Itaconix (LSE:ITX) — Final results for the year ended 31 December 2020

0:01 Good afternoon, ladies and gentlemen, and welcome to the ITACONIX PLC Investor Presentation for the Final Results for the Year Ended 12/31/2020. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated in the right hand corner of your screen. Simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your Investor

0:31 Meet company dashboard and you'll be notified once they're ready for your review. I'd also like to remind you that this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to John Shaw, CEO and Laura Devon, CFO of ITACONIX PLC. Good afternoon. Good afternoon. We're very excited to be here to present, to begin this presentation of our 2020 results. I'm John Shaw, this is Laura Denner. We look forward to a productive presentation here of our results. We do have a standard disclaimer regarding any comments we say today. For our discussion, we have a number of topics to cover, both our base business of being polymers for better living, financial highlights, how we play into customers' wish list with our ingredients, our position in sustainability, we'll go through each one of our major products to give you updates in that area, an overall operational progress update, talk about some specific current global factors affecting our business, go through our outlook, and then have a summary on it.

1:51 I am the CEO, Laura is the CFO. I would like to take a moment at this time to recognize all the people that contribute to making this a huge year and a transformational year for us. First of all, we greatly appreciate the support of our shareholders, the support that we received last July in terms of completing a highly successful fundraise, the support of our employee base, particularly the person who's not here is our, the key member is Doctor. Yvonne Durant, who's really the technical lead in driving innovation for us, who's not here, but clearly a key player.

2:39 Many people have gotten us here for, in terms of the contributions over the years to the innovation and position that we're in, going back to even to our Revolimer days of all the great work that was done at Revolimer and the great years of work that they put into it, and our great employees here, and, and to very years of work with number of customers to get us to where we are. So I just think it's important, I want to make sure we acknowledge really all our appreciation for everybody for what was a tremendous year for us, and it really was a tremendous year. What we are all about, we are key ingredients and disruptive ingredients that are meeting new buying behaviors that are in and developing in the marketplace.

3:28 From that, we achieved major growth and we have tremendous revenue potential towards, momentum towards high revenue potential, and we are in a strong cash position after completing the $2,000,000 fundraise in being on a path to profitability. What we are about is Polymers for Better Living. Our plant based polymers our key ingredients in a new generation of disruptive consumer products, where we're able to deliver both performance, safety and sustainability and cost savings to our customers in a new generation of consumer products emerging in a number of different segments. Our current focus is on the £600,000,000 revenue potential that we see in detergents, odor control and personal care.

4:22 As we've discussed in the past, the formulations that we're already in, where we have already shown that our ingredient can create a disruptive product for our customers, we've already been validated in 60% of the types of formulations that we need to be in. Doesn't mean that everyone's going to use us in those application areas, but we have established that our ingredients do have value in those areas. And what you're seeing is last year and the results that we have is really how that has emerged into revenue growth as our as customer projects have managed through. We are taking the capabilities and scaling it globally, both ourselves directly in the detergent areas, in odor control and personal care, but we also have great partners in Croda, in odor control for home care, and in hair styling with Nurion.

5:19 All of this adds up to value that we have as an advanced sustainable material that enables us to have major roles and opportunities in the emerging low carbon economy. That's what, to me, we stay focused on what Polymers for Better Living is all about and what we can deliver. And in 2020, that's what we did. We did, we have been talking about for several years the progress that we had and the potential that we had in our pipeline, and it did deliver in emerge as revenues and profitability in 2020 in fairly dramatic fashion. First of all, we more than doubled our sales, 156% increase in revenues, because, and really that's across advancement in our pipeline across all of our products, all of our applications.

6:16 Again, years of development to get there and it really developed through and progressed across all of, all of our areas last year to, deliver really dramatic growth. And we were able to do it while maintaining overall profit margins around 35%, our product margins vary across the, across our product lines with detergents generally be a little bit lower, some of the personal care odor control ones being higher, but overall 156% growth in revenues and we delivered that through at 156% growth in profits on it. Then in terms of how those gross profits made it through down into overall profitability, Laura and I and the whole team really focus on managing our operating expenses, our capital spending requirements, our working capital needs. So we're able to drop that gross, those gross profits down into a significant advance in our adjusted EBITDA in terms of our profitability, bringing it down by $1,500,000.1500000 dollars improvement and actually getting underneath, under $1,000,000 in EBITDA loss on it.

7:31 We're very proud, that was a great achievement on both combining the revenues and the cost management side of it to get there. On top of it, we were able to have a lot of that drop through in terms of reduction in terms of cash needed for operations on the working capital side. So again, we brought our cash needed for operations down significantly also. All that developed into ending the year in a great cash position, 1.4, almost 1,500,000. We achieved that by really playing into our customers' needs for the ingredients that they want for their next generation of materials. Customers and formulators are sitting there, they have a wish list of what they would like a perfect ingredient to do. They'd like a new performance claim. They'd like to lower their cost. They'd like more compact formulations.

8:27 They'd like to be bio based. They want to make sure it's good human safety. They want certain certifications. They want certain materials not to be in there. They want non GMO. There is a broad range of wish lists, and our revenues come because our ingredients allow our customers to meet this wish list. And that's been a pipeline that's been developing. As you can see, that process of, you know, what, starting with what a customer wants, getting samples out, getting formulations tested, optimizing the formulations, then getting the product launch, that really came, we had projects and continue to build projects where all that advanced dramatically for us. And it did it across both our home care and our personal care side of it, so you can see the dramatic growth we had on both sides.

9:26 Equally important is the opportunities that we have as plant based materials to contribute to the low carbon economy. And we are going to make this a point of emphasis going forward, because beyond the performance and the cost savings, we have dramatic opportunities to contribute to climate change. Just to go through that, remember we've talked about it in the past and I presented it before about, it starts with carbon dioxide that gets absorbed and turned into carbon in plants, in our situation that's corn, Corn is then turned, the corn is then turned into a sugar that is used in the fermentation of itaconic acid, we don't do that, we buy it in, but this is what our suppliers do of using that.

10:16 So the carbon that was in the sugar comes through as the carbon that's in the idaconic acid that we bring in and produce here in our facility. We run it through our patented production process, We turn those polymers into specific ingredients that have value for customers. They go in as ingredients into our customer products, consumer products for performance costs and sustainability. Then when those consumer products get disposed of through primarily through landfill or into the waste treatment, that carbon, while the products degrade, is basically sequestered carbon that stays there. Now across our range of product potentials from our water soluble ones that go with detergents, those degrade rapidly.

11:11 But in the range of products that we have potential, and we can do, bridge any of the polymers that are used in the $20,000,000,000 acrylic acid market, which can go into paints and coatings, super absorbents and other areas, depending on the product, you know, we have an ability to make a bio based paint. If we go into a paint, that carbon gets sequestered in the paint for ten, twenty years. So that's how we can contribute to the decarbonization process, and there really is a it's an important use of our technology and one that we're going to emphasize going forward. So we have an important role, we are playing an important role, we have an increasing role we can play in the low carbon economy.

12:02 In terms of how that applies in our current products, 96% of our revenues in 2020 came from advanced sustainable materials. These are materials that use plant based carbon, that's the carbon that's coming in, in the, that's in the idaconic acid. In our detergents across our four products there, it's either, you know, ranges from 75, greater than 75, greater than 80% up to 100% of the carbon is from plant based carbon. In our odor control it's 80% to 100%, in our skin care line it's 100% plant based carbon. So when you are sequestering carbon like that, even for a short period of time, that you are still helping the decarbonization of it. Because of the way our products are produced, because we have a very low energy, low capital intensive patented production process, we are also contributing to energy efficiency on it. And then in particular areas, like particularly in automatic dish detergents, when we make, formulate our detergent pods here and have our customers do it, these are lightweight pods that are saving, can save up to three, four, five, six gram per pod across hundreds of millions of pods, and when you do that you are reducing the carbon footprint of the consumer product. And I

13:34 don't have it here, but please do take a look at our annual report, we actually give a specific example of what just in the automatic dish detergent area of the, how many tons, many thousands of tons of potential there is just in our automatic dish pods for greenhouse, reducing greenhouse gas emissions. So this is a very strong position for us and a point of emphasis going forward. In terms of going product by product of how our year went, tremendous advance in terms, in our detergent area with the launch of our ITACONIX TSI three twenty two polymer. We have been in the detergent business for many years, since 2009, but we have continued to evolve better and better polymers to meet specific needs. And with TSI, we really hit a sweet spot within automatic dish detergents in terms of the availability of delivering performance improvements and reducing the cost while increasing the sustainability.

14:42 So what we've the big one for us, we had a major launch in the first half of last year. We actually expected it a little bit earlier, about six months earlier, but it did come in the first half of last year of a major detergent brand, automatic dish detergent brand hitting the shelves and progressing through the year, which was a huge advance for us. We also had some specialty and private label brands reformulate their detergent products around the value of TSI, so we switched them from other, our other detergent polymers to the TSI three twenty two to get the full advantages there, which aided our sales. And then importantly, just a little bit of sales in the fourth quarter, there is a new very high breakthrough bio based green detergent product by a major brand that was launched just in January that went onto the shelves.

15:42 It's just getting onto the shelves now, and we're very excited about it in terms of hitting really new levels of sustainability in automatic dish detergents with a major brand. And we expect that to advance extremely well during the year. So the progression of the advantages that we have with TSI three twenty two are really advancing across a number of brands, most of it currently in North America. We will also have at least three additional launches into specialty and private label brands in the coming six months, so we are starting to stack up more and more brands using us in this area. So that was really a key part to our advance of sales in 2020, with additional opportunities available to us.

16:43 In odor control, first I'll start in home care, where we sell ZYNIDOR through Croda. That product has continued to advance, particularly with a market leader in specialty fabric cleaning, has started with Xinadore in one new product area, which is typically how they start, and it's now advancing through. So we expect over the next eighteen to twenty four months that those volumes will continue to grow as a core ingredient within their product line on it. We are seeing steady activity in uses and innovative new products, air fresheners, fabric refreshers, automotive refreshing products on it. And those are small volumes at this point, but are expanding out into new application areas.

17:34 And interesting enough, the reason why we selected Crota is they have a very broad base of chemistries and technologies for sensory, in the sensory space, and they have launched an exciting new product, a probiotic odor control ingredient called Evogene. And that helps us even more because the two products complement each other. Xinadore does a certain part of the job at a certain period of time, and then the probiotic comes in at a different time to contribute odor control. So in combination, they have tremendous performance and you can see that here that Crota is actually cross promoting the two together, which we expect to have exciting potential for Croda, and one of the reasons why we selected Croda as our global partner because of their broad platform in Century Technologies.

18:33 Vela Fresh is our odor control product that we use in the, targeted more in the personal care space. We are getting advances there in terms of getting into initial specialty products for aluminum free underarm deodorant and actually getting into some pet products too, because pets have lots of odors, and

19:00 we work very effectively in those. One of our new development areas is focusing on new applications and broader applications in hygiene products, and that's a particular area with our new Vice President of Marketing and Sales and her experience in the hygiene area that we expect to progress new applications in that space.

19:25 In AMAZE SP, it goes through Neuron, it allows weightless hairstyling, you can't get it without it, and Neuron is doing an excellent job of progressing sales in this area. We had very good demand growth last year from both existing products that have been on the market being gaining some popularity, and then some new products hitting the market. Significantly, one of the global majors used it for the first time in one of its hair care products on it. But the growth primarily coming from products that were already on the market that were gaining sales because of their performance and weightless hairstyling on it.

20:15 Lots of opportunity for continued growth in this area, but a very good year working with Neuron, and another example of why using the right partner generates great returns for us. Lastly, I'll talk about bio Asterisk. We announced the initial part of the product line last year. This is going to be a multiyear development effort for us across a broad range of applications. We did have the initial area we worked as a specially additive in degradable films and packaging. We are not, it adds certain strength properties to it, it's not an ingredient that's used to enhance the biodegradability, but instead it's to take a biodegradable, an existing biodegradable plastic and improve the performance of it so that that plastic can be used in more areas.

21:16 We are advancing there. It is not this is a slow process, so we expect it will be at least eighteen months before we see significant revenues in that area. It is a long development process. But we also see lots of high revenue opportunities across other ranges of home care, industrial and personal care uses that we plan to advance in the coming year.

21:47 In terms of operational progress, we are advancing as a, with disruptive consumer products and home in detergent products with major brands, with the use in home in hair styling products, in odor control, in home care, in all of the areas. So we are making progress as the key ingredient in a disruptive consumer products in all of our areas. On the operations side of it, we fulfilled all of our customer orders during demand growth last year, and it was dramatic demand growth. We did go to twenty four hour production. We have the ability to, I might turn off my camera here and make sure we have.

22:39 So the, so right now, if we were running full, we would have four production crews, right now we have two production crews, so we can run twenty four hours a day, So the next, so the stages of growth we have is to add a production crew, it expands our capacity, and then we also have the ability to double our capacity with a small incremental debottlenecking of our product line, of our production process. So we did bring on that first increment of production capacity by bringing on a second production crew and our ability to run twenty four hours a day. We did complete our full executive team with a new Vice President of Operations and a new VP of Marketing and Sales. One of the key benefits for that and intent bringing on those expenses and capabilities, one is to make sure we deliver on all the

23:39 opportunities that we have on our existing customer pipeline and maximize the opportunities there. But it also is giving Yvonne, Dorant and myself more time and potential to focus on additional revenue opportunities of emerging revenue horizons that we see for our existing technologies on it. And significantly from an operating cost standpoint, we did terminate our UK facility lease last year. On funding, we had, we reduced our operating cash requirements, as I spoke earlier, we did complete the $2,200,000 fund raise, and we ended the year with $1,500,000 in cash. In terms of global factors that we see, the COVID-nineteen pandemic was, had numerous effects on us, but first and foremost, we were able to continue to operate throughout with the health and safety of our employees first and foremost in our mind. We took a number of safety measures to make sure our employees were safe, but we were able to continue to operate throughout.

24:55 It was a although our new our revenues would have come regardless because of the new products that we're bringing out and the new products our customers were bringing out, the pandemic did create a favorable market conditions for those new product launches. It was a good time to be in dishwashing detergent and to be able to gain entry there. One benefit it did have is that there was a high level of interest in ready to use end product formulations, which we have, particularly in the detergent area. We have a very active detergent formulation laboratory just here in our facility. So with the people working from home,

25:41 some of the research laboratories and development laboratories had some limited capacity to come up with new formulations. So we were fortunate to be in a position to have some ready to use formulations for the brands to use on it. We did find,

26:02 we are, there's new emphasis particularly with administration, new administration here in The United States on low carbon economy, and you are seeing a pretty significant shift in the consumer base of urgency of taking action in this area, which is favorable to us. We are seeing some global disruptions in terms of material shortages and price increases caused by some delays in shipping and costs coming out of Asia, are primarily COVID-nineteen related. There's been some temporary U. S. Plant shutdowns for a variety of factors, not for raw materials that we have, but rather some of the other materials that go into the detergents, particularly the surfactants. There was a freeze in Texas that closed down most of the petrochemical business down there that's had an effect.

26:53 And then we are also, the lower U. S. Dollar has some benefits to us, but other areas in terms of materials, raw materials that we use can be a little bit more expensive.

27:03 Brexit also, it's interesting, we closed the, our initial merger with, become a public company in The UK with Revolimer back in 2016, three days before the Brexit vote. With that done and over with, we are happy to get that uncertainty out of the way. At that same time, it's no major effect on our revenues in terms of the revenue base that we have in The UK. The only real effect so far has been the separation of the EU and UK regulatory process that required some additional use for us efforts. So in terms of our outlook, our plant based ingredients are finding increasing opportunities, both our existing products and the technologies that we have ready and available to expand on in terms of opportunities in the low carbon economy.

28:01 Our base of our customer base and the foundation we have for revenue growth has expanded with sticky recurring revenues occurring across a broader base of products, a broader base of applications and a broader base of customers, and really giving us a base for sustained revenue growth and a path to profitability in the coming years. As I mentioned earlier, when you have a successful product on the market,

28:33 everyone, all the other brands find out. So one of the wonderful parts of the second half of last year was the success as a key ingredient in disruptive products just breeds more success. The amount of business that's come in as we get successful new formulations on the market is really, it's fun to see and actually gets a little bit easier after many, many years of hard work. So with that, we're taking the commercial momentum of 2020 into 2021 with additional brand usage both in North America and Europe. We, the second half of last year is a, was a tremendous year for us, Laura may go through some numbers on that in a moment here, but the, but what we have is

29:25 that momentum coming through. Now just to remember is that the second half of the year is always bigger than our first half, particularly in the fourth quarter in terms of new products hitting the shelf in February means we have all those order volumes come in October, November and December. So the first half of the year is always a lower is lower than the second half, but we are carrying very strong growth into this first half, and we're well ahead year to date of our first half results from last year on year to date. And then we do have the capabilities in place to meet demand on it. I do want to let Laura go through a little bit just the specifics in terms of what we delivered on the numbers for you.

30:23 Hi, Laura Dunner here, CFO. Just to go over kind of the high level of what we've seen in our current year results, which are available right now on the ITACONIX website under investor, under reports and documents, you can see our full annual report there.

30:40 So as we've stated, our revenues grew by 156%. How that broke down really was in H1, we saw about $1,100,000 in revenue, and we saw that growth continue and double to $2,200,000 in revenue. This growth allowed us to keep strong gross profit margins. Over the last eighteen months, we've seen continued strong gross profit between mid-30s and high-30s, so we've been at that 35% for 2020 and 2019. So the administrative expenses, you can see that we were at 3,400,000 in 2019. Due to COVID, we did do some cost reductions, and we brought it down to 2,600,000 We do expect with the addition of some of our HR hires, our VP of operations, our VP of marketing, some additional expenses to continue growing the business. We'll see a little bit of an uptick in our administrative expenses going forward, but we were able

31:44 to bring that down and create a nice operating loss. As we move into these exceptional expenses, one I'd like to point out is the contingent consideration. We do have an agreement with the former ITACONIX owners from the merger that we had in 2016. We were able to achieve the threshold, and we will have a payout of that contingent consideration to those shareholders as part of the growth of the company. One thing I'd like to point out is the EBITDA. It's not shown on this slide, but last year we had an EBITDA loss of $2,500,000 This year we brought it down to just under 1,000,000 How that breaks out is in the first half we had an EBITDA loss of $600,000 and in the second half that moved down to about $400,000 So we continue to see improvement in our EBITDA loss to get towards breakeven.

32:48 So the balance sheet one thing that is wonderful about the business is that we have a low capex. You can see that the year over year, basically we recognize the depreciation of a lot of our property, plant, and equipment. We've not had any significant expenditures in the last year we continue to be able to use the plant and generate revenues. Under our current assets, you can see we've had a significant growth in our inventory and in our working capital. This is in response to the growth in our revenue. So in order to meet the customer demand, we've continued to put the fundraising money that we received in July 2020 to use. Our working capital increased about $1,000,000 over the year, and that's really through our cash and inventory.

33:39 One thing I do want to point out in our current liabilities, we have a note payable. This was really money that we were able to get from the US government through the Small Business Administration, through the PPP loan, which is the Paycheck Protection Program. This allowed us to help support our employees through the COVID-nineteen pandemic.

34:05 So just to touch on our operating activity cash flow, we brought that down from 1,800,000 to 1,200,000 That was really due to the advancement in the demand in our revenues, as well as being able to reduce some of those costs, and lastly, putting that fundraising money into our working capital to generate the ability to continue to meet our customer demand. As you can see in the financing activities, there's that 2,200,000 through the oversubscription of the fundraise that we had, and that brings us down to a strong cash balance at the end of the year where we ended the year at $1,440,000. So we're positioned well, we have a strong balance sheet, and we're ready to continue growing the company.

35:00 So just to wrap up the formal presentation side of it, and look forward to getting to your questions, tremendous revenue growth, dramatic revenue growth, great balance sheet position, delivering on cost performance sustainability for our customers, tremendous low carbon metrics, both with our current products and our potential products for ESG, investing,

35:26 strong base of demand for our existing products, and a pipeline that will will have some inertia to it and momentum for for this year and beyond, really giving us a good road map to profitability and allowing Yvonne, Durant, and myself to really start focusing on both, you know, the potential we have for current products, but some new horizons for us to pursue. All of that within a very secure operational capability to deliver on our current demands on it. So that ends our part of our presentation. We really look forward to talking to you directly with any questions that you have.

36:19 Fantastic. Thank you, John. Thank you, Laura, very much for your presentation.

36:23 Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated on the right hand corner of your screen. But just while the company take a few moments to review those investor questions already submitted, I'd like to remind you that a copy of the presentation along with the recording will be available on the Investor Meet company website. I'd also like to remind you that your feedback is important to the company. Immediately after the presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company better understand your views and expectations. John and Laura, perhaps before we go into the, live q and a, we had a number of presubmitted questions from investors. And perhaps I can just, read the first one actually, if that's okay. Following question reads, when would you expect to commit capital spend to double existing plant capacity from current plant limit, equivalent, I believe, to circa $15,000,000 in sales, therefore further enabling the journey to the five year target of $75,000,000 in sales, and can your existing physical site accommodate such an increase?

37:25 The increments that we're gonna have in in production capacity are one is we added a a production crew. One of the issues that our vice president of operations, who has thirty years of experience in this industry, is going to be looking at as far as do we add additional production crews with our existing equipment, or do we do the expansion now for relatively small amount of money to do the incremental improvement in our capacity here and then start, you know, which sequence do we do. So that, that's our focus right now. We, that's the, you know, that's well within what our current needs are for the coming next couple of years, well within that before we start considering anything beyond the operations that we do right here.

38:17 Fantastic. Thank you very much indeed. Okay. The next one we've got here is what, competitive materials do you see in the markets you're challenging for? And the second part of the question is what level of, replacement efficacy do your products have? We are in so many different applications, from hairstyling to detergents to that in each specific formula, your goal is to have a formula at the end of it that's more successful than the prior formula, and what we're replacing can vary. In detergents, we are providing water conditioning, so we are, we would be replacing phosphates, sometimes it would be a small molecule chelant, and maybe an acrylate polymer.

39:06 So one of the major advantages of the TSI three twenty two is we can replace out more of the material in the formula, so you can use fewer ingredients to get the same effect. So that's, in that situation we're trying to replace out two different ingredients, whereas in weightless hairstyling there is, there already is a polymer that would be used that would have a more weighted, I guess, styling instead of weightless styling. So there we would be replacing out another polymer. In odor control, it's many different things that you, many different types of ingredients that you could be replacing. It's just, that one's very hard to pin down in terms of exactly what it might be, but there are some zinc, other zinc based products that we're superior to. So I wish I could say, jeez, there's just one to go into, but one of the values that you have in stacking up all these little slices of products that you get into for those sticky recurring revenues is that there's a big diversity of what formulators are using it for.

40:18 And frankly, sometimes they won't tell us exactly. They just find it, they use it, and then we get a purchase order, And we may not they may not have told us exactly why. We know what the functionality is for delivering, but we may not know what other ingredients they they were replacing. Fantastic. Thank you, John. The next one reads, could you provide an overview around margins across your product lines, please? The, they vary, you know, depending by customer and by product. I think at the low end we'd be in the 20s, the high end above 50. So the blend that you see of 35% product margins, gross profit margins is, we expect to stay in that area. It will fluctuate a little bit depending on mix of business, but we price against the value of our ingredient to the best of our knowledge of what the value of our ingredient is in that application on it.

41:19 And by doing so, we're able to capture, you know, we think we're capturing as much margin as possible in that. But overall, again, it's raising from the 20s up to a little bit above 50 to get that blended 35%. That's great. Thank you, John. Next question we've got here relates to raw materials. Does the company face any potential raw material supply issues, particularly in relation to China? We have had contingency plans, risk mitigation plans in for, since we founded the company, we do get our, itaconic acid does come in from China, there are multiple producers of the idaconic acid there. We have one preferred supplier. What we do have is we maintain high levels of raw material inventories that the in the supply chain that we don't necessarily own. Laura in our has done a very good job of working with our suppliers so that we both have plenty of supply available of any short term disruption without having, hitting our working capital needs that much.

42:33 So we manage that primarily through just safety, very significant safety stocks for it. That being said, we are not, we're not seeing any disruption in the actual supply, we are seeing disruption in the shipping time. They've gone from like six weeks up to About twelve weeks. Up to twelve weeks on it. And, and so there's disruptions in shipping throughout the world, and this is before there was any blockage of the Suez Canal. Our product does not come around that way, we come across the Pacific to get here, but but there are disruptions in in the supply chain that we've taken into account. That's great. Thank you. And the last pre submitted question we've got here is ITACONIX is one of the only companies who has no presence on social media, giving investors the much needed update or information on the company, which gives existing investors confidence and also entices new investors. Why is that?

43:32 I'd say two factors. One is there's a little bit of where our focus has been in terms of when you're growing when you grow 100% from the first half to the second half, you're keeping pretty focused on making sure you keep all the customer orders going out, and you could see the need for expanding our executive team on it. The other one is the other aspect of it, we are we do live in The United States, and not everybody in The United States was doing a good job on Twitter necessarily on it. So you know, you have to be a little careful of of what you do there. I think it is an objective that we have later on in turn later on this year in terms of delving into that.

44:19 It is there, it just wasn't the highest priority as we were going through the dramatic growth we were going through. But with our executive team in place, and we are taking a number of steps of advancing the promotion of the company that you can see hopefully in some of our presentations here of how we're presenting the company. I think you really need to be very clear of how you're going to present the company and consistently present it in social media, and we think we're working towards that. Fantastic. Thank you, John. May ask you just now just to, turn to some of the questions submitted during the presentation itself? If you just wouldn't mind just clicking on the the q and a tab. We've got about fifteen minutes left there. So if you could just perhaps start at the top and work your way through, that would be fantastic.

45:08 Wow. I know you put quite a few there, you may not be able to get through all of them in the session. But the company done meeting results. You do not to have broken out administrative expenses, have they seemed to be higher in the second half as they were in the first half? Can you please comment? I think this is generally around so I'll I'll make a comment, first of all, that that it was a decision on our part to take on some additional expenses of of the executive team. It really was a need that we we had to do to both make sure that we could deliver on the demand growth that we had plus to advance projects in our pipeline.

45:58 So that was a careful return on investment calculation for us to make sure that those were judicious expenses to bring on, and we will be covering those expenses. Obviously, taking expenses on takes out a little bit of, it may appear that you're deferring off your breakeven. But when you look at your pipeline and you actually say, well, here's what's in our pipeline, but do we have the capacity, not just, not the production capacity to do it, but the organizational capacity to make sure, yes, absolutely, we're going to get that, that customer pipeline is going to come to fruition, that's where we ran the numbers and said that was a fairly easy decision for us to say that for the revenue growth potential we had, we needed to have expand our capacity there. We have expanded our capacity. We're in great shape now. And it also created an opportunity for Yvonne, Doctor. Dorant and I to focus on the new horizons that we need to do for the potential that we have in front of us on it. So there, I see that, I can see there's a number of questions about breakeven.

47:04 We're continuing to progress there. We did take on a little bit of additional expenses that makes it looks like we're deferring it off, but when you balance it out in terms of assuring that we deliver on the revenues that we had and the revenues that, the revenues we have in our pipeline, we don't think it's really deferring it off that much. So I think our, we can, we do not give specifics on the breakeven because the world can evolve in many ways on it, but we are, but we, just to give you context, I mean, we already had breakeven months in the second half of last year. We already had we had multiple profitable months in the second half of last year. Now from that, there were some very high revenues and we have taken on some additional expenses since then.

47:57 So, but, you know, it's not as if like we're, it's more of the consistently hitting them, it's a matter of consistently hit it because our revenues can, you know, month to month are not, you know, can jump around a little bit based on which truck leaves the loading dock at what time. So we have been profitable on a monthly basis at times. We did take on some additional expenses, but all of that is so that we believe we will have the revenue base to consistently hit it. I'll just take that time now, that's on the operating cost side of it. As Laura alluded to, I think more in terms of our cash requirement, which we're focusing on a lot more, we kind of think we have the breakeven profitability, we kind of have that in shape on it. I think far more is when you are growing rapidly is keeping an eye on your working capital, because you got to make sure that you have the inventories to meet all your customer demand, make sure you have the raw materials in there. So if any, I think the focus for us right now is on the working capital side of it and making sure that we, you know, that we're being judicious in the use of our cash, both ensure we have enough inventories that our customers are paying us on time and that we are keeping all that flow side of it.

49:26 So I think in terms of cash usage, because I see there's some there, the cash usage is far more oriented towards working capital at this point than it is on breakeven profitability. And I think that I can see a number, I hope that addresses a number of questions in there in terms of what our status is in terms of both cash use and breakeven profitability. I think I saw some other ones and various ones of kind of what our run rate is, how our numbers, things like that. The second half of last year, there was a big surge at the end of the fourth quarter on it. I think the first half of the year is never as big as the second half.

50:14 Our numbers are very good relative to last year. Last year's first year, our year to date numbers are dramatically ahead of last year's year to date numbers in the first half so far. We expect to have a very strong growth in the first half. That being said, I don't we don't necessarily think that the first half is going to replicate the second half of last year. It will be significantly ahead of the first half of last year, but not necessarily approach that. I mean, there's a chance of it, but not necessarily so on it.

51:01 We do expect the growth in the second half though, we have a number of new projects coming on, but the growth in the second half will still be strong and that overall growth for this year will be significant. So I think, hope that addresses a number of ones I hear I've seen here in terms of what our run rate is like. There's some here too in terms of our distribution of sales. It vary between Europe and North America. We don't give those out specifically because it gives some competitive intelligence to that some of our partners don't want disclosed and some of our customers don't want disclosed on it.

51:48 So we do have a balance between it. By far, the majority of our sales right now are in North America, particularly in the detergent area. But in areas outside of detergents, we have very strong sales outside of North America on it. It's a continuing balancing act on it. We expect growth everywhere on it. We do expect some advances in milestones in Europe later on this year on it. It's a, I think Europe has been probably a little bit slower on us because they rely more, the customers there rely more than our North American customers do on doing their own formulations, and that their laboratories with isolations at home away from work, some of those laboratories have not been as active, through the middle part of last year. So some of the reformulation activity slowed down on it, but we expect that to pick back up.

52:53 And then if anyone has a crystal ball of how the world emerges out of the COVID-nineteen pandemic in terms of consumer demand, I don't think anyone really knows. I think people expect it to be strong, but in exactly which segments it's going to be strong relative to hairstyling and personal care versus the other areas, I think that's a bit of an unknown. But we do expect strong demand coming out of the pandemic on it. So I see some questions here from Duncan around capital, to drive profitability.

53:41 Yes, we do feel we have the cash for that. I think I referenced our growth in the first quarter, it's been strong growth ahead of last year, and the momentum from 2020 has continued into this year. I see a question from David here on how does ITACONI expect policy determination by the Biden administration to have impact on future business. There is clearly a much stronger emphasis on the low carbon economy with the current administration. They did rejoin the Paris agreement on it.

54:26 We expect there will be initiatives, more aggressive initiatives around climate change, we don't know. We don't know if there's a carbon tax going to come out. There's a lot of unknowns, but we there will be stronger initiatives. And that's really being driven already on the consumer side. I think it's, in this situation, I think it's the government's reacting to the consumers rather than dictating to the consumers on it. And that's really what we see across all brands right now. Think we touched on a lot of these. We say, we've referenced, I think, the breakeven, Jennifer asked about the cost cutting measures, what value has the two high profile and no doubt highway brought to the company?

55:18 Well, I get to take Saturdays off now. That's really been nice. I really appreciate that. But, and and Laura, you know, gets to spend a little bit more time with her young kids and Yes. Family on But really, all joking aside, one is, is that just to reemphasize is that the day to day week to meet management that we have of advancing our fulfillment capabilities and advancing customer projects through our pipeline to have people dedicated day to day to make sure to do that is a tremendous advance value to us and will pay for itself with the projects that we have coming in.

56:04 And importantly, you know, Yvonne, Durant, and I, back when we started the company in 2008, we spent days, you know, at a whiteboard talking about all the application potential for idaconic acid as it maps against the acrylic acid mark, the $20,000,000,000 acrylic acid market. I can assure you that the products we have out right now are just a portion of what those discussions were back in 2008, and we have advanced our chemistries to support that vision for the last twelve to thirteen years. And we are sitting on a significant amount of proprietary Idyconic chemistry that is, you know, some of it already within the bio Asterix line, some other areas that we have that we are going we will be pursuing new horizons.

57:00 And really, Yvonne and I getting back to some of the discussions from twelve years ago, I think we've been successful with Laura joining early on of building out the areas that we're in, and I think we're going to be successful in building out new areas. That's the value, that's the true value to both the organization, to our customers, and to the shareholders of what we've what we've done in expanding the capabilities. John, I think you have addressed pretty much all those questions from investors, and we're just coming up to the hour mark. Of course, the company will be able to review all questions submitted today, and we'll publish responses perhaps where it's appropriate to do so. And, John, I think you have just pretty much wrapped up there, but if there's any just final words before we redirect investors to give you some feedback?

57:48 Just again, appreciation as I started out, when we have the year to have, you have to be thankful and appreciative of everyone who's helped helped you get here. Customers, key people at Revolum are who added huge contributions to where we are today, the shareholders and the support. We miss being face to face with you in London. We hope to get there later this year. But just the tremendous support from everybody and being grateful for everyone's support to get here. You need to remind yourself every day that, you know, it takes a large group of people, and we're very appreciative of it. Fantastic. John, Laura, thank you very much for updating investors today. Can I please ask investors not to close the session as you'll now automatically be redirected for the opportunity to provide your feedback? If you've accessed the meeting from our website, the feedback page will appear. But if you've accessed the meeting via the link sent to you by email, you'll simply be asked to log back in to give your feedback.

58:49 Please do so. It only takes a a few moments, and it's greatly appreciated by the company. On behalf of the management team of ITACONIX PLC, we'd like to thank you very much for attending today's presentation. That concludes today's session. Thank you. Good afternoon. Thank you. Thank you.