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JD - not sure why you need it but anywhere here is your proof. If you look through my previous posts you will see they were marked “strong buy”. As soon as I read the 2nd April RNS, I posted the comment below marked as “Strong Sell” and sold my shares. If you look through my previous comments you will see I have always been positive (sometimes frustrated) about ITX and believe it or not I like the company and believe it does have a future. But one can not ignore the simple facts that we have lost our largest customer and while they may be low margin, the loss of revenue means that the company’s overhead costs have doubled relative to their revenue prior to this announcement. If there is no significantly positive news before the H1 update I believe the re-entry point to be around 115p.

Anywhere here is the post:

Absolute disaster

2 Apr 2024 08:09

Itaconix has just lost its largest customer. Predicted Revenue for 2024 slashed by almost half!!!

This might be great for gross margin but it absolutely screws us for revenue.

I’m sorry but you can not paint a positive picture with this and the share price today and for the rest of 2024 will reflect this.

JD - time will tell. I’ve been on the money so far haven’t I, and know the business, trading pattern and market reaction to this share very well. But good luck to you mate.

PS - two words to save you money “ Stop Loss”.

DYOR

Lol Surfie

If you think it’s bad now wait for the 2024 H1 trading update. If you think about it logically without the emotion of being a shareholder you know revenues will take a battering in H1 from the loss of their largest customer and future business not yet factored in.

Thats why I sold out at 190p and continue to wait for an opening later in the year after the likely H1 bloodbath.

Thanks Elsol this is helpful. The ACF guide is fairly basic. Hopefully a full initiation paper with a valuation and forecasts will follow.

I’d like to reinvest but I’m worried that the share price will get hit on release of the H1 trading update as revenues will be markedly lower than the previous trading period.

I’m still sat on the sidelines for now but thought I’d contribute a potential positive tail wind for Itaconix which I think has been overlooked.

In its most recent presentation Itaconix commented that it was unaffected by the Suez Canal shipping issue as all its raw material comes from the opposite direction. This has been mentioned on here.

But what I don’t think has been elaborated on is that this could give the company a financial and strategic advantage over other chemical companies who do traditionally use the Suez Canal shipping route as they have seen a 300% increase in shipping cost which they will have to pass on to customers.

It might encourage more companies to switch their products to include Itaconix formulations.

Bearded - Let’s see how well your post ages. Today’s rise on a bit of publicity won’t change the fundamentals for 2024.

No hidden agenda. I’ve made my intentions very clear.

I believe the time to buy will be next January before the H2 trading update. That’s the earliest we will get any insight into the expected improved margins because of the timing of the exit of the largest customer during H1.

I continue to maintain there will be share price drift downwards unless the company salvages a deal with its largest customer. The figures don’t lie!

Thanks for the acknowledgment Dougerboy. For those who have followed my posts here over the past 3 years you will know I am not a day trader and I am pro-Itaconix.

Unfortunately as soon as news of the loss of the largest customer dropped and the revised forecast income for 2024, I worked out that this put us back 1 year which was confirmed by their broker and in yesterdays presentation.

Unless they manage to renegotiate with their largest 2023 customer the share price will drift down to where we were at the start of the year. That means 110p to 120p. It’s even feasible we touch 100p. Ask yourself why invest now when we are months away from H2 trading update at the end of January 2025. Holding Itaconix shares during the next 8 months is like dead money unless they pull a rabbit out the hat.

Long presentation and a lot of questions. So here is my honest take on today and whether now is the right time to invest or not.

Positives:

1. The company clearly justified its decision and reasoning regarding its largest customer. Feels like the door is still open there.

2. Really liked all the graphics. They illustrated gross margins of 72% in hygiene and 63% in beauty which are very impressive.

3. Clear explanation on super absorbents and the company are 100% right to get the product right first. It has to match or be superior to existing products to justify the premium.

4. Glad they are going to be pushing investment in Itaconix outside the U.K. I noticed there are listings for Itaconix in France (18GO.F) and Germany (18GO.SG and 18GO.DU).

5. Overall the company is doing all the right things.

Negatives

1. Unless the company wins back their largest customer of 2023 revenues for 2024 will be lower than 2023. We all know why that it but the market will focus on cold hard numbers.

2. As a result of point 1 the next trading update for 2024 H1 will be underwhelming (unless it does a deal with its largest customer).

3. As was repeatedly said break even and all numbers have shifted back 12 months.

My overall conclusion therefore is that the company is a good long term investment. I’m just not convinced that now is the time to invest. I am worried that there will be share price drift until the next really positive RNS. So I’m going to maintain a watchful wait for when best to reinvest.

It was the outlook part of the statement that interested me. Hopefully we will get more insight this afternoon:

“We are pursuing growth from other existing customers and from new accounts with a view to replenishing this revised expectation with higher margin revenues.

“Our balance sheet provides us with new opportunities to target higher revenue growth. There are many exciting opportunities for us to develop new ingredients and increase revenues and we are positioning ourselves to better capture the commercial value of our performance ingredients with new customer wins, new volumes in non-detergent uses, and important new product development initiatives.”

FG - No. I was right to cash out at 190 as demonstrated by this week’s share price. Monday could go either way so I’m happy to wait and see whether I should reinvest or not. It’s much safer to catch a rising tide than to be left high and dry when the tide goes out.

I hope it is a rising tide on Monday and wish all investors here good luck.

Elsol. I agree and I go into Monday with an open mind. If I like what I hear I will reinvest. I am hoping they will spell out what gross margins look like post the loss of their largest but lowest margin customer. It is no time to be secretive and coy.

After Monday I guess it will be summer time before the H1 trading update, so they need to seize their opportunity on Monday and fill investors with confidence. Ball is in their court.

On Monday it will be interesting to see, now that Canaccord is Itaconix’s sole Broker and nominated advisor, whether there is any change to the style of presentation.

I also wonder whether Canaccord had any influence in the recent decision to axe their largest but lowest margin customer. At the very least the company would have got their prior approval for such an important decision.

I am hoping that with Canaccord’s influence there will be a much more polished cut-throat display on Monday that can give old and new investors confidence to invest moving forward.

Monday is compulsive viewing whatever side of the track you are on.

Hi AJP

In the spirit of transparency these are the 2 questions I have submitted:

1. The company had previously referred on many occasions to “sticky revenues”. The recent loss of Itaconix’s largest customer has therefore shaken investor confidence, as reflected in the share price. What assurance can the company give to investors about future growth trajectories?

2. What impact will the decision have on gross margins? Please can you give before and after (estimated) % gross margin figures. If investors can see expected improvement in gross margins this would go a long way to improving investor confidence. A graphic would be nice!

Out of curiosity I did a bit of research to try and work out who was Itaconix’s largest customer in 2023. My money is on Hannaford Bros for these reasons:

1. Their HQ is within an hour of Itaconix

2. Itaconix’s polymer makes up 10% of the powder in Hannaford’s automatic dish detergent pods

3. Significant sized company

4. I believe their president Mike Vail and John Shaw are friends.

5. Profile matches the information in the proactive video posted earlier this week.

5. I also found this article from last year.

https://www.businessnhmagazine.com/article/itaconix-the-nh-company-you-donrsquot-know-but-is-part-of-your-daily-life

Elsol it isn’t scare mongering - it’s cold hard facts!

Loss of largest customer accounting for about half of all revenue in 2023.

Positive EBITDA pushed back a year to 2026

Time to stop seeing the world through rose tinted glasses. Your over optimistic posts are more to blame for “poor PIs” continuing to loose money here. Keep pumping based on scant speculative information to explain this disastrous business decision and see where it gets you.

Elsol - happy to disclose that yes I sold out at 190p as soon as I learnt of the disastrous news. You can paint the decision any colour you like but the bottom line is the board FAILED to renegotiate acceptable terms with its largest customer.

- no I don’t want a re-entry. The company is not investable at present.

- maybe if there is positive news next January I will re-enter. Until then I will monitor developments.

- lovely company but not a lovely investment

Sadly I tend to agree that the share price will continue to fall - potentially back to 120p. My logic for this is as follows:

1. The trading update will just repeat the bad news. Canaccord advised it was our largest customer worth half the 2023 revenue.

2. Canaccord confirmed projections have moved back a year. We are now looking at 2026 for positive EBITDA.

3. The money markets move money from minute to minute. They are not going to leave money sat around waiting until January 2025 which is when the next likely positive trading update will occur.

Unless there is unexpected positive news I can’t see any significant improvement in share price until early 2025

Takes a brave person to catch a falling knife. I’m waiting on the sidelines until we bottom out which may not be until a few days after the trading update.

Canaccord confirmed the loss of ITX’s single largest customer. They “accounted for around half 2023 revenue”.

2024E revenue forecast reduced from $9.5m to $6.2m

“We expect gross margin for Itaconix to be higher with other customers. However, the absolute lower revenue means a significant cut to EBITDA expectations for this year and next year”.

EBITDA 2024E reduced down from (0.8) to (1.6)

2025E reduced down from 0.2 to (0.6)

2026E 0.5

All figures US$m.

Canaccord state that they are essentially pushing numbers out one year to the right (which is what I calculated myself yesterday). Therefore 2026 is now forecast to be the first positive year.

Price target downgraded from 400p to 325p

Some positive points to cling on to:

Canaccord remain Buyers

Itaconix will remain in a substantial cash positive position throughout the forecast period thanks to the 2023 fundraise.

Excellent balanced post BR

Yesterday’s RNS felt like a rushed effort to get the bad news out before it leaked out. Given these negotiations must have been ongoing for some time it surprises me that the company couldn’t come out with a better statement.

“If I were CEO” I would have also said, based on our modelling our gross margin will increase from 30% to XX%.

That would have made yesterday’s bad news much more palatable.

Let’s hope that the upcoming RNS gives us this level of detail and assurance. We need clear business projections not words. Until then the share price will just drift.