that are less practical with aluminium wheels. Four of the most recently secured engineering programs are for electric vehicles.
Key Investment Highlights
- Early-Mover: Carbon Revolution’s unique and protected — 89 granted or pending patents — next-generation auto technology is years ahead of the competition.
- Leading Incumbent: Carbon Revolution is expected to retain significant market share in a market characterised by high barriers to entry.
- Large Market Opportunity: Automotive passenger wheel market of $38 billion.
- Strong and Diverse Customer Base: Nine current awarded programs and six additional engineering programs in progress, of which four are for electric vehicles.
- Attractively Valued Entry Multiple: Pro forma enterprise valuation of $270 million is 5.4x 2023 estimated revenue and 3.0x 2024 estimated revenue. 98% of 2023 and 2024 estimated revenue is under contract (awarded or engineering) based on the Company’s forecasted revenues from those contracts.
- Rapid Revenue Growth: Total revenue forecast to grow from $28.7 million in CY2022E to $90.1 million in CY2024E representing a compound annual growth rate (CAGR) of 77%.
- Margin Expansion: Automation investments by the Company are driving margin expansion as the business scales, with substantial opportunity to further optimise through expansion into lower-cost geographies.
- Highly Experienced Management Team: Carbon Revolution is led by a forward-thinking team with an average of more than 22 years of experience in automotive technology and manufacturing.
“We see an enormous addressable market for Carbon Revolution’s disruptive efficiency technology with adoption already underway with major car manufacturers,” said Jake Dingle, Chief Executive Officer of Carbon Revolution. “Carbon Revolution’s technology provides an effective next-generation solution to the challenges of transitioning the global automotive industry to new mobility. We have a strong track record working with leading OEMs and a world-class team with a passion for our work. Our partnership with Twin Ridge is a significant milestone as well as an opportunity for Carbon Revolution to continue to build on our early-mover advantages in next-generation auto technology,” he said.
“Carbon Revolution is a sector leader in the production of revolutionary carbon fibre wheels, the next-generation of wheel technology, and has an opportunity to play an important role as the global automotive industry accelerates the shift to electric vehicles,” said Dale Morrison of Twin Ridge Capital Acquisition Corp. “We believe that following this transaction, Carbon Revolution will be well-positioned for rapid growth and adoption as it further enhances its automotive solutions, capitalises on market opportunities and continues to accelerate growth as a U.S.-listed public company.”