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As an occasional poster on here and holder for a fair wee while, Iāve now cashed in. My main reason being here was the arrival of Richard Gibbs, heās going, so am I at a decent exit point. Wishing everyone the best - and hoping my timing was wrong (it usually is!) and onwards and upwards. Cheers!
Oh and IF JS could improve GM further in 2024 towards 40% overall plus revenue growth towards $9M (not expected - I know) we are then looking at a breakeven year. ie the EBITDA loss of this pass year is history. Itāll be interesting to monitor further shipments.
Thanks for this AJP but if I read that link you posted correctly Chemtan received 4 shipments - 3 in Feb 24 1 in March, meaning 160T so far for this year. It looks like leather treatment is indeed becoming a big deal. And hopefully at juicy Gross Margins.
Fair point WD. And there have been many others fair points made by the various bystanders to this decision, including Smart Investment, Elsol et al. There is validity in much of them, if not all. BUT on the capacity point, it must be remembered, that JS has always said CURRENT plant capacity can handle up to $15M in revenue. So, the idea that capacity shortfall is a reason for the recent termination of the major customer negotiation (leading to the $3M+ rev ālossā) cannot be correct.
UNLESS waiting in the wings of the coming months are the beginnings of new higher margin contracts with potential revenue pipelines that would eat up the now āreleasedā capacity, equivalent to some $8M and more.
Other metrics such as Ops Hires and Raw Material imports are for this reason worth continued monitoring.
Too bad Smart. I understand the frustration. I recall when I took up a SME MD job, one f the first things I did - as profitability wasnāt good - was look at profitability by customer. Busy fools was an apt descriptor and for those clients, their refusal to accept price increases was GOOD for us. We said cheerio and focussed on stuff that made money. Non profitable growth is a recipe for disaster - glad weāre not doing that, it would seem. I suspect this client has kept their previous formulations on the back burner, but it would surprise me if they returned to the negotiating table. JS, however, really might not be bothered given that his factory, logistics, admin, customer services, sales, finance can focus on the other higher margin (hopefully) stuff coming down the line.
I pulled this info from the āMarket Driversā slide from an Itaconix 2017 presentation. Still seems pretty valid. Though the BAYER share price is down the pan! They could do worse than look at us.
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MARKET DRIVERS
Increasing consumer expectations, regulatory changes and environmental best practice driving major consumer brands to seek sustainable raw materials
P&G ā Goal of using 100% renewable or recycled materials for all products
LāOreal ā By 2020, 100% of products to have an environmental or societal benefit Croda - >60% of raw materials currently derived from natural or renewable resources
āTogether for sustainability ā
Major Chemical Companies join initiative
AkzoNobel, Arkema, BASF, Bayer Clariant, DSM, DuPont, Evonik, Henkel, IFF, Lanxess, Solvay, Wacker
Developing sustainable supply chains
Well aligned with global trend and ideally positioned to play a significant role in the redesign of many supply chains to improve sustainability and performance
******************************************************
You are probably right Elsol. Either way Iāll be hanging on. 18M net profit on a 100M sales would be very nice. With a 40% dividend payout on that amount would be 7.2M would be ca. 0.50 per share, assuming no further share dilution. Itās a waiting game for sure.
The CEO John Shaw, I think in his last interview, stated a goal/ambition a few years from now (letās call it 10) was to be a $100M company. I really hope that happens - he sounded quite bullish. If it does, I think we can at that point be considered to be a quite mature chemical ingredients business. I wonder what PBT & PAT margins might look like then?
There certainly is s Elsol - and just found this piece of recent research (2022) where an acknowledgment to ITACONIX for their financial support is given. The essence of this research is this - if Iāve understood correctly - it is possible/would be the intention to use Itaconix manufactured polymers which can be made to be highly pH sensitive to deliver drugs into the body to locally attack low pH (acidic) environments - such as cancers. This is probably a long long way off on the ITX product roadmap, but given that it has been an active area of recent research, it sounds like itās worth a question to John at the next Q&A. I wonder we are in discussion with any of the drug majors?
https://pubs.rsc.org/en/content/articlepdf/2022/na/d2na00399f
Found it! And well worth a watch:
https://youtu.be/9ksKyvrPQU4?si=ZnHsi3al2IVew_OW
Whatās Thordon up to I wonder? Havenāt seen anything from him for a while. Heās normally pretty good on technical stuff.
Good Post AJP. And interestingly the first patent entry on the link you post https://patents.justia.com/inventor/yvon-durant has as co-inventor Jim Gordon. He is ex-Unilver. So I think the Itaconix Executive Team will know exactly what the ābig boysā Unilever, P&G, et al need.
I also recall seeing a video presentation a while back from the CTO Yvon Durant where he stressed the strategic significance of Itaconixā patented polymerisation production process. It was a fascinating watch.
Great find AJP! And hugely significant, because I asked my wife if sheād heard of Tresemme, and she said āof course, I use it all the time!ā
I think we are really now going to move up through the gears and it would be fab if we get to hear of capex spending plans later this year to accommodate & handle future growth.
Haha great post Spindok. I have no more a periscope than you, had i had, I might have sold a whack a couple of years ago. I think Iām still glad I didnāt because I think we are finally heading towards an āUp-Periscopeā moment. I think our CEO and CTO believe the same.