Itaconix (LSE:ITX) — Preliminary Results for the year ended 31 December 2024

0:01 Good afternoon, and welcome to the ITACONIX PLC Full Year Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and publish responses, which is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like

0:32 to hand you over to CEO, John Shaw. Good afternoon to you. Good afternoon. I am John Shaw, CEO of ITACONIX, and welcome to our report on our full year 2024 results and our outlook for 2025. Here's what's most important to know about ITACONIX right now. First, we did $3,700,000 in revenues in the second half of twenty twenty four, which is close to the largest half we've ever had, and we're carrying that momentum into 2025. Second of all, this momentum combined with our success with the profitability, the diversity of our customer base has put us on a better path to profitability than we had in early twenty twenty four.

1:19 Third, we're generating new products and applications that will produce revenue growth for us in the midterm. Our focus is on products that have clear customer demand and that win based on performance and affordability. With this discipline, we are postponing products that do not that have not established customer demand and have benefits that are really mainly only around sustainability rather than performance. This is the case right now with our super absorbent program. Fourth, our supply chain is currently secure. We believe we have the production capacity to meet our needs through '25 and 2026. We have good steady supply of our raw materials with itaconic acid prices with the new tariffs that so far are within the normal fluctuations that we've successfully dealt with for the last three years.

2:10 All of these add up to a very good start to 2025. That places us in line with current market expectations. Our path to being a large specialty ingredients company centers around the value and potential of itaconic acid. Itaconic acid is a natural molecule that's produced within the biochemistry of our bodies and in the plant world, and its value is derived from its unique combination of three functional sites, which is one more than acrylic acid has. These sites offer multifunctional benefits for polymers made from itaconic acid, which is what we do. Its value is also derived from how safe it is to handle and use relative to the building blocks it can replace. It's reproduced and readily available via industrial fermentation and used for many years across many industries to make polymers. It's a great foundation to work from.

3:04 We have a large technology platform we've created from itaconic acid. We bring in itaconic acid into our facility here and run it through our proprietary processes to make valuable ingredients, the potential uses in many applications. Right now, first and foremost, is mineral scale inhibition and dispersion, particularly preventing the detrimental effects of calcium scale in your home, in your detergent, and industrial applications. Second and important for us right now is odor neutralization, where we bind zinc into our polymer. Our polymer is affected by getting water soluble zinc, which acts to neutralize odors on contact. And the third area we're currently in is the binding of hair and collagen. It's used for hairstyling, for skin products, and for leather tanning.

3:56 There are additional areas where we can we are moving into. One is the underlying monomers and binders to make, paints and coatings. Another area is crop nutrients, where we can bind zinc and other minerals into polymers that act as micronutrients. And then we have a capability we do have the capability to make our super absorbent that can be used for absorption and hygiene products. And finally, our polymers can work as thickeners as viscosity modifiers in a wide range of areas in consumer products, paints, and coating of stickers. So together, this is a $20,000,000,000 potential market for our technology platform, and today, we believe we can go after about $2,300,000,000 portion of that potential. Large market potential for us. So how do you turn our technology into great products?

4:44 First, we start with an attractive to be attractive specialty chemical company. We need to we we align an unmet market need with our technology platform where we believe we can create a chemistry that is uniquely able to deliver functional value that meets customer needs. We then turn that chemistry into a new ingredient and go about finding initial customers to confirm and validate that the ingredient has the expected value in customer formulation. This ignition phase can take about one to three years. Once we have validated the product with initial use, we start working our way into broader and broader formulations with more and more customers where the ingredient gets more and more recognition for its value in helping customers succeed in the market.

5:31 And so finally, competitive pressures get the product into takeoff stage. We've received recognition for how we run our stage gate and our development process, by getting best practices from Frost and Sullivan for developing new polymers. We take this process, and to date, we've turned our technology platform into 17 different products across four functional areas and four applications area. It's a tremendous achievement. New counterstrease from new polymers with new multifunctionality, and we're adding more products each year. Last year, we introduced ITACONIX TSI four twenty two, which is a more advanced version of our flagship ITACONIX TSI three twenty two polymer. So from great technology to a broad line of great products, that's what we do.

6:23 In terms of what our revenue success, 2024, our revenues were 6,500,000. That was down from 7,800,000 in 2023, a 17% drop. That sounds bad, but not really. We backed we backed away from one merchandiser due to pricing, then we grew the rest of our business by 55%. That was what the great success was. And then to put 2024 into perspective, in the second half that we had a great second half, we also look that we we have actually grown our our revenues since 2021 by 35% compound annual growth rate. We have a great technology platform. We've returned it into a growing line of valuable ingredients. These products are advancing through ignition, traction, and takeoff to meet more customer needs and generate more revenues.

7:24 When we look at what we achieved in 2024, we reached our major targets. From diversifying our revenues by customer and application to expanding our product stewardship and regulatory footprint, which Laura will go through in more detail, we have set up a broad foundation for our financial success and path to profitability. So when I think about specialty ingredients are great techno are are great companies to invest in with the right technology platform and make attractive long term investments. From a commercial standpoint, you wanna make sure the chemistry is safe. No one wants a toxic forever chemical. The best part of of iodiconic acid is its safety profile. It's a natural metabolite produced in our bodies. Second, make sure the technology has large revenue potential.

8:12 We have multiple large addressable markets based on performance, affordability, and sustainability. And make sure our customers truly need the products. We have a large line of products used in hundreds of consumer app consumer products. So a patented technology platform, large market potential, growing list of products with recurring customer usage and established value, safe chemistry, and then resources in place to grow. We have the large commercial potential for an attractive specialty ingredients investment case. Laura Denner will go through the financial aspects of our performance to date, the success we've had in 2024, and the financial aspects of our investment case as a specialty ingredients company.

8:59 Laura?

9:05 Thanks, John. I'm Laura Denner, and as John just spoke about the valuable products and revenue potential of ITACONIX as a specialty specialty ingredient company. As the chief financial officer, I'll talk to you about the attractive financial aspects of being a specialty ingredient company and our financial progress towards the towards this goal. When we think about the investment case of a good specialty ingredient company, companies such as Croda, Novozymes, and IFF have demonstrated the long term investment returns and investment case that can be achieved in this industry. As we continue on our growth path, we are looking to build a similar investment case with attractive financials that meet these companies. Some of these attributes include attractive gross profit margins, effective capital use, valuable intangible assets, cash available for growth, and investing in future success.

9:59 But first, let's touch on our 2024 results. As John said, we did see a contraction in our top line revenue this year. We were down by 17%, and he provided some detail around that. However, 2024 offered some important advances in the business. First, our total gross profit margins improved by 3.7 percentage points. This allowed us to achieve almost the same gross profits as in 2024. Secondly, we increased our operating capabilities through increased headcount. In sales and marketing, this allowed us to focus on executing our pipeline conversion of potential customers. We also improved our fulfillment capabilities to meet our customer demands globally. These increases in expenses were directly impacted on our net and EBITDA losses for the period.

10:49 As for our cash usage for the period, the investment we made in our operating capabilities used additional cash. We also increased our working capital of, about a million dollars to support, the increased demand we were seeing in Europe. Even though we saw increases in working capital and expenses, we did leave the year in a strong cash position. So this year, we achieved better gross profit margins, improved operating capabilities both in marketing and fulfillment, and we had strong working capital position to meet our growing demand. So as we turn our our attention to the top line revenue, revenue development was primary focus. As we look to, our sales channels, we still sell primarily contract manufacturers with about 80% of our revenues being generated through these customers.

11:40 These manufacturers produce for tier two and tier three purpose driven brands. Typically, a brand will either come to the contract manufacturer or directly to us, and we can provide us a whole range of solutions. One is simply providing our polymers. Two is,

11:56 creating a fully formulated solution, which includes preblends, fully blended powder, other detergent ingredients, and a formulation. Being able to provide a wide range of turnkey solutions allows for faster market adoption of our ingredients.

12:16 Aside from our primary primary sales channel, we saw the most hit in our sales through distributors and partners. This more than doubled from 8% to 17%. So our midterm future revenues will primarily be through our relationship with contract manufacturers. However, we're seeing real positive trend through our sales with partners and distributors. This was due to the primary work that our sales and marketing team did to make sure we had a full range of base formulations and additional, like, marketing information for partners and distributors to continue to cultivate clients. Now as we move over to application areas, cleaning remains our strongest segment. Cleaning applications are in the traction takeoff stage of revenue growth and represents the vast majority of our revenues.

13:06 To continue to drive revenue growth in cleaning, we are offering more avenues to customers to bring products to market faster. We have plans to further these avenues by providing customers with format solutions as part of our Sparks program. Many brands are looking for next generation formats such as tablets, pods, and sheets. We're working closely with contract manufacturers to provide these answers. As we continue to focus on as we change our focus over to beauty and hygiene products, they have advanced through their ignition and traction stages of the pipeline development. Revenues in both of these areas grew by about 50% and became a larger part of our business. This growth was important because our beauty and our hygiene ingredients offer great value in end product formulations, and they're generating very attractive margins at over 40%.

14:01 Although these markets have attractive margins, sales wins in this area are relatively small and require a lot of small accounts to have a material impact. Therefore, in these applications, we can sell directly to customers or we or we can sell through our partners Croda in Hygiene and Nurion in Beauty. We expect that future sales will still be primarily through cleaning, but we'll continue to see growth in beauty and hygiene. So changing our focus to from market segments to geographies, we did see a similar, sales progress from ignition, traction, and takeoff development. In North America, we've established success in cleaning. We can convert this success into other regions, and we are seeing this occur in the European detergent market.

14:50 Europe is one of our fastest growing areas due to the success of our TSI, ITACONIX TSI three twenty two detergent polymer. We continued this momentum with the launch of our ITACONIX TSI four twenty two. This polymer offers more cost efficacy and scale inhibition. These two ingredients really drove the sales doubling in Europe, and we were just under 1,000,000 in 2023, and now we're just about $2,000,000 in 2024. As part of our expansion in Europe, we invested in additional product safety studies to meet the needs of our European customers. We expect to see the continued surge in adoption in Europe as these detergent ingredients become more widely adopted.

15:36 However, North America will still remain an important market space for us as we have strong relationships with contract manufacturers here in North America. Lastly, we did invest in a lot of regulatory approvals globally to take our success into further regions. So we'll continue to find geographies where our ingredients can provide valuable solutions.

15:59 Next and probably most exciting for me was the work that we did to diversify our customer base. In 2023, our top five customers represented over 80% of our revenue base. Whereas in 2024, we diversified this revenue base base so that no single one customer made up more than 20% of our revenues. Our top five customers did shift with two new customers entering our top five customer mix. Another characteristic of our new customer base is the other customer revenues. This increased from 1,300,000 to 2,600,000. Our focus was to concentrate on customers that recognize the value of our polymers. These are customers that understand the cost savings they can achieve with our ingredients, the performance they can get with our ingredients, and the safety our ingredients can bring to their formulations.

16:50 These are the type of customers that we really are looking for and really want. The customer base we have now is important to the business so that we can extract the correct value for our ingredients and stabilize our revenue growth over across over across a diverse base of customers. So as we continue to think about the investment case of what makes a great specialty ingredient company, we have to look at gross profit margins. Our peer group yield average gross profit margin was 38.1%. The path to strong gross profit margins is having the ability to truly understand the value of our ingredients in a customer situation and having the discipline to price to that value. Our 2024 results show the dramatic effect of having this discipline.

17:38 We made major progress in this area, and we increased our gross profit margins from 31% to 34.7%. As you can see, what may seem like a relatively small change in our mix of gross profit margins resulted in a major impact to our overall gross profits. These total gross profit dollars stayed fairly equal to last year.

18:01 So as we move into 2025, we see many opportunities to continue to continue to improve on our gross profit margins. One will be to continue our discipline of pricing. Two will be to make sure that we have a diverse customer base. Three, we will continue to increase our plant utilization. We will be keeping an eye on any adverse changes in raw materials due to the current political conditions, so that may have a negative impact. As we shift over to the balance sheet, another attribute of impressive specialty ingredients company is good utilization of working capital. Currently, we're in line with our industry comparatives. We did increase our noncash working capital by about a million dollars this year, and, again, this was largely due to the success we were having in Europe.

18:53 We are projecting that this increase in working capital will support our growth for the near term and midterm needs that we have. So as we move our attention to fixed asset utilization, this is probably one of the most impressive financial ratios. This truly sets us apart from our specialty ingredient comparatives. With a base of only $600,000 in net fixed assets, our fixed asset turn ratio is 11 times. This means we're generating revenues that are over 11 times the net fixed asset value. This is more than five times higher than our comparatives. Even with this impressive fixed asset utilization ratio, we could still generate higher revenues from our production line. We have more than sufficient capacity to enhance this ratio and to meet our revenue targets for 2025 and 2026 and beyond.

19:47 The last and most critical attribute of a successful ingredient company that I'll touch upon is our intangible assets. This is really the secret sauce behind what is the true value of a business. At ITACONIX, we have a patent portfolio that includes 16 different patent families. This is probably one of the most valuable assets as it provides the protection for our technology platform. These patents provide coverage for various aspects of our ingredients from composition, process, to to usage. Many of our ingredients also have multiple levels of patent protection. Aside from our patent portfolio, we do carry a net asset balance for intangible assets of about 200,000. This includes some recently capitalized process development work that we did in 2024.

20:39 So in conclusion to me, 2024 was a year of exciting progress. I'm really delighted with the progress we are making towards being a highly attractive specialty reading company. We have a better revenue port profile with diverse customer base, better profitability. We've made strategic investments in operations and capital spending for their future growth. We have a highly valuable asset profile, and we made and we have great financial ratios that have already meet met or exceeded our peer group. So all of these aspects lead to a steady path to both midterm profitability and long term growth. At this point, we have the cash to grow, and we have all the pieces coming together.

21:24 Overall, we are in an exciting position as we move forward. So I'll turn it back over to John, and he will discuss our strategic progress.

21:37 Thank you, Laura. The, as we look, into our strategic progress, we operate in three business areas. First is our underlying ITACONIX performance ingredients. These are the polymers that we produce and sell to enable our customers to make great end products. A key part of our success in the early stages is our ability to present brands with formulated solutions that fully utilize the benefits of our ingredients. We work with brands, contract manufacturers, other ingredient manufacturers to pull all these together so we can get that next generation of consumer products out on the market better and faster. We're attracting more brands, more contract manufacturers, more equipment suppliers, more ingredient companies to work with us. We've we've done formulated solutions for many years, but this year, we formula formalized it into our SPARKS program announced in October.

22:34 Safety, performance, affordability, renewability, and collaboration. Finally, we have our bioasterisk area where we work on the specialty esters of itaconic acid and the binders produced from these esters that we are close to advancing into a new commercial phase.

22:56 For growing performance groups, we have great opportunities for our performance ingredients. Most important, is our scale inhibitors, which have great value in detergents that we've established, and are also important are odor neutralizers, which rapidly eliminate odors. Our ingredients can deliver better performance based on their unique functionality. They can replace out a broad range of other ingredients to reduce the overall cost of a formula with excellent safety and environmental profile. What we expect to see with continued growth for our scale inhibitors and odor neutralizers, particularly in detergents, but also getting into more, into some other areas, and that growth will continue into '25 through '25 into '26.

23:45 We're also continuing our research on further modifications, advances to our chemistries, and our performance ingredients, and are working to put new layers of intellectual property and patents in place. For bioasterists, these are the specialty idaclinic esters and binders that are an important area of future growth for us. We're gaining recognition for our they're gaining recognition for their specific functional value, and we have a range of esters that we can make. The key value is the multifunctionality that Iaconic esters can bring. We believe that there is a large opportunity to replace acrylates and styrene esters in certain applications, both at the monomer level and the binder level, in in these applications.

24:31 What you can expect is we'll be launching in ecommerce capabilities, in the near future to make our esters available at research quantities. We believe that sizable opportunities within the environmental safety and functional profile of our bioacitoris building blocks, in segments where biogenic carbon is considered to have great value will create major opportunities for for these products. And finally, is the area we're very excited about, for both the work that we've achieved last year and what we're going to do for the rest of this year, our SPARKS program. As I mentioned earlier, we've been working with on formulated solutions for many years to accelerate the use of our ingredients to deliver the value that brands are are looking for. We formalized this into the Sparks program because of the momentum we have as we research not only different formulations, but the other formats that are coming forward that meet customer needs.

25:29 We have a large presence in unit dose detergent applications. In North America, our presence is mainly in pods, but we're increasingly asked about tablets. There's growing interest in tablets in North America because of the ability to avoid the use of plastic wrapping. We created our first collaboration under the sparks with Banals, a leading tablet machine manufacturer, to bring European quality tablet capabilities into the North American market. We'll be establishing an innovation center here in Stratum with Banals, to be able to bring these formulations forward. You can expect that we will announce additional sparse collaborations both on the ingredient side and the brand side. This is a very exciting area for us that we look forward to reporting more progress on through the rest of the year.

26:21 So we did anticipate some of the key questions that we believe that our investors are hanging out there, in the world of uncertainties that we have right now. So let's talk about what the big questions are. Number one is our supply chain. I think we've addressed it. In the midst of the turmoil and the relationship between countries, and our reliance on itaconic acid from multiple sites in China, there is a, this has been the case for many years, as it is with many chemical intervenes. We've seen some effect from the tariffs, but overall, in terms of our profitability and availability, we do not see a major concern at this point, although we're monitoring it closely. Second of all, we have ample capacity to meet our midterm needs. We have a large operating facility here in Stratham.

27:07 We're operating twenty four hours a day, multiple days of the week. We have a strong operating team with the capacity and staffing to expand. We'll continue to make investments judicious investments in debottlenecking certain operations, but we believe we have all the capacity we need to meet our growth needs for the next few years. In terms of profitability, we are growing with better gross profit margins, and we are investing our expenses to make sure that we can develop even higher revenues, to expand our customer and operating base to achieve breakeven profitability and beyond in the coming years. We have slowed down on our super absorbent efforts. We've seen some other plant based competition, coming in into play using other chemistries, and we have not found a reliable entry point as of yet into the market.

27:59 So we're continuing to pursue superabsorbents, but are not pressing forward too aggressively. And at this point, we do not expect revenues in this area in either 2025 or 2026. We have other applications that are more attractive in the medium term for generating revenue. One is the growth that we have the growth we have available in scale inhibition and odor control, areas we already have a strong presence. We think that's much better opportunities, the effort, the revenues that we need in the near term to on our path to profitability.

28:36 Overall, our outlook for 2025 is in line, with expectations. We exited 2024 in a very '20 in a very strong position, and we're entering 2025 with great revenue momentum across different accounts. We we expect to maintain our gross profit margins so that 2025 revenue growth brings our adjusted EBITDA losses down. As we start to see some very strong returns on the investments that we've made, we are also, that we've made in both operating expenses and capital expenditures, we expect to see these turning into new revenues across our platform. So we are entering 2025 in a remarkably good position with great momentum, and we see a great year ahead.

29:24 So to summarize our investment case of for nature with nature, we have excellent proprietary technology platform that's generating a broad range of valuable ingredients that deliver performance, affordability, and renewability to a broad and growing range of consumer brands and products.

29:44 And, with that, we are generating, with very little competition and for making, for making our particular products, and we have low capital intensity and an excellent financial profile to be an outstanding specialty ingredients company. We're very excited in terms of, where we stand right now, and we move forward with great excitement about our potential over the next twelve to twenty four months. So thank you for joining us this morning, this afternoon. That's great, John. Laura, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard.

30:37 John, Laura, as you can see, we have received a number of questions throughout today's presentation. And if I may now hand back to you and kindly ask you to read out the questions where appropriate to do so, and I'll pick up from you both at the end. Thank you. Yeah. You can just read it. So first submitted presubmitted question, will the company reach breakeven this year? We are not expecting breakeven profitability this year. We do expect our losses to come down significantly. So one of the the next presubmitted question, why don't the company provide more regular RNS updates on the many developments taking place?

31:21 These would be welcomed by long term investors and help to maintain buying interest in between trading updates. We do, provide, RNS updates. Both RNS and RNS are REACH ones that are not regularly required on a regular basis. I must say in the last since our last trading update in end of January, early February, there was quite a bit of turmoil going on on the political side to be able to make any specific statements until we got to today. But you will be seeing a regular pace of commercial progress that we'll be announcing through the rest of the year. One of the presubmitted questions, why does the share price fluctuate such a large percentage on just small volume trading?

32:13 I'm a I'm a as a stock trader, I'm a really good specialty ingredient executive on it. I would say that, my understanding of our shares is it's fairly thinly traded. So if someone is going to sell, the price can go down quite a bit. But it also when someone is buying, there's very few shares available on it. So you do see a fairly significant amount of trading fluctuation. That's my best understanding of the situation. I know you already touched on Sparks, but one of the presubmitted questions was about Sparks. Please provide an update in in regards to the Sparks progress. The program has a goal of having brand releases, at least 10 new products generated from these collaborative efforts by the end of twenty twenty five.

33:04 Yes. We are, working with a number of brands right now on, some consumer detergent product products, that we believe will be generating those those kind of successes through the rest of this year, primarily in some new automatic dish formats, formulas and formats, and getting additional focus into some lawn into some laundry products. So, I don't believe we've had any yet this year, so far in 2025, but we believe the pace is gonna pick up through the rest of the year. Sid b asks, how would you describe your sales pipeline? Is it mostly comprised of a lot of small deals or dominated by one to two huge potential contracts with global partners?

33:55 We have a mix between lots of small accounts. That's where the profitability comes. And you can see in terms of what we've created as a customer base is to have a diversified customer base. So we have increased our number of smaller items in it. The smaller customers in our pipeline, they are very profitable, and they tend to create very nice stable revenues going forward. That being said, we still continue to work with global brands. We have a number of projects going on with global brands right now and some other large contract manufacturers that can drive higher revenues on it. Just a reminder, we do not sell on contracts, so we we will not be getting long term contracts anytime that just explode into it because this is the nature of how trading is done in this area.

34:47 We do sign supply agreements where people give us forecasts, and because we're the only supplier of these particular products, this is almost as good as it's almost good, if not better, than having a fixed contract in place. But it is a mix of both some very large projects, but we've worked really hard to make sure we have a strong base of smaller projects that are keep a more stable revenue base, and they tend to be more profitable. Sidney further asks, what are the biggest pain points of your clients in different sectors that create hurdles in adoption of your ITACONIX products? Each segment has its own issues that people are dealing with. An automatic dish detergent is getting compact, low cost formulas that have excellent shine performance in it, and that's what our product does.

35:47 In odor neutralization, whether it's your pet or your carpet shampoo or air freshener or underarm deodorant, it's the ease of getting instant odor neutralization into your product and easily formulating it in. One of the key parts is that across our customer base, our ingredients are solving a wide range of customer customer needs. And even in a particular segment, for example, an automatic dish, you could be talking to one customer about what their pain point is, and another customer in the exact same market may have a slightly different pain point. We are very adept, and we use our technical capabilities to have that discipline to focus in on exactly what a customer needs to do, and that's the discipline that Laura talked about, is doing so we understand the value of our ingredients in each situation.

36:41 So E and T asks, when do you expect to have a profit? I think we've addressed that, a number of times here that we're on a path to profitability on it, and we will, expect we expect to be proceeding to that in the midterm. Christopher n asks, should we understand that gross profit margins will not expand meaningfully over the next twenty four months? I think we still expect we we made progress. We expect to make additional progress in terms of improving the blend. I think as Laura presented, our overall gross profit margin is a mix of different ranges of it. We continue to focus on finding accounts and revenues above the 40% gross profit margin range so that we average out at at a continuing to proceed. But we are right in the pretty much, we're we're approaching the the typical range for a specialty ingredient company.

37:46 Christopher N. Asks, in the event of a developing trade war slash tariff complexity, would it make financial sense to develop manufacturing facilities in the European arena, and where currently would make most sense if there were a case? We will we were we know kind of where the threshold is to have enough volume to load up a plant. Having a plant investing in a new plant and running it at 10% capacity is is is not a viable alternative for us. And having a plant that's too small is expensive. So, we have the capacity we have now, to continue to utilize that. When we get up to a much larger size than we are now, then we would consider a plant.

38:40 But it it has to be a sizable plant that would have favorable economics, and also that would have we'd be able to load at a relatively high level to have costs on it. Those economics, still overwhelm any tariffs that you have. Christopher n asks, in 2025, can we continue to expect to see the European region to be the dominant revenue and margin growth driver? We expect it to be a mix, I think, in terms of I'm not sure in terms of margin driver that's necessarily the highest margin driver on it, but we do expect continued growth in that area. As we said, you kind of go from ignition track ignition traction takeoff.

39:30 We see a number of projects progressing through in the land and expand, so we we continue to see expansion there. That being said, there are some, like, some end brand accounts, particularly some large private label accounts that we lost access to last year, and we are working hard to get some of those back through alternative channels. David d asks, how much crossover is there in the customer base between North America and Europe? I don't think there's any crossover. One is that the a North American, a North American, detergent formulation, would not, in North America would not work in Europe, nor would a European one work in North America.

40:22 The machines are fundamentally different. In Europe, the, water tends to be heated up in the machines, both on automatic dish, and I believe at laundry machines also, where that's not the case here. So the formulations are different. The supplier, the contract manufacturers are different. So because the majority of our revenues, the actual purchases come from contract manufacturers, there's not much crossover. That being said, the lessons learned from a successful automatic dish formula or a successful laundry formula, those do get translated, into another region fairly quickly, with some adjustments for the needs of a specific of of a the formulations in a specific region.

41:10 So Andrew P. Submitted a question asking for some clarification. As regarding superabsorbents, you stated earlier that this kind is on the this is kind of on the back burner. But in one of the earlier slides today, you stated that you have a water based super absorbent application in place. Can you clarify, please? We have completed the development of a super absorbent that matches the performance of an acrylate based formula. It is significantly more expensive than an acrylate, as we had always expected. And what you need is someone is a customer who's willing to pay a significant premium for that sustainable aspect. So when I say the only aspect of it, the the only advantage that we bring to it is the same, you know, end product performance, but the only particular advantage is that it's sustainable.

42:09 As some companies are painfully finding that base their entire business on sustainability, you can talk to some big brands, and they'll talk a big story. But once it actually comes to getting a purchase order and actual volumes to make your product, your company successful, those orders don't materialize. I think you're finding that in some of the biodegradable plastic companies right now, is that lots of talk that they have with big brands and big global brands and all the wonderful things they're gonna do around sustainability, but the orders don't show up. We are an operating business. We work in areas where we're going to get purchase orders from customers in the next twelve to twenty four months. If I don't see Laura and I don't see that there are purchase orders gonna come from our development efforts, we slow that down. And we do not see any purchase orders imminent, in that area at this time. There's lots of talk about the interest in it, but, again, it's only sustain the only advantage is sustainability.

43:09 We have the same performance, and we're asking for a significantly more expensive product that and in an area where there's competition. So I think it's I think it's just the discipline that we maintain in our product development pipeline is really assisting us right now to make sure that we're generating the revenues we need on our immediate path to profitability. So there was a question here about our production. Are ITACONIX now running two production lines? One where we are producing our standard ingredients used for formulations by the likes of Unilever, Engel, etcetera, and one where we are producing dishwashers slash laundry, tablet, pods, for smaller Sparks brands.

43:56 Our performance ingredients, are are produced on our production line here. Our water soluble performance ingredients are produced here, and those are sold into a broad range of detergent contract manufacturing sites for detergent applications and other applications. We have we're not necessarily what we have coming in from a tablet line is a prototype specialty tableting line, really to develop and co develop effective tablets, based on our chemistries, in the European tablet capabilities of a proper European detergent tablet.

44:44 It is a innovation center. We'll be doing prototypes and some small volume production specialty products. It is not a full scale production line. Our intent is that we will develop those products so that a contract manufacturer would put in a large, large scale, high speed tableting line that we then would have our formulations on. So right now, we run one production line, which is our core which is our core water soluble polymers, and we are running that twenty four hours. We are we're running that we run that for twenty four hours for multiple days. So another question, about our investor relations. Is it possible that we can have an investor relations dedicated person an email address going forward?

45:32 It is just that it would clear up some of these repetitive noncommercially sensitive issues as the at at this point or the input received from this form of presentation slash trading update? We are we we are available for any investor questions. I think through our corporate website, we have inquiries. We we accept corporate inquiries through our website on it. There's a lot of information on our new website on it. So I believe you can find that we address all inquiries that come in. I think it's [email protected].

46:19 We can look into having a special one called investor relations at ITACONIX dot com. It'll probably go to the same person, Laura, on it. So but if well, we can we we do wanna respond to all investors' inquiries as best we can and as timely as we can. Another question regarding human resources. Are there issues accessing good applicants for the positions being advertised? Are some positions having, having had a requirement for quite a while? I think we've kept some positions posted, for a while because we're continuing to build up the staff. I think the the most difficult one was our overnight production operations and supervisors on that. We have filled that, but we always like to keep a few people more available, particularly if we want to extend the number of days per week that we run.

47:23 So we you can expect to see our our advertising for operations people at a pretty steady rate. And I think we had also a position out for a senior financial accounting position, which is an important one for us to step up as we grow from where we are into the 15 to $20,000,000, we do have some additional accounting requirements. So those I think you'd see out there. In general, we have found it, we're a great place to work, I think. We get lots of good applicants. When they apply, they see, what type of company I would work with, and we've been quite successful, at building up a very effective organization. Another question here is about our cap, CapEx spending.

48:11 Please elaborate on direction this year, and what is driving high broker guidance for uses? I think the we have some investments that we're doing to continue to debottleneck our production line. There are, you know, always some pumps and some some new areas to replace certain unit operations to expand our capacity, improve our our throughputs and our efficiencies on it. I don't tends to be a blend of those. No major one area. It's just that we in general, I think we're keeping our capital spending roughly up with our depreciation rates, I believe, on it. So we are not we don't wanna start liquidating our our our fixed assets by not keeping up with the depreciation rate on it.

49:09 So it's roughly a kind of a maintenance area. Another question. When do you plan to provide a trading update for 2025? Our normal practice, is in July, to put out a we typically, at the end of the first half, in the middle of July, we'll put out our our top line, revenue numbers for the first half and our cash position on it and give a fairly full one then, similarly as we did in January for the end of year. And then depending on exactly the developments we have, we would do possibly a formal trading update maybe in the fall and maybe before July.

49:56 It really depends on the it has to have substantive material to bring forward. Chris N asks, below the gross margin line does ITACONIX expect to have to make any further significant investments in personnel or other nonfixed asset expenses prior to EBITDA breakeven? We will we still have positions that we will be filling on the to continue to build our sales team and reinvigorate our research team, not major expenditures on it. And I believe I've addressed the capitals, the fixed asset side of it really thoroughly about what what I just talked about in terms of kind of keeping up with depreciation rates on it.

50:46 Harry L asked, why was the average gross profit margin in h 232.2%, this was lower than the 38% achieved in H one? That was a blend of business. Within that gross profit margin is the, typically formulated solutions have lower profit margins than the performance ingredients. We just had a lot of business coming on in the formulated solutions side of it as we were working on some very exciting new products for some of the purpose driven brands in North America. Another question about our share consolidation new question about our share consolidation that happened in August 2023.

51:36 Has the consolidation shares had a or negative outcome? I believe it's been a very positive outcome. Remember, we have a large share large chunk of our shares are held by US US investors. And at the share price we were at, those investors couldn't participate at all in the success of the company. We now have, the key part of the of the consolidation was to have some, equality between what UK investors, get to experience and what US investors have. So for example, Laura and I, as I've stated before, we now can hold our shares in our brokerage accounts, which we couldn't before.

52:23 So I think that that's on it. So super. Maybe one of the last questions as we're coming to, the bottom of the hour. Do you see yourselves as more like a private company rather than a listed company? We are a listed company. We operate as a listed company. We like where we are. We like we think we can we will be very successful on the AIM market as we reestablish our growth and as the AIM market itself, bounce back on it, I think we're in an excellent position of where we are. Fantastic.

53:09 That's great, John. Laura, if I may just jump back in there, and thank you for addressing those questions from investors today. And of course, the company can review all questions submitted today, and we'll publish those responses on the investment company platform. But John, before we redirect investors to provide you with their feedback, which is important to the company, could I please ask you for a few closing comments? 2024, did not look, particularly well when you look at the top line of the financial statements, but I think I hope as you've learned, in the last hour that there are many positive outcomes, when you look at it closely in terms of, some fundamental improvements. We've worked hard at, creating that foundation for growth going forward. I think we're in an excellent position. We had great achievements in 2024, and you'll see the results of them in 2025.

54:05 John, Laura, thank you once again for updating investors today. Can I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of ITACONIX PLC, we would like to thank you for attending today's presentation, and good afternoon to you all. Thank you very much.