Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Welcome Scarpa and what a good time to take the plunge. This is by far the best company share chat around that I know of, with loads of valuable contributors who give a good balance of opinions.
JD this is a very good point and I am inclined to agree with you. This ties in with the last FinnCap forecast which I posted last night. Essentially the message for 2022 seems to be growth at a cost. So I too expect cash reserves to be depleted and you raise a very good point - where will the cash come from to fund growth in 2023?
If revenue is higher than expected in H2 2022 the question for me is does this improve the cash position or make it worse? We will soon have an answer.
On a more positive note 2023 is forecast EBITDA break even and if we are ahead on revenue and gross margins have improved then we may move to profitability sooner than John Shaw previously alluded to. The markets are forward looking so much will depend on the forecast for 2023.
Reading the last FinnCap research note on 14th September it’s forecast for 2022 had positives and negatives:
“We have raised revenue expectations from $4.7m to $5.2m, reflecting progress in commercial volumes and price raises, with an improvement in H2 gross margins and some additional opex costs resulting in a $0.5m increase in adj pre-tax loss to $1.5m. Year end net cash is now expected at $0.2m. In FY23, we have increased revenue from $7.6m to $8.0m, conservatively holding forecasts unchanged at EBITDA breakeven.”
(Elsewhere in the report they state they expect improvement to 30% gross margin in H2).
So the positives forecast are:
- Increased revenue
- Improved gross margin
But the negatives forecast are:
- Increase in pre-tax loss
- Reduction in year end net cash
Perhaps this serves as a helpful reality check prior to the upcoming trading update.
Thordon any idea if there any scope for Itaconic Acid to be used by Bemis in their bonding solutions or alternatively any potential collaborations you can think of?
Totally agree AJP. There’s some chunky buys going in. I think by Tuesday the share price will be up a fair bit in anticipation of a trading update on Wednesday, though of course there are no guarantees when it will land.
It will be interesting to see what happens to the share price following the trading update. I think it will all depend on just how positive the update is. i.e. is it just a satisfactory update in line with guidance or is it something more spectacular that reflects the progress we believe the company is making.
I think we’re now anticipating next Wednesday as the likely trading update but with Paul Leblanc having only just been appointed and one of his roles being Audit Chair, is it possible that the trading update could be a bit later?
I obviously welcome the presentation and Q&A sessions but I would prefer that they did not tie them in with the results announcements. Reason being is that gives day traders notice the results are coming in a weeks time and they pump the price and then sell off heavily on the day.
Therefore I hope the trading update lands fresh with no prior warning and they then arrange a presentation session a week after the results are out.
By my calculations based on today’s trading it only took around £30,000 of net buys to lift the share price by 1 pence. Just think about that.
With 68% of shares held by insiders and institutions that leaves 32% of shares floated but of these 54% are held by institutions so that leaves less than 15% of all shares to private investors like me and you. That’s how the share price rocketed up so fast in the past on good news and why a strong trading update could have a profound impact on share price. 15p to 20p a share might sound like pie in the sky today but it could be here a lot quicker than people realise, and longer term I have much loftier hopes and expectations. GLA and always DYOR.
Agree that seems to be the pattern AJP, assuming there is going to be a presentation. If no presentation, it’s possible we could just get the results in the morning. I’m waking up every morning excited that today could be the day! With the change in general market sentiment on stocks and crypto the timing of the update couldn’t be better!
I was mulling over the recent appointment of Paul Leblanc from Bemis Associates which is extraordinarily good news for Itaconix. As CFO he must already be incredibly busy (and already well paid) and I did ponder why have Bemis Associates agreed to this? Undoubtedly he will be able to guide and support Itaconix through its new phase of rapid growth and as Audit Chair that would give him the best insight into Itaconix finances.
So is he just doing Itaconix a massive favour perhaps because of mutual associates or is there more to this?
1. Revenue. Upgraded forecast is $5.2m for 2022 but we know the company delivered $3.1m in H1 of $2.7m was detergent.
So IMO there is a strong likelihood we will beat the $5.2m forecast.
2. Gross profit margin in H1 was 25% compared to 27% for the full year of 2021, which was below the overall gross profit margin goal of at least 35%. With the most recent price increases taking effect in September, raw material costs stabilizing, and more beauty and hygiene revenues, the Company expects significant improvements to gross margins in the second half of 2022.
If both revenue comes in above market forecast and gross margins improve as predicted, then I expect the market to respond in a very favourable way. I made another little top up this morning of 20,000 as I optimistically believe the days between now and the trading update will be the last window of opportunity to buy shares at this price.
Hi did anyone else notice that Itaconix changed its intro on its RNS introductions? The 7th September 2022 notice of half year results had the new intro.
Old intro:
Itaconix (AIM: ITX) (OTCQB: ITXXF), a leading innovator in plant-based specialty polymers used as essential ingredients in everyday consumer products
New intro:
Itaconix plc (AIM: ITX) (OTCQB: ITXXF), a leading innovator in plant-based specialty polymers used to decarbonise everyday consumer products.
The change from “used as essential ingredients” to “used to decarbonise” is a subtle but smart strategic change in my opinion.
Great to see that Paul LeBlanc has already updated his Linked-In profile. Under Experience right at the top it now has the Itaconix logo and next to this it states:
Board of Directors - Audit Chair
Itaconix Corporation
Jan 2023 - Present
Yeah I guess traders are happy to make a quick 10 - 15% profit and move on.
I’m usually both excited and a bit nervous ahead of the trading updates but this time I am not nervous thanks to last week’s RNS:
- The appointment of Paul LeBlanc
and
- Dr. Peter Nieuwenhuizen’s comment ("As Itaconix enters a new phase of development with its rapid revenue growth, I am pleased to welcome Paul to our Board”).
As the company are not likely to break even until maybe late 2023 or early 2024 it does leave open the potential to raise funds at some point to support their rapid expansion, though John Shaw did down play the prospect of that in his last session with investors. If that does happen again that doesn’t worry me as investment to support growth is normal.
RNS could land as soon as tomorrow but I think it will be next Wednesday. Exciting prospects ahead :-)
I think it was 2 years ago we started talking about “exponential growth” at Itaconix based on what John Shaw described as the addressable market and Itaconix’s share of this. However, up until yesterday I was uncertain how Itaconix could achieve such lofty aspirations. I was also cautious about how many years it would take Itaconix to turn gross profits into net profits.
I feel that Paul LeBlanc is the missing piece of the jigsaw to enable this massive scaling up to happen and transition to profit. He is someone who over 20 years has witnessed and implemented this at Bemis. He has the experience and knowledge to fast track Itaconix through this.
My beef about the share consolidation not having taken place has also gone away as it makes a lot more sense to push Itaconix to US investors now they have Paul LeBlanc’s financial credentials on board. He is someone US investors will have heard of and give them confidence to invest in Itaconix.
It will be very interesting to see if there is any change to John Shaw’s usually conservatively worded outlook in the upcoming trading update.
Amidst all the excitement around Paul LeBlanc joining the Itaconix board it’s also worth noting the excellent news about Peter Nieuwenhuizen becoming the permanent chair at Itaconix.
On Peter’s Linked-In profile, as well as his Board Chair position at Itaconix, he holds the following positions:
- Founding Partner - European Circular Bioeconomy Fund. ECBF invests and partners with ambitious and visionary entrepreneurs to accelerate late-stage Circular Bioeconomy companies in Europe.
- Board Chair - Green Chemistry & Commerce Council (GC3). GC3 is a multi-stakeholder collaborative that drives the commercial adoption of green chemistry by catalysing and guiding action across all industries, sectors and supply chains.
Interestingly GC3 is also based in Massachusetts which makes me wonder if it was Peter who introduced Paul LeBlanc to Itaconix?
Congratulations to John Shaw, Laura Denner and the rest of the team at Itaconix for both these first rate appointments.
Returning to today’s good news. Bemis are based in Shirley, Massachusetts which is only 1 hour away from Itaconix. Paul LeBlanc joined Bemis in 2008 as their world wide financial controller before progressing to the very top at Bemis. His resume includes costing analysis, pricing strategy development and demand planning for global supply chain. These are all attributes that will help Itaconix improve its gross margins and realise its revenue expansion plans. I can’t imagine a better chair of an audit committee. He also has a lot of experience in mergers and acquisitions.
There is much to like about Bemis as a company with over 100 years experience which like Itaconix focuses on tailoring and developing their seamless technology to meet customer needs. They are also hot on developing new environmental sound solutions.
The fact the successful CFO of a global player with over $200m in revenue has joined Itaconix’s board speaks volumes for the potential he must see at Itaconix.
Surfie really don’t know what your problem with me is but starting to feel a bit personal. I am certainly not the only one who mentions their buys on this forum but you only direct your comments at me. Go do one!
This isn’t just any NED appointment this is massive. BEMIS share a lot of similarities with Itaconix in how they tailor and develop solutions to meet customers needs. Paul LeBlanc has been there for over 20 years and doesn’t get involved in many other companies so to get him on board at Itaconix is a massive achievement and testament to Itaconix.
Also as a side note BEMIS have been known to buy up other companies that compliment them. Most recently they acquired Protechnic in France.
I’ve been trying to add another 25,000 shares since 8am but transaction is still pending so I imagine I’m not the only one buying on the back of this great news.
@Thordon I share your general optimism which is why I keep topping up while the price is what I consider absurdly cheap.
I recall John said in his last Q & A session that it was very difficult to draw any conclusions from shipment data as they receive their raw materials from multiple sources. However, I tend to agree with you that the numbers appear to have increased significantly. I suppose this is to be expected to meet growing revenue predictions. However, I also wonder if they have over stocked as a hedge against any future China supply issues. Hopefully I’m being over cautious in my thinking as I would much rather you are right lol