Itaconix (LSE:ITX) — Interim Results

0:00 Good afternoon and welcome to the ITACONIX PLC Interim Results Investor Presentation. Throughout this quarter presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. Have the company can review all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to John Shaw, CEO. Good afternoon to you, sir. Good afternoon. We're very excited to be here. So I'm gonna take you through a bit of an overview, then our CFO, Laura General, will take you through our financial results, and then I'll come back and discuss our strategic progress.

0:51 Quick overview about our business. It is all based on idaconic acid. Ideconic acid is an outstanding plant based building block. It's natural. It has high value. It's generally available. It's a raw material for us to use, and it offers safer, profile than the chemistries that we're substituting for, primarily acrylic acid and styrene. Inaconic acid is made with a plant based feedstock through fermentation. The fermentation is currently done in China. We bring the material idaconic acid into our facility here in New Hampshire. We turn it, polymerize it into valuable, functional ingredients that we then sell as specialty ingredients into everyday products.

1:41 The potential for our Iodiconic acid technology platform, really reflects the current usage for acrylic acid and styrene across many different application areas, totaling a potential market of about $20,000,000,000. To date, we've identified a a portion of that in terms of currently addressable with the products that we have available, but it goes into a wide range of potential applications across many, many industries. In terms of our results to date, for the first half, we are really positioning ourselves for growth, with profitable customers. We hit $2,800,000 in revenues in the first half, which was a decline over the prior, first half of twenty twenty three related to a previously announced adjustment, with one of our major customers that we announced in April.

2:37 One of our goals was to increase our profitability. We did do that with higher gross profit margins at 39%, so that actually year to year from first half of twenty twenty first half of twenty twenty three to the first half of twenty twenty four, we actually had the same amount of absolute gross profits. Our adjusted EBITDA loss was a million dollars. One is we had the same gross profits, and we continue to invest our operating expenses in terms of future growth. We really are very focused on future growth in terms of, first, diversifying a profitable very profitable revenues, across applications, customers, and customer types. We are we are investing our operating expenses, and to increase our marketing efforts, our new product development efforts, and to improve the positioning of our current products through the product, stewardship, which we'll talk about later. And we are making judicious, spending capital spending in both our laboratory and facility upgrades.

3:42 So we really end the first half, we think, a very strong position positioning our, customer base for future growth. To go a little bit more into how we're diversifying our revenues, I wanna talk about, where and how we get our revenues across different formulation pass. There are four primary passage for our revenues that involve both a new formulation using our product, as a key ingredient and how the ingredient is sold, and those are not always aligned. The most amount of our revenues do go through our contract blenders. Very few brands actually produce their own their own products. They usually use third party manufacturers. So we will work with contract blenders and give them new formulations.

4:31 They will purchase our ingredients, and then they will work with brands. Sometimes we do know and sometimes we do not know exactly which brands they're working with to deliver a new a fully packaged product to the brand. Another big area for us is when we work directly with the brand on the new formulation, we get we we get the product claims that the brand wants. Then, when it goes into production, we actually, the invoice and the purchase of materials actually goes to a contract lender who is producing it for the brand. There are also certain brands that do do their own formulation and their own manufacturing. We will bring new formulation, and they will buy the ingredients from us.

5:16 And then lastly, we have, partners and distributors. In home care, we have, in odor control, we have Croda, and in hairstyling, we have, Neurion, where we assist them with new formulations. We provide them with information of how to formulate with our ingredients, and we sell them, our ingredients that they sell either to some of the distributors under our own name or the partners under under their name, and they're the ones who interface with either the contract lenders or the brands on the sale. So there those are the four major routes for it. In terms of positioning, for future growth, at all times, we're working with new formulations and providing information for how to formulate and get new claims for the brands.

6:04 One of our goals going forward, however, is that, we don't have this intensive a process, and we can scale larger by having less participation. When you look in '20 first half of twenty twenty three, like, almost 90% of our revenues, 80 to 90% of our revenues, we have heavy participation in it. We are now, able, to have less participation and still gain new accounts on it. Very important development for us. Across revenue pass, we're in the past, we've relied heavily on the contract lenders. It was almost 89 80% of our revenues in the first half of twenty twenty three. We're diversifying that so that brands in our partners and distributors now made up a significant portion of our revenues in the first half of twenty twenty four, a very important step in terms of diversifying our revenue pass.

7:05 Another important step is to, expand, the number of customers that we're dealing with. So, we the concentration of our top five customers is where before, it was a very high percentage. Now it's almost down to 50%, of our revenues, from our our top five customers. Those customers still are the top our top cups, which are still contract lenders who are then working with multiple different brands. A con a particular contract lender may be working with five, ten, 15, maybe even 20 different brands, which we may or may not have full insight into. One thing we have had in terms of our partners and distributors, improved they've actually entered into one of our top five customers in the first half.

7:54 So across both the formulation pass, the revenue pass, and the revenue concentration, we believe we have significant advances in terms of diversifying our revenues and having a profitable base, revenue base going forward. I'll turn over, financial for you to our, CFO, Laura Dunner. Hello. I'm Laura Denner. I'm the chief financial officer at at ITACONIX. To just give a quick overview of our financial highlights before we, kinda dive into more, We did achieve, revenues of 2.8. This was a reduction from our first half of twenty twenty three by 30%. As John indicated, we were able to keep our gross pro our absolute gross profit at 1,100,000.

8:43 This was due to improvements in our gross profit margin. Lastly, we did have some judicious spending, and we did increase our EBITDA loss to about 1,000,000. The revenue makeup, we did announce in April 2024 that we did lose, we did not renegotiate a agreement with a large merchandiser. That revenue represent represented a net of 1,800,000. We still do some volumes with them currently. What we did see was growth in other existing accounts as well as in new accounts, and this was across all of our geographies. So in Europe, we saw a 50% increase. We also saw a decrease here in North America. Revenues by segment, we have performance ingredients as well as formulated solutions. We did see a reduction in both.

9:37 What we also did see is our gross profit, margin improved on both of these segments of our business. The reduction by, the reduction that we saw was really focused in cleaning. This was due to the merchandiser that we did have. We did see improvement in our gross profit in that segment of the business. It did improve to about 33%. We also saw increased sales in our beauty and hygiene, and those gross profit margins remain consistent from half to half. So when we talk about our gross profit margin, the improvements were really due to improvements that we saw in our cost on our raw materials as well as our throughput in our factory.

10:26 So that represented about 10% improvement in our gross profit margin. We were able to provide better pricing to our customers because we had, those improvements. And then due to that product mix that we talked about a little bit in the previous slide where our beauty and hygiene, volumes did increase and our gross profit that related to our gross profit margins improving. As we move down, our adjusted EBITDA was 1,000,000. This relates to the fact that we had a flat, gross profit for the h one twenty twenty one 2023 and h one twenty twenty four. We did increase our operating expenses by about 500,000. Of that, 400,000, were cash expenses. These were from improvements in our marketing as well as in our product development, that were ongoing costs as well as some nonrecurring expenses.

11:26 These were some development costs that we had for, onetime testing as well as some regulatory approvals that we were searching to get. Some of the noncash items were were, stock option expenses as well as some changes in our depreciation expenses. Since the fundraise in, February 2023, about sixteen months ago, we have deployed the proceeds that we received. A good portion of them were used in our working capital. This was to make sure we were well positioned for our growth in Europe, as well as being able to have inventory there and provide attractive terms, for accounts receivable and accounts payable for our European customers.

12:11 We have improved our, finished goods globally, so we are well positioned to meet any of our customer needs. That did use a significant portion of those proceeds, but it positioned the company very well for our the growth strategy that we have. As for operating expenses, we did have about a million dollar increase in our operating expenses over those sixteen months, not in just the six months, but over the, sixteen months since we did the fundraise. Of that 400,000 were nonrecurring expenses. So this, again, is the, product development expenses, some onetime testing for regulatory as well as product safety. And, we are having an ongoing increase in our operating expenses to improve our marketing as well as new product development.

13:03 Lastly, we did some capital spending. This was for facility upgrade as well as some lab upgrades with equipment. We have capitalized some new product development as well as we've launched our new website. I'll turn it back over to John to speak about the outlook and strategic progress that we've had over these last six months. Thank you, Laura. So we do have a excellent range of, products that operate as valuable ingredients for consumer products, both cost cleaning, hygiene, and beauty. They work in terms of providing better performance, lowering cost, and improving sustainability.

13:51 We always increase this increase the sustainability whether or not a customer decides to market that or not. So we really focus in on better performance and lowering overall costs. Our major targets to reach the next level is first in terms of our product revenues is the we is to increase the product stewardship that we need in Europe and with global brands to meet in Europe, the increasing certification demands for certifications around the safety of your product, and for global brands is to make sure, across all applications, that we have a regulatory footprint so that they can pursue sales everywhere around the world.

14:39 With that, we've also wanted to have global have our global regulatory footprint in the noncleaning area, particularly as we go into areas like sustainable leather and some industrial applications so that we have that footprint. We do want it we are focusing on noncleaning accounts to expand our hygiene and beauty sales, bringing new value added products out. And, also, the global brands are really focused on the total carbon footprint of the product and looking at ways we can reduce the carbon footprint. We already have a favorable one, but what can we do to continue to improve it over time? In terms of profit margins, we do wanna hit the 36% profits prod margins in terms of increasing our volumes, having better better accounts, updating our pricing on it.

15:36 And then in terms of diversifying our revenue base with custom with new customers, new customers, new applications using our digital marketing capabilities that we're adding, adding noncleaning accounts and applications, adding new, EU cleaning accounts, an area of growth for us in North America focusing on the purpose driven kind of second and third tier, brands where we do very well, and also adding more partners. Our polymers, do not persist in the environment. We've known this from the onset, but we have been required to bring more studies forward. We've invested significantly in new studies where we have new study results to show that when our product gets put into any sort of composting that we we have dated studies to show that it it biodegrades.

16:34 We also have new studies further studies to show that when it makes it out, it's a waterways that it biodegrades. Very important efforts, particularly in Europe and the certification bodies that people looking at in in those that region for safer products and the scrutiny that homeowners get. Additional elements of this is that carbon removal was in the news. You see that in Iceland, they launched a new factory for sucking carbon dioxide out of the year. They've got a lot of publicity. It's a novel largest carbon removal process for it. When you look at the in North America about the Super Bowl back in February, the biggest one was how is Taylor Swift gonna get from Tokyo to Las Vegas, and what sort of carbon footprint was there? Was there a private jet going to leave in the carbon credits she was gonna have to buy? And even Heathrow Airport, you could now get a bio based breakfast where the oil used to make that breakfast is recycled into making jet fuel on it.

17:42 So carbon renewable is very much in the news. Although it's not something we highlight specifically about it, remember that our polymers are involved in carbon renewal removal because we we the plant we the iodine acid starts with a sugar, the fermentation of a sugar that did was created by the absorption of carbon dioxide into a plant through photosynthesis. That plant turned it into a sugar. The sugar was used as the feedstock for the fermentation of isodic acid. The isodic acid gets spit out by the organism and then refined and comes to us. All along the way, in that process, there's been carbon renew removal all the way through until it finally biodegrades.

18:30 So there is a significant carbon removal opportunity for us, particularly as we look at some of our new products. As we've mentioned several times, we have expanded our regulatory footprint. We're very excited to have regulatory approvals now in China, Australia, New Zealand, and in South Korea. Very important steps for us. Whereas in now we have a pretty much a thorough footprint where we are between where we already have approvals, where we got recent approvals, and then there are other countries where no approval approvals are required. An important initiative that we've worked on, for the last year and announced officially out, yesterday, well, was our new ITACONIX, website for marketing new generation claims to a broad range of customers that we can reach through the Internet and can find us through the Internet. That's a very important part with the new formulations that we have and the new claims that we can bring to support our partners, to support our distributors, to to support our contract lenders as they go out, and that can we can get out there and be effective in presenting the benefits of our product with having less participant not having to have intensive participation here for us on a day to day basis and drop people more in. Very important step.

19:56 We're very excited about it. It's been a long time coming. I hope everyone has had a chance to take a look at it. So in terms of our outlook, we reiterate our expectations of 6 to 6,500,000 in revenues for the full year 2024, and we reiterate our expectations for 36% gross profit margins. In terms of our EBITDA loss, we are continuing to do investment spending and important revenue generating initiatives for the future. We we are restoring our growth and see great prospects there. And then when Laura talked about the types of investments that we've made with our proceeds from the fund rates, you'll be seeing in the coming twelve months some returns on that. We expect some new IP from product and process research, including SAP.

20:55 We we are continuing in the EU to get the certifications we think we need to continue growth there with our product stewardship and then getting new new customer projects going, through both, our digital marketing and our regulatory, approvals, feeding new projects for us. So, we, it was a a somewhat difficult first half in terms of some of the adjustments we made, but we do believe that we've created a strong foundation and restructured our very strong foundation for a second half of for a a very strong second half going into 2025. So with our net tagline for nature with nature, what our purpose is to make sure that what we're doing is favorable for nature and for the planet, and we're using nature for it. Nature has provided has been around a lot longer than we have. It offers many different chemistries and solutions for our current problems, and that's what we're doing with our aducanic acid platform.

22:05 We're doing it with performance and cost as the lead and then finally state sustainability. We have a large proprietary platform. I think we're at 60 different patent families, low car low capital intensity. We still have plenty of capacity in our production facility here. We have an established base, a continuing base of customers using it. No direct competition that we see for IDACONA gas. In each particular application area, we may have another formulation that could get to those results that we're competing against, and we continue to have high quality recurring revenue side. We like to remind people that we face lots of daunting problems in terms of being human interaction within the within the planet. We have to remember that nature is more powerful than any of us may imagine. The nature adapts and life finds a way, and we think that that's what we're doing with the potential for iodine iodine acid offers offering new solutions.

23:09 So thank you very much. We look forward to taking your questions. John, Laura, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments through the questions that have been submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see we received questions both pre submitted and throughout today's presentation. Laura, I could hand over to you to just share the Q and A that'd be great and then I'll pick up from you at the end. Thank you. So, from our prescreening questions, we have for long time investors, it's been a long waiting period. We rely on management to deliver, by selling our products at great margins. On the face of it. You've had a turndown in revenues at low margin.

24:00 Can you please provide a timeline for high margin revenues to materialize? Well, I think we you see the results that we had in the first half that we do have higher margins. We're materializing and that with our efforts going forward and the focus that we have in the areas of how we're approaching the market, engaging the market, we think that'll continue to to develop. It was a a difficult but important step to make in the first half, and we're very pleased with where where we are right now. Second question, there is a lot of excitement amongst private investors about superabsorbents. Please, can you provide more detail about when the product is expected to be ready for market and what levels of early customer interest has the company received?

24:47 We may we're making important investments in the super absorbent. As I mentioned earlier, we hope to have some new IP available, either late, later on this year or the first quarter of next year. That's the next important step for us. In, the efforts that we had a couple of years ago, we had an alternative process where we had a super absorbent suboptimal in terms of performance. There is there is competition for other plant based superabsorbents. We think we have a equal to better performance than any of those in a better cost position on it, but we did not wanna go out with inferior absorption performance in the current. We think that was a very difficult sell.

25:32 We also found that the path the current path of looking at the current players in trying to get a new super absorbent in there and replacing out the incumbents can be a very could be a very difficult and long process on it. So we're looking at alternative ways when we have the right product to get out there. Alternative past due to initial sales on it. Again, I think we are it is one of our most important initiatives. We're investing on heavily. We do not expect revenues in the certainly, not this year and even next year. If if we get any at all, it would be much later in the year of next year on it. I understand that could be frustrating, but we you need to make sure that you have a successful product that we put out.

26:24 The next question was in September 2022, you announced a renewed agreement with Croda, which included a newly formulated product added to the collaboration. Is this still not this is still not available as I have yet to see anything pertaining to it on their website? We did make a new product available where we took our scale inhibitor, and we added some zinc into it. It was a fairly low level of zinc. So it's primarily a scale inhibitor with a little bit of odor control. They that was for them to evaluate. They did have it available to them. I think it with the economics come out, if you're actually looking for strictly the o zinc for the odor removal, it's it's relatively expensive.

27:12 We found more opportunities for it because of the balance because we're in the scale and efficient business already. So I think it was just an alignment with what the what their core message was to the customers. Thank you. The next question is in the second half of twenty twenty two, you announced that you had a hair care polymer to be released. It appears briefly as b r 300. Has this been discontinued? We did, successfully develop the b r 300, from a application performance standpoint. We found, some issues in terms of, shelf life stability on it. So we are continuing to work on, seeing if we can improve the shelf life stability on it, so that it it could be a successful product.

28:02 Next question is back in September 2022, you said that there were revenue opportunities with a with the development of a product with a major paper company for odor control and hygiene products. How is this proceeding? We had very successful testing of it. We provided samples. The samples were tested by the customer, and we actually got to the stage implementation. It was going to involve investment in the customer's part of some equipment for applying our technology onto their product. When it came to that stage and it got up to the higher levels, it came to a stop about some new issues that came particularly around some intellectual property that we did not think really was an issue, but they decided it was. I think it's a good example that in the past, particularly with our resource constraints, we rely on bar on our partners to bring new breakthrough products out onto the market.

29:06 That's been continually a the process is long. It can be fairly expensive. And at the end, we could find after two years of effort that all of a sudden, the project falls apart for some aspect that we we really had no control over and that we may not agree with. I think what you'll find in the future is that when we think we have a breakthrough product, we're gonna have a little bit of control over our own destiny in those areas, and we will find a path where we if we really believe that what we have is a breakthrough, an ingredient that's gonna enable a really extraordinary consumer product that we will do it in a manner where we have control better control over our destiny and to get it out on the market and then go back to the large players and to to show what's possible on it. It's been a it's one of the freedoms that we have now with our resources that we have available to take that approach. And I think you can expect to see that in the future.

30:11 Thanks, John. The next question is there are a number of positions being advertised at the moment, of which are laboratory tech technician, chemical production operator, and overnight chemical production supervisor. Have these been these have been displayed for some months now. Are these positions being actively sought to be filled? Are we having a difficult time finding the right candidate? We think the job market has actually improved quite a bit. We did we did out actually, add a chemical production operator who started yesterday. We still have a search going for the overnight chemical production operator. We are currently using our moving around some existing staff so we could run twenty four hours a day, a number of days a week. The lab technician that we're we're continuing to look for that one, we are also we're not referencing, but we are building up our marketing department.

31:12 Our communications director, Bill McClure, retired on Friday, actually. We hired a digital marketing associate who's actually helping with today's presentation, and we expect to put an offer out for a marketing director in the near future. So we will continue to build our marketing capabilities to reach new customers on it. In general, we're finding a lot of a lot of people attracted to working with us. Thanks, John. As regards the the operations director, is this a new position, or has Helen King moved on? Just that her profile is no longer displayed on the website. Because we announced in our in our report and interim results today that Colin King did retire back in April.

32:04 We've left that position open. We're going to move it down to a operations director, and we hope to fill that in the coming months. The next question is congratulations on the new website. Looks really professional, matches the aspirations of the company. With this in mind, there appears to be no mention of any of the super absorbents or leather applications. Can you comment on this? Leather applications, we have three good customers in that area that in terms of approaching the leather come up the the leather tanning process in in market. We're very excited with the partners that we have in that area. We actually don't think we need more customers there. We just think they need to find success with the new chem the new chemistries using our ingredient that they're bringing to market. We probably will do some efforts on our own to push our leather out onto the market.

33:03 You can expect in the future. Super absorbent. Again, we're making progress there. I think you can expect when we do get when we do get a product that we're happy with, you'll see some efforts where we actually have an ability to push some application use out on the market on our own. Thanks. The next question is in regards to raw material shipments of itaconic acid. I'll just post note it because it's fairly long. Cash so there are 60 metric tons that have been received since the last trading update with the statement cash used reflects higher finished goods inventory from the last trading update. Does this mean that the overall picture has changed for this year, and we are very much busier than anticipated with the sizable reduction in the finished goods inventory?

33:55 Second question to that is, will this also be reflected in the rising raising of the revenue expectations for 2020? We expect a very strong second half. A lot of that growth we expect to be in Europe. So we started in May to increase our production levels so that we could have plenty of material available for delivery to meet any any demand in Europe. So we had a very strong our production crew did a great job in May, June, July, August, even through the very hot months of running twenty four hours a day for many not every week, but many weeks on it to build up our finished goods inventory. We're very pleased with where we are. We think we have we're in position to meet any demand that we have coming in Europe on it. So that being said, I don't I think we always caution that know people track the imports of iniconic acid.

34:59 We get them from multiple different channels coming to us so that any any one piece of data you're looking at may not be fully reflect what we're using. Thanks. Next question is, is it possible that we can have an investor relations dedicated person and email address going forward. It is just that we clear up the sum of the repetitive noncommercial, the sensitive information at that point where the input received could form part of of your presentation slash trading updates? We have have added staffing in that area. Laura and I have have some chief of staff that that is assisting us in our demands on our time.

35:48 We are expanding our marketing capabilities. So we think we've added a significant amount of capacity there and will be better at meeting each one of the challenging communications that we have better and faster. Next question is, what will come first? Expansion of The US facility or a brand new facility in Europe as we continue to grow the business and move into profitability? Expansion in The US will come first. We really particularly with some of the new products we're looking at, we wanna make sure that it's under as close to our central r and d capabilities as possible for that next level of expenditure. And it really is not that expensive for us to to to ship into Europe.

36:38 Even in in the the shipment of of particularly in the cleaning market, there's a steady shipment back and forth of key ingredients between Europe. Europe supplies some into The US. US supplies some into Europe. It we don't see any cost savings of extending that, and we wanna develop continue to develop our processes as close to central ROV as possible. Thanks. So the next question is, ITACONIX was a project partner in a funded grant looking into new branch polymer polymers with enhanced drug delivery project partner, Clinton Health Access. Can you advise on this and if there are any potential future commercial advantages to this research.

37:29 That work was completed some time ago. There was an effort at our u our former UK r and d facility that was based on acrylic acrylic acid branch polymers. We have made the decision to focus solely on Iconic acid based polymers, so we are not continuing that work. Thanks, John. So Steven k says gross profit margins increased to 39% from 28% despite low revenues. How was this achieved, and can you maintain or grow these margins with new supply agreements? We are and I think it was referenced in our both our trading update in July and in our release.

38:16 We are signing more supply agreements around pricing that we think is favorable. They're favorable for both the customer gets the benefit of our ingredient in theirs and that we're getting capturing the value of ours. So we're very comfortable that where we're at and how we're approaching the market that we'll be able to sustain those margins. Question from Benjie. Given the advancement in the plant based superabsorbent polymers and the potential to displace acrylate based polymers, what are the company's plans for commercialization? And are there major customers when market showing interest in this tech? It's previously announced that some of the years here, we did have with our our prior production process for super absorbent, we did have some customer interest in that as it showed as it proved, it was a fairly difficult substitution when we didn't have the performance that we needed.

39:15 It was not a one for one replace for the acrylate based one. That's when we came back and continued to work on the process to get to a better polymer. It is a very competitive market. There are other plant based superabsorbents that we expect to be out there. And as and when we go out there, we need to make sure we go out with a really great product on it. And the other one that I'll emphasize again, when we do, we will find we will find a path where we have some control over making sure our product makes it out onto the end market. Particularly because in certain hygiene applications, we have multiple technologies to come through what we think are some extraordinary new products that we get there, and we wanna make sure we come out with with the best consumer product that could happen there, and we will probably work to control our own destiny to something like that.

40:13 Andrew w asks, as a long term holder, we haven't seen any returns. When do you think the share price will actually rise? We think we're we're advancing the company. We think we're doing we've solved many of the issues that we're the difficult issues that we're dealing with, you know, three or four years ago. One is we, there was always an issue that we we didn't have enough cash on the balance sheet, so people thought we they'd get diluted out. We've addressed that. There was an issue of whether or not our technology really was going to enable new consumer products and the product companies were gonna win with our ingredients. We are showing that on it. Again, one the the one minor one that the issue we had is in terms of how making sure that we capture the value for our ingredient when we go to market. We were constrained.

41:08 The resources that we had constrained us in terms of how we did it. You'll now see the results of the efforts that we're making to make sure we can capture it. So I think we're in a much stronger position than we were three or four years ago when actually our market value was much higher. Some of that is in terms of stock market conditions and interest rates went up and, you know, the returns on equities versus bonds changed. That's really not our area to get into. But in terms of being a substantive company with a bright future and the resources available to perform on that, we think we're massively better better positioned, and that we hope that that gets reflected in our trading value in in the future.

41:55 Jeffrey h asks, thanks for the presentation. If you have such a wonderful formula, why aren't your sales a multiple of what they are? Is it poor marketing, or don't your customers see the benefit that you suggest? Good question. You know, our sales model in the past has been very intensive one on one, highly a lot of personal interfaces with with customers in terms of getting our getting the the right claims out in place on it. It was very intensive personnel intensive on it. You'll see with our efforts that we're gonna be leveraging other resources so that we do not have it does not have to be as intensive, and we get more more cracks with more parties showing the benefits of it. We do believe that success begets success.

42:55 When you get successful applications out successful products out there, other brands take notice, and that's what we do see on it. Jeffrey h also asked, might you be vulnerable to trade restrictions from China given that there there were sorry. Given that your asset comes from China. It is a you know, it's trade, there there's always trading risk for China. You can solve the idaconic acid one, but when you get into a to a contract lender and all the other ingredients that go into a detergent, you're gonna find five other, ingredients that are a problem on it. So I I think the fundamental position in terms of, trading with China is something that, is certainly a large geopolitical one. For right now, we do not see any risk at all. In the past, when there have been trade trade issues, Idekonic acid has been left aside on that one because of the limited because of the supply chain on it, and we hope that that our politicians maintain level heads on that going forward.

44:14 David s asked, how successful has the strategy been to diversify the customer base and reduce dependency on a high volume, low margin deals? I think it's been great. I mean, we're picking up lots of smaller specialty retail brands working directly with us with great success. They love working with them. We love working they like working with us, and we hit had a number of successes in the second half of in the second quarter that you'll see success coming in the in in the second half year on it. I think it's been very successful, particularly with our ability to do it with the digital marketing with less with with lot less labor cost to be able to do that.

45:03 Chris n asked new IP for processes and products including SAP. Can you provide any further color on SAP elements and why this is significant? We have some new process developments where we've been able to extend our polymerization capabilities, and that's really what's underlying the improvement that we've had in our super absorbent performance. That extension on our polarization capabilities with some new processes are also opening up some new application areas of other polymers that we can that are have been targets for us in the past. So we're very excited about it. We expect to have, some, tangible progress on that, either in the late in the fourth quarter or early in the, first quarter of next year.

45:56 Chris and also asked, how is the sales cycle developing in h two twenty twenty four? Is it accelerating? We found that when we really like some of the smaller brands that we work with. Some of them, there's customers that we had our first contact with them in May, and we'll be shipping product for them in November. That's how quick the cycle could go. And when we have success with them, that they wanna come back for more. So we've had some important launches in the as I said, in the first half of of of this year, they're gonna continue to grow. We think that we are targeting customers when we think we can reduce that sales cycle and avoid the two year projects that can blow up at the very end after spending lots of time now.

46:47 Jeff h asks, with all the coming with all the coming investments, do you have enough cash to see you through to a profitability future? We think we're in good shape right now. Don't see any issues. Chris n, asks, can we levels as 2023 given the strong improvement in gross profit margin. Can you provide any guidance on cash operating expenses in two h two twenty twenty four? I think our adjusted EBITDA target that for market expectations is that we are we we are gonna increase our adjusted EBITDA losses. That's because we will be maintaining our operating expenses for important investments in the marketing, some of the onetime expense that we talked about, our product stewardship side of it, and some of the staffing that we've done.

47:43 We think this is all judicious spending that has a fairly rapid turnaround in terms of, generating, new revenue. So, we expect we're focusing on rapid payback, investments. Andrew p asked, can we expect a trading update in October based on the first three months of the second half of twenty twenty four? I'm sure we'll have a trading update at some point in the in the in the second half. I'm not sure it's gonna be October, but I'm sure, you know, before the end of the year, we will have one we will have a trading update out before the end of the year. David d asks, are you still in negotiations with the former largest customer to overcome the impasse, or has that reached a dead end and each side has just been forced to accept each other's position?

48:37 We'd still continue to have we still continue to have sales to that customer. It's sort of a little bit narrower set of products that we're in, but, clearly, there are there are formulations where we really were needed, and we are continuing to supply there. And we continue to have active customer projects. I think it was a I think it was a good position that we both came to on it, and, you know, we remain in communications and all are always looking for new opportunities for ourselves, and they are still a customer that we would like to help and be successful with. And that concludes the q and a portion of our presentation.

49:26 So Perfect. Thank you for all your questions. Perfect. John, Laura, thank you very much for answering those questions from investors. Of course, the company can review the questions submitted today, and we'll publish our responses on the Investor Me company platform. Just before redirecting investors to project their feedback, which you know is particularly important to the company, John, I was wondering if I could ask you for a few closing comments. I just think the you know, I think we're as even though the numbers may look difficult, I think the the wise investments that we've made in long term opportunities that are gonna advance us as a great specialty ingredient company, I think the elements are there, and I can understand why people may not see them yet, but we're very encouraged by it. We think they've made some very important steps, and we look forward to continuing to show progress in the coming six months.

50:22 John, Laura, thank you once again for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations? Will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of management to invite CONIX PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all. Thank you.