EcoSynthetix Inc. (ECO) Earnings Call Transcript & Summary

I so move.

All shareholders and proxy holders in favor of the resolution, please so signify by raising your hand. Contrary, if any? I declare that this meeting is now terminated. Thank you. Now I'll turn it over to Jeff MacDonald, our CEO, who will provide a short presentation and answer any questions.

Thanks, Paul. Slide 7, we'll just have a quick reminder on forward-looking statements and then move on to Slide 8, what we do. So we create polymers from renewable feedstocks to create green chemistry and ingredients. And we transform those renewable feedstocks that we start with through a low-carbon footprint proprietary process called reactive extrusion to create the polymer melt flowing down that extrusion line and ultimately create a dry product at the end of it, which are the chemicals and ingredients that we provide to various markets. Change in long-established industries of key materials in those spaces is a tough process and takes time. And so we invest pretty significantly in the people and technology to make that change process as easy as possible for our customers in the form of teams and equipment that go out and support our customers in trialing and ultimately using these new materials. On Slide 9, this is showcasing the areas of business that we participate in today. Our polymers have very broad potential across many industries, some that we plan today and others that we hope to plan in the future. But today, we're very focused on these 3 key areas. number one, wood composite panels; number two, personal care products; and number three, pulp-based products like paper, packaging and tissue. On Slide 10, we'll start with pulp-based products, and this is actually the newest family of products that we've created called SurfLock, which we've developed as strength aids for pulp-based products like paper, tissue and graphic packaging. Paper products are made from pulp, which is essentially wood fibers that come from trees or recycled paper. And we've developed these strength aids to improve the strength of the bonds between those fibers and ultimately create better and more cost-effective paper products. We use our strength aids to build strength between the fibers, but ultimately, our customers don't necessarily need a stronger tissue product or a stronger packaging product. What they need is the cost savings that result from being able to achieve that strength. And you can see here that they can achieve those cost savings in several different ways. Very specifically on one case study and using SurfLock in a tissue customer in Europe, we were able to achieve a 30% increase in tensile strength. And the main way that, that customer realized the cost savings from that advantage was in reducing the basis weight of their tissue. So the tissue essentially performed as the incumbent tissue did with less material, same softness, same performance but with 5% less fiber in it. As well as a number of other key performance improvements that we were able to make through introducing SurfLock to their line. Slide 12 is a league table showing the top global forestry and paper companies and the top global pulp companies on the right. We have a head start in this space for SurfLock in that we already count 5 of the top 15 global forestry and paper companies among our commercial accounts today, and a handful of the pulp companies on the right-hand side are also buying our products today. This space on the right-hand side is probably the most exciting one in our lineup today as it has the potential within one pulp line to generate in excess of $50 million in sales per line. If we move down on Slide 13 to the wood composite space. Our DuraBind products are glues and additives that are used in the production of wood panels like particleboard for furniture. We first developed our DuraBind products as a replacement for formaldehyde, which is a known carcinogen and is used in most wood products today. And we've since realized some substantial carbon footprint savings when using DuraBind in replacement for formaldehyde with the same performance and a cost competitive footprint for the customer to transition to safer renewable materials. And that's been highlighted as of -- as critically important to the market leader in this space, which is IKEA, who have highlighted in their recent sustainability report that over 5% of their carbon footprint as an entire company is captured within the glues that they use in their particle board. And so they've made it a key objective to reduce the carbon footprint of those glues by moving to bio-based resins, and they've also announced that the first operation in Lithuania is using bio-based resins to that effect. Next on Slide 15 is the personal care space. We knew we had some interesting polymers that had some interesting performance attributes for the space, but we didn't have the marketing scale nor the applications development capability in Personal Care to be able to leverage those capabilities in our products as strongly as we would need to. So we decided to adopt a partnering approach in this space. And we're actually happy to report that very recently, we signed a 5-year contract renewal with Dow, who's been taking our products to market under the banner of Maize Care. First and foremost, for the hair fixative space, which is a $460 million space dominated by a fossil-based chemistry today. And more recently, they've been introducing Maize Care for new applications like color cosmetics for skin care and makeup applications. And if we turn a little bit more internally now, we've been investing in our footprint and our capabilities in our own operations and have recently commissioned a brand-new production line here at our Burlington Center of Innovation, which is already contributing with some exciting new products actually that we're hopeful are going to be contributing to some of our future growth steps. So we're in business in a production capacity here in Burlington, and it's already showing the benefits of collaboration across the team. By having this production line in the hands of our own operating people and in collaboration with our R&D people and management, we're able to really get our hands on things and make real-time decisions and changes and improve the way that we're doing things. So this has proven quite beneficial to us in just a few months of being in operation. On Slide 17, 100% of our revenue is driven by renewable products, which gives us a pretty big check mark on the sustainability side of ESG. But that, together with some progressive social and corporate governance practices, has earned us some pretty nice recognition by third-party organizations that look at environmental, sustainable and governance practices. So we've been, for the last 2 years, ranked as one of Canada's top 50 corporate citizens by Corporate Knights, and we also recently received our third in a row platinum designation by EcoVadis, which rates 125,000 companies globally and the platinum designation places us within the top 1% of those 125,000 companies. So we think that all of those pieces provide us with a pretty strong foundation for our next milestone as an organization, which we've set as building our revenue base to $100 million in sales. Why that number? We think that's a scale that allows us to generate substantial cash flow so that we can be operating cash positive, EBITDA positive on a regular basis. and be able to generate cash to continue to fuel our growth in the future. So with that, I'd just like to say I appreciate the support that our shareholder base has given us along this journey, and thank you all for joining us today. I'd be happy to answer any questions that anybody may have.

[Operator Instructions] There seems to be no questions at this time. I'd now like to turn the call back over to Mr. MacDonald for final closing comments.

Okay. Thanks again to everyone for joining us today. And we'll be back to update you again really soon.

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a lovely day.