Itaconix (LSE:ITX) — Final Results

0:01 Good afternoon, ladies and gentlemen, and welcome to the ITACONIX PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so, and these will be available via your Investor Meet company dashboard.

0:34 Before we begin, as usual, if I may just submit the following poll. And I'll now like to hand you over to CEO, John Shaw. Good afternoon, sir. Good afternoon. We're pleased to present our full 2022 results today after releasing them yesterday. We'll go through our highlights, talk about our pathway to being a large specialty chemical specialty ingredient company, our outlook for 2023, and we also have a summary.

1:08 Most important part of of the four things achieved last year, one is that we increased our addressable market for our ITACONIX technology platform to $2,300,000,000, showing the path that we have to being much higher revenues. We did that through a successful investment spending in 2021 and early twenty twenty two when we had brought on a VP of operations in 2021 to get our CTO, doctor Avond Durant, back into the laboratory and developing new innovations, and that has been successful. We added an early version of our SAP, which we expect to be a long developed, a extended development cycle of absorbent products.

1:57 And then importantly, we added some new chemistries for both an intermediary and advanced composites and some new hair care hair care technology into our product pipeline. We I think this what we achieved in increasing that just shows our ability and potential for it, further extending our addressable market within what we define as a $20,000,000,000 market potential for itaconic acid. Very important in terms of our long term growth expectations. Secondly, important was that we did deliver $5,600,000 in revenues that met the upgraded expectations from earlier this year.

2:42 We're significantly ahead of what expectations were last year at this time. So it continued to show that the the traction that we're getting, the progress that we're making in the areas that we have defined or and applications we've defined for our ingredients in specific product categories, consumer product categories. With the advance of revenues, we are reducing our EBITDA losses. So the increase in gross profits, overall gross profits with a smaller increases in operating expenses. We're bringing continue to bring our EBITDA loss down from where it was the previous year on it.

3:28 And then equally important is the fundings that we got done in the first half of twenty twenty two and the large fundraise that we have in 2023. So as we exit the stage of development where we needed to prove our technologies in three areas and look into a new state of development as we expand our revenue horizons, we do that with great resources in place to do so. So just to dive into a little bit of our f y twenty twenty two financial highlights, you know, we had a very exciting year where we hit 5,600,000 in revenue. That's a compound annual growth of 63% over the last four years.

4:14 And over the last year, it was a 115% growth. So we're really seeing that traction in our revenue. When we look at the half over half revenue development, the first half revenue continue to show strong growth In f y twenty and f y twenty twenty one, we had some pandemic disruptions, and that's kind of cleared itself up in f y twenty twenty two where we had two very strong halves. The first half was about was 3,000,000 in revenue. The second half was 2,600,000 in revenue. So a really strong two halves to the year. And then how does that convert to our gross profit? We had a gross profit of 1,500,000 for the year. That's a compound annual growth on our gross profit of 49%, with our overall gross profit margin for 2022 being 27%.

5:09 In the next slide, we'll talk a little bit about the segments and the end markets that we had. But when we look at the gross profit by our two segments in the business, performance ingredients and formulation solutions, which is a way we started reporting on it over the last year, our performance ingredients are at a gross profit margin of 31%, and our, formulation solutions are our gross profit of 8%. So that combines to make your 27%. When we look at half over half gross profit margin, our our first half of twenty twenty two was at a 25% gross profit margin, and our second half was at a 29%, overall gross profit margin. So we are seeing the recovery in our gross profit margin. You know, we had experienced a lot of higher costs due to logistics and raw materials being increased. So we're starting to see that kind of flush its way through this through our our inventories.

6:07 We did experience some higher costs for the euro from some of our European sales, and that started to kind of recover as well. So we're seeing our gross profit move in in a positive direction moving into 2023. So just to dive in a little bit to the end markets and the segment analysis that we look at when we look at the business and how our revenues are developing. You know, our revenues for FY 2022 were really driven by our cleaning, segment of the biz our cleaning market of the business. So we saw real traction in our North American private label, high growth in our European detergent accounts, and that all accumulated to be a 174% growth in our cleaning. So you can see over the last four year, cleaning is really driving that revenue growth, and we did see some hygiene and beauty declines. That was really related to buying patterns, and we expect to see recovery in that in in the near term.

7:07 But to talk about how we were presenting on our revenue by segment, we have our performance ingredients, which is our IDACONIX polymers that we produce and manufacture here, and we sell direct to customers. We do identify strategic support ingredients that we we provide to these customers to support the formulations that we've helped develop. So this is ingredients that we provide to our customers to support the formulation. And we do get a lower gross profit margin, but they're critical on our path to development. They support the performance ingredients that we do sell into the marketplace. So over those two weeks, again, saw a 31% gross profit margin and 8% gross profit margin in the formulation solutions.

8:00 Down the income statement. You know, in a period of rapid revenue growth, we did maintain relatively stable operating expenses. You know, when we look at our operating expenses as it relates to, our pre pandemic business and where we are, that was about a a 12 increase in expenses. So we've had a pretty level increase in expenses, very judicious as we continue to grow the business. There was a large portion of our operating expenses. This really relates to the depreciation we received as well as the share based payment expenses that we had to recognize in this period. And that was the plan that we had approved by shareholders in the annual general meeting in 2022, and we're incentivizing our employees and our management team to continue on this growth path for the company.

8:54 So when we look down to our adjusted EBITDA, we're on a continual path of shrinking that EBITDA loss. When we look at f y twenty nineteen to f y twenty twenty two, we've decreased that by about 44%, and we've decreased that EBITDA loss from 2021 to 2022 by 14%. And that really has to do with our growing revenues, maintaining our gross profit margin, and maintaining a lit level cost base as we continue on the path to profitability.

9:30 So as we move over to the balance sheet side of, our results, during this period of growth, we were able to maintain a stable working capital base, to support the growth. We did have a fundraise in April 2022 that was supported by management as well as one of our large shareholders, and the money was really used to improve our inventories in Europe to support the volumes that we were seeing for for customers in that area. That was all in cleaning as well. When we look at the CapEx side from the plant that we put in in 2017, that was about one to one and a half million dollars. We've had, over the last three years, just a little bit more than a $100,000 to continue to support the the production we do here in Stratum.

10:23 So we're very low CapEx for the revenues we're looking to produce. The facility we have here in Stratum is more than adequate to meet the growth potential that we have in the next few years. So we're well positioned to continue on our growth strategy with the working capital and the CapEx that we have. We did just finish a large fundraise in February 2023 that was very well received by the market, and this is what we're positioning the company for to move into that next large growth phase that John will kinda give more color to.

11:02 So to go into key elements of our business plan to become a large specialty ingredient company, What we really are is in a new stage of development. We when that really the progress of sodium polyataconic as a major ingredient in polymers of iataconic acids, major ingredients in consumer products, really started back in 1960 when Pfizer tried to develop the technology. Roman Hass tried to do it in 1993. We developed started in 2008 with our technology and our breakthrough and the development of our technology platform for itaconic acid polymers that we've advanced for 2018 until last year is really focusing on three areas to make sure that we could prove the technology platform and make sure that we can establish our ingredients as key ingredients in the new generation of consumer products.

12:07 What you see now is that we have done that. We validated the technology platform. We validated our ability and the potential for these types of products to contribute to new generations of consumer products. And now that's where we enter in a whole new phase of growth with a growing customer base of recurring revenues. All of it starts around the wonders of itaconic acid. It's about a $20,000,000,000 market potential defined by the uses of acrylic acid and styrene, and the basis for it is for the wonders of itaconic acid are first and foremost, the safety profile that it has in terms of human and environmental toxicity relative to acrolic acid and styrene, And second of all is the multifunctionality that the chemical structure has of two dipoxylic acid groups, and that's why it's been such an interesting technology for so many years, why companies have been working on it for the last sixty years.

13:16 So it all starts with the wonders of itaconic acid and and what could be done with it to create high value added specialty ingredients. Our ability, which we just received recognition from from Frost and Sullivan, is the process that we go through to create high valued ingredients based on unmet customer needs. We see we see an unmet need out in the market. We look into our technology platform to to say that we have an ingredient that we think could be a key contributor to a new generation of products, consumer products in it. We create the create the ingredient, get initial use of it, build traction for it, and then eventually it it get it to take off. So what you will see for the company, that core part of our business plan is just layering more and more ingredients on that go through these phases of development.

14:17 Right now, we are we now have our our cleaning product, particularly our ITACONIX TSI three twenty two in that stage of development where it's getting to be more competitive pressure to use the ITACONIX ingredients. But the business plan is to continue to layer on more and more ingredients that have this kind of value to bring to the new generation of consumer products.

14:43 So is there enough demand out there? Are there enough changes going on in terms of the what consumers are looking for, what brands are looking for? Absolutely. This is a tremendous year of a time of change in consumer product needs driven by global imperatives for both decarbonizing products for the low carbon economy and increasing consumer concern about the safety of the products and the safety of the ingredients that are in their consumer products. So there's a tremendous rush of unmet needs. Some of them we don't fit into, but there is a steady stream of demand for for new and better and safer products that we get to operate in.

15:31 When we do find an opportunity, we particularly with the chemistry that we have and the technology platform that we have, we're gonna address those needs with better performance, better cost, and sustainability. So we wanna go about it where we use the capabilities of our polymers to make sure that we deliver better performance, better cost, and sustainability. So we are not asking for consumers and retailers to spend and brands to spend more money. We actually in our particular area of growth right now, we're actually bringing the the overall cost down while at the same time increasing the plant based content so that regardless of what decision the consumer is making about performing a high performance product, economy product, whatever is the one, we are still contributing to the advancement of a safer world and a low carbon economy on it.

16:40 When we find those when we find those opportunities, we wanna get them out and build up a broad base of of consumer products that are using them. Every time we get formulated in, it's like it's like an annuity that we can keep stacking up and stacking up a broad range of products, and that's what we're doing in terms of increasing the base of recurring revenues.

17:06 Base of those base of brands continues to extend generates years of growth because as they as the brands get out into it, they get more and more placement into retailers. So there's an extended growth curve out of each brand that you get into. So that's driving the high levels of growth, particularly if we focus on North America in terms of the formulations that we can get into and extend it there, but we are translating that also into other areas of country the world, particularly in Europe. So it's a very clear business plan of using the wonders of itaconic acid, what we can our ability to turn those into high value added ingredients, get them formulated in key ingredients, get those more brands using them, and then those brands are in more and more retailers to extend us to being a larger and larger company.

18:06 The next phase of development we have is to keep adding ingredients with higher revenue potential. The two areas for focus for us right now is in VeloFresh, which covers our VeloFresh product lines, which covers our technology for both odor neutralization and absorption. We are working on product and application development in these areas over the that we started in earnest about a little over a year ago. Those are continuing to develop. It'll be another twelve to twenty four months when we start seeing fruition from those efforts. But we're we have two different pieces of our platform to bring into the hygiene area where we think we can transform certain product categories with our value added ingredients.

18:53 And then second of all is bio Asterix is our is bringing the value of itaconic acid forward in another form by bringing intermediate materials that can replace acrylates and styrenes and certain

19:08 types of chemical chemical reactions and chemical formulations, particularly in sustainable resins and coatings. So these are the two areas that we have teed up for growth. This will be about a twenty four month effort as we to get major results in this in terms of higher revenues, but these are but these are very big markets that we get to go after that are bigger than what we've gone after in the past. We have to make progress each year, and we are making progress in twenty twenty twenty three year to date. Our results are on track with board expectations.

19:54 We continue to have revenues being led by our advantages in cleaning applications, and that's with progress with major accounts in both North America and continued growth in The EU and adoption. So very exciting continued growth there. We are seeing some recovery. It was a down year last year in beauty and hygiene. We are seeing a recovery in order volumes, both from our marketing partners, but even more importantly, getting some smaller wins that we think are gonna develop into bigger bigger opportunities over time in a more diversified area, particularly in the odor neutralization.

20:39 And that's been assisted both some direct customers, but also some of our marketing partners finding some more small wins there. So in terms of being positioned for growth, we do have new with the new resources that we have, we were running pretty thin when you're growing at a 100% a year, 40 60% year to year over four years. We ran a little thin on staffing. We have added some staffing in both innovation, marketing, and sales and production, not huge increases, but making sure we have additional capabilities in place. We've done some selective spending on some production upgrades and some laboratory upgrades. Production upgrades is related to just ways to continue our production efficiency and to make sure that we maintain an uptime on the production side. And laboratory upgrades, we had some pretty old instruments that needed replacement of it.

21:40 And we are do have product and market research efforts underway to accelerate the revenue development in some of our some of the major areas that we're new product categories that we're targeting. And importantly, you'll see in the next nine months new efforts to increase consumer investor awareness, particularly focusing on our digital marketing capabilities.

22:12 So we kind of exit our last stage of development in tremendous position with validated technology, bringing performance costs and sustainability to key product categories. We have great opportunities for additional consumer product categories to pursue. We do that with a very nice base of large and growing base of recurring revenues, not that much comp direct very little direct competition, not a huge little demand for large capital spending, and this is really rich technology platform of idaconic acid chemistries that have unique value that we believe we'll be able to apply to more and more consumer product categories.

23:07 So it's a very exciting period for us entering a whole new stage of development in a better position than we've ever been in. So we look forward to continue to report out our progress. John, Laura, that's great. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that situates on the top right hand corner of your screen. But just while the team take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Laura, John, we did receive a number of pre submitted questions ahead of today's event. And as you can see there in the Q and A tab, we've also received a number of questions throughout your presentation this afternoon as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. And, John, Laura, if I could just hand back to you to respond to those questions where it's appropriate to do so, and then I'll pick up from you at the end. Thank you.

24:14 Great. I have a summer print out here. So number one is what is happening with a 10 to one share consolidation that's still going ahead, or is it no longer required? We are letting that share that authorization that we received last at our last annual general meeting expire And is in our resolutions for the upcoming annual general meeting, we're asking for a 50 to one. A little explanation on that is the underlying issue here is that about 25 to 30% of our shares are held in by US shareholders, and we are Laura, myself included in it, and we cannot hold it's very difficult for US shareholders to hold their shares in a standard brokerage account like UK shareholders can do. It's a very difficult situation for people.

25:08 A lot of that is around the share price and compliance rules that the various brokerage houses have. We believed last year that a 10 to one would be sufficient to get our our share price up to a threshold that would allow our share US shareholders to hold the ITACONIX shares in their trading accounts, and we do not believe that that is possible and that we need a higher consolidation. So it'll not only benefit a the 50 to one share consolidation will not only benefit our existing US shareholders, but it'll also make our US our shares more attractive in The US market in terms of trading levels.

25:54 We do this against the known known and understood concerns about having a higher share price on the London market and the potential risk that that would have, but we believe that the commercial momentum that we have will, you know, fully mitigate those risks. So that's why we are seeking a 50 to one because we believe it will support it will help all shareholders going forward. So can you please some detail on how you'll be investing funds. I believe, you know, we have some, some of those funds are needed to to to meet our working capital needs for our base business. Some of the funds, as I've already detailed, in our presentation, are being deployed to pursue higher revenue opportunities for the next stage of growth into larger markets that we think are going to help drive us to even higher levels of revenues in the coming years.

27:03 Again, it's around some staffing, some minimal investment in some capital spending in some of our capabilities, production and laboratory capabilities, but in market research to help make sure we're clear about what our major initiatives are. We will be giving more detail as we roll out those initiatives in the second half of this year and and early part of next year as we do it. I can just tell you from the last four or five months, it's just been catching up with the inventory requirements that we had to build up our inventories, get our staffing in place has been kept us quite busy, and we'll be we will be rolling out new growth initiatives.

27:55 Third question, why have you appointed joint corporate brokers? It goes back to our our presence in The US. FinCap has done a a very good job for us, and it'll actually be FinCap will even be a larger broker with their combination with CentOS going forward. Canaccord has a global footprint, particularly a footprint here in The US and a trading desk here in The US that will be quite helpful for us. So we do, again, wanna make sure that we're addressing and supporting our shares, not just in The UK, but elsewhere. And I think that Canaccord's appointment will be quite helpful for that. For when do you estimate breakeven and a move to profitability will be achieved by? I I believe there are, two analyst guidance out now. We now with with Canaccord, we also expanded, our analyst following.

28:55 I think those are one or both of those are generally available, and I think those provide good guidance.

29:06 Are you totally reliant on China for itaconic acid? If so, can you obtain sufficient quantities elsewhere, and would it be a lot more expensive? The only two major manufacturers of itaconic acid are in China, so there is no no other manufacturing of itaconic acid at scale throughout the world. So, currently, there's more than enough itaconic acid on the open market to achieve our revenue goals and targets, and we have a great relationship with major manufacturers of itaconic acid in China.

29:47 This is has your has there been any progress of the super absorbent nappy diaper product? We are continuing to do development. We've had some trials done. I think we would like to do some more development in terms of improving the performance of the polymer. We got some excellent we had some better understanding of what the performance needs are. Similar, when you look at our automatic dish detergent polymer, our ITACONIX TSI three twenty two, the development of that and refinement of that to be, you know, that perfect product that's really gonna grab the market. You know, it took three or four years of trial modification to get to hit the right performance target of it. So we will be making progress in that.

30:40 We think that that's a tremendous market. We think that the superabsorbent market, there's other areas than nappies and as you get in adult incontinence markets where we think we could bring multiple technologies to bear in it. So we we are looking carefully at what what our entry point would be and how we would enter it in that market. Congratulations on the raising the circuit £10,500,000 minimal discount.

31:21 Well done. We agree. We're very we're thank you. We were very happy with how it's on, not only about the the quantity of money, the support that we receive, but also the new institutional investors that we brought on. That was a major objective for us over the last few years, is to expand our institutional base, broaden our support, and we're very excited with the new institutions that have joined and supported us in the last round and the support that we got from our prior from our existing institutional shareholders. It was a very happy time for us to to get that kind of support. Krishna, I believe in the technology.

32:13 However, it seems that it does not seem to focus on selling this technology to major organizations. What is the company doing to market the technology given that the world is moving towards a more caring society to protect The environment. The environment. We think that I think that the major brands, whether it's Procter and Gamble, Wreck at Benkeys or Unilever, they are making major efforts in terms of being more friendly in adopting new technology. That being said, we still find our greatest success the

32:55 smaller specialty brands because they move a little bit quicker and faster in in on the adoption side of it. And so we are making progress with the in the segments that we think that we think are important of it. And we our development path is does not necessarily require the largest brands to adopt our our technology in the next two to three years.

33:27 Why does a specialty products business only make a 27% gross margin? What is being done to rectify this? I think we covered it a bit in our presentation, but as we identified, our ITACONIX polymers are really doing a 31% gross profit margin right now. We still have ambitions to improve that gross profit margin over the near term. Some of that gross profit margin that nets to the 27% is a lower gross profit margin for support materials that we provide to our customers to make sure that we can provide excellent formulations and excellent service.

34:05 Nine, what is your target long term gross margin? Currently, we're our targeted long term gross profit margin is 35%. We continue to work towards that as a company to grow and move towards our profitability goals. We we think that the pricing in this the pricing that we have now with the raw material costs we have will get us there. Part of it, remember, is that our our plant is still only loaded at about 25% of capacity. So as we grow so the the value in the cleaning the the the the biggest product volumes come out of the cleaning area. And so as we continue to grow in the cleaning area, we you know, those profit margins our gross profit margins will improve just because we're absorbing our production our our fixed production costs over a larger volume. So I think we're very well on track for for the the gross profit margins you would expect from a specialty greedy company.

35:14 Earlier this year, we had two job vacancies for an application chemist and a laboratory technician. Can you advise if these additional requirements for staffing and if these positions have been filled? We have we have added we've added one person in innovation, is these areas come in, and we have another person joining in late July. That will probably kinda, for for right now, for this year, we'll complete our staffing increases in that area. We also have a we hire in development associates who rotate over a couple years.

35:59 We did add in we did hire some of that. They kind of move over a couple years between departments of it. So we are we are right now, for the staffing that we need for the rest of this year, we are where we wanna be. In a previous presentation, you highlighted the headwinds surrounding the exchange rate. Since this has significantly improved, has there been a beneficial impact to the gross profit margin? As it relates to the pricing that we provided our European customers, we did price to what we expected for an exchange rate recovery. So while we did see the improvement, we are at the gross profit margins we are looking to achieve for those European customers that we sell to in euros.

36:48 So we did see the benefit of the improvement, but we also anticipated that the euro would rebound, and we were pricing towards that improvement.

37:01 Eight months into a distribution program between ITACONIX and Brentag, North America to prove how is it progressing. It's going very well. We just had a nice meeting with important meeting with their technical marketing team about a month ago. They are advancing and finding new opportunities in smaller accounts for technologies across our products, across the household institution and industrial market as expected. We're impressed with their capabilities and are finding more and more opportunities. They are most of these start out as very small opportunities and that we start seeding the market.

37:51 And I think that's the area there's an area of some of the smaller accounts that we hope to be getting higher penetration into to bring the success that we've had in in our direct success down into those smaller accounts. So we're very pleased with how it's progressing. Can you advise slash update us on the following, plea from fifteen months ago? VelaFresh s a p 80 is being trialed by a leading supplier of companies that produce baby diapers, feminine hygiene products, adult diapers, and industrial absorbent products. This follows the company's production trial for Vela Fresh SAP 80 in 2021. If the prospective client trials are favorable, potential ITACONIX revenues are expected to be starting in 2023.

38:39 I believe, you know, I gave a a a answer this question a little bit earlier. I think our prior updates have said we're thinking more of 2024 in terms of sales into the super absorbent sites and long development cycle, and we're continuing to do some we're in that process of making some continual modifications, improvements. We think it's a we the the what we had was favorable. It was a good product. We think we can make we'd like to make a so a little bit more improvements to it, which we have we are working on. But it continues to be an important area of growth, we wanna make sure that we're in position to be presenting the best the best solutions possible when we enter the market.

39:32 The next question is around bioastrics. I think we kind of updated that in our presentation. Sorry. The but can you advise updating the following? It's. So we are So we are we are continuing to look at the development efforts around our intermediates to look at ways to get our intermediate products into downstream areas on it, I think that we'll see further advances in our bio Asterix product areas in the next twelve months.

40:21 It's been noted that Chemtan has recently taken delivery for both themselves and on ACONIX's behalf. It appear that I don't think that's accurate at all. I think people are collecting some data and not interpreting it correctly. There is a there's a third party warehouse that we use that we partner we have partners with in terms of off-site storage. So I I think we we maintain significant inventories, access to significant inventories of itaconic acid on it. I think the trying to track and to see that you can look shipping any sort of shipping records to track what our what our itaconic acid consumption is, it can be misleading because of how we maintain local inventories to to to support our production audit. So I would be I would caution people to draw what conclusions they would be drawing from looking at shipping records.

41:39 Kim, do you want me What was the sorry. What was This one was a import record. Yeah. So, yeah, both quite the same the same issue, which is, yeah, the you know, we we do keep we make sure that there are local inventories, readily accessible local inventories here that have more storage needs than what we have here at our facility. So we have various ways that we do that. So looking at the you're you're looking at shipping records around inventories, not shipping records that are related directly to production. Commune union chemi union, can you advise on the significance of this product?

42:34 We're somewhat familiar with this. My understanding of what I I I is that they are using I believe it's a they are using itaconic acid in its its monomer form, not using polymers of itaconic acid. There are lots of uses for itaconic acid on a standalone basis, and there may be some synergies that people find for it as a standalone asset. We're in the business of polymers of idaconic acid. We don't really work with idaconic acid as a standalone monomer. I could go back and take a look at it, but I don't think it's it's you know, I think I think what it does point to is that itaconic acid, you know, the safety profile and the functionality is are are highly valuable, and we hope that, you know, that other people see that value and continue to use it.

43:40 But in a in a I think this is in a I believe it's just used in a monomer form. What date will the next trading update be? I think we usually report out do some high level trading update in later July once we get through our first through our first half. Mhmm. When are you expecting to hit positive cash flow? We're we're comfortable with the with the resources that we have right now. Again, regarding cash flows and and future ones, I would direct you to, I believe there's now two analyst reports out there, and I believe one, if not both, are are are available to the public on it.

44:46 The company has already started to deliver a baseline of operational cash flow. Would you now consider greater use we're we're years away from from looking at debt on it. I mean, we have the resources that we need for our near term plans on it. I I I think when the time comes, we would we would take a look at it. It's not something that we that that's really something we need to take a look at right now. Please elaborate on the arrangement with Brenntag and how this is might benefit ITACONIX. Is it just focused on yes. It is. Right now, it is Brenntag. We're only working with them in North America. It is targeted at going after some of the smaller accounts where we think there's considerable opportunity for our polymers in janitorial supply janitorial sanitary supply type products in some smaller accounts to be able to access. So we're very pleased with how that's how that's proceeding.

45:50 Can you talk about the competitive landscape? Oh, sorry. I missed the has the current macroeconomic scenario made an impact on your plan to profitability? Not particularly. I mean, we're really driven by what's going on in in a few particular product categories. One is that one of the reasons why we pick consumer products and everyday consumer products is that regardless of what happens in the world, you know, people are still using their consumer products, they're still running their dishwasher machine, they're still cleaning their houses, they're washing their hair. So I think it's built into our strategy is to not be affected too much by the macroeconomics other than what we do get affected by is, I would say, exchange rates on it, which we Laura already went through before, and we've managed managing those well.

46:52 And then just the the overall, you know, state of the world on it. But I I think we're we're I I think we part of our plan to become a a large specialty ingredient company is to make sure we kinda isolate ourselves from any huge macroeconomic effects by the categories that we're pursuing to go after. Can you talk about the competitive landscape in your IP moat? How do you defend your products? We 14 different patent families. We try to protect both the composition of our ingredients, the production processes for making those ingredients, and the specific applications of those ingredients into certain product categories.

47:49 So in a major area, we'll if a major area of growth we want to make, we would like to have multiple patent side of patents in place to do that. But at the same time, it's just moving quickly and getting in and getting a position, getting the early position when you go into into a category audit. Audit. So I think we've we've we've done a good job protecting that. I think fiscal year twenty twenty, as our tracking with board expectations, I would think that you would were the board expectations, you'd be one is what we have internally of it. I think you would wanna look at what the analysts are looking at also.

48:44 Do you have any independent distributor agents working for them elsewhere? We do have distributors right now in the personal care space in Europe on it, and and one out in in some in a little bit in North America, but that's pry particularly in the beauty care area. We kinda wanna work out the success in the cleaning area with in North America and then look at opportunities next in Europe. But we have all the access we need right now through our direct efforts in Europe to implement our business plan. We, you know, we don't we don't directly provide revenue guidance.

49:34 How would you put your private label split? We we deliver a lot of the facilities that we ship our product into production and contract manufacturers that are producing both private label and branded products. And a lot of times, we don't know exactly what the split is, but, you know, I roughly would say it's maybe fifty fifty on it right now. The private label, we think, is a great is a great segment for us on it. But roughly roughly fifty fifty, but we don't have line of sight on exactly what happens with our materials once they go inside the contract manufacturers space.

50:22 I think we've already talked about revenue growth. Those are guidance that's available out there. We do not look at AI right now. We have AI to date hasn't really applied in our areas, And I think maybe it might apply sometime in the future in terms of how we screen and identify chemistries chemistries and applications for What portion of your turnover is in The US? For 2022, 5,000,000 5,100,000 was in The US versus 500,000 was in Europe. So it's still a large portion in The US, although we did see a substantial growth in Europe. 2021 was a 186,000 in Europe versus 2022 was 522,000.

51:20 So we are seeing quite an uptick in our European revenue growth. Thoughts on current share price, really, you know, don't have any comment on that one. Really can't comment on that. If China goes down the same path with Taiwan as Russia did so this is the the China one, that is a macroeconomic one, which is interesting. One is, you know, when you look at what it takes to put a detergent formula out there or probably any almost any consumer product, you we can go solve the delivery of our product, but if, you know, but if one of the other ingredients doesn't show up at the contract manufacturer, the the end product can't get produced. So not only do you have to solve the supply, make sure that we can supply it, you have to make sure that all the other products are supplied in.

52:22 It's a China has a major presence in chemical chemicals and chemical intermediaries, both of what gets produced in North America and in in Europe. So I know it's a it's a scenario, but even if we had a idaconic acid fermentation plant right next door here, it wouldn't necessarily mean that the demand for the products that we go into would continue because of other ingredients, surfactants, and other products that go that go into the blends on it. So it's a very it's a pretty complex one based on China's presence as a chemical producer. As your turnover increased by 3,000,000, why did your loss lose a further 2,000,000 compared to last year?

53:12 I believe you're referring to our losses before taxes or losses in general. There was a a large recovery in our revaluation of contingent consideration in 2021 to the tune of 1,600,000. So when you back that out since that's a noncash item and really an estimate by management, really, it's you know, we had an improvement on our EBITDA by about 14%. So we look we track it on EBITDA, especially with the contingent consideration being an estimate by management. We did see improvement in that EBITDA over year over year. Hi. You correctly highlight the growth rates on it. I think we have a very bright future available to continue to grow into being a large specialty ingredient company.

54:11 Growth percentages, You know, we had small numbers, so the percentages can vary a little bit as you go forward. But we we're excited about the growth prospects ahead of us. Whatever happened to product wrapping project example given bread, I don't know what that is. I I'm not I'm not aware of anything that we had in product wrapping projects And, Brett, I think that may be referring I think that may be referring to another company that I'm aware of that's working in that area. That's not related to what we're doing. And then many thanks for answering my questions. Super So on thank you again. It's a we look forward to continuing to provide updates on our progress. We're excited about our position.

55:10 We're excited about the new stage of development that we're entering into. We're excited about the we're really pleased about the success that we've had to date with our last phase of development. There's still lots of growth, revenue growth already built into our customer base, into our existing applications, and we have new and larger horizons to pursue, that we have the resources and technology platform to pursue. So we're very excited. Thank Thank you. John, Laura, that's great. And thank you for being so generous of your time there and addressing all of those questions that came in from investors this afternoon. And thank you also once again for updating investors today. Could I please ask investors not to close this session? You'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations.

56:06 Won't take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of ITACONIX PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you Great. Thank you. Thanks, everyone.