Itaconix plc (ITX.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Itaconix plc 2026 Half Year Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, John Shaw. Good afternoon to you, sir.

Thank you. We look forward to going through our results today and giving you some overview of what we've done and where we end up, will be going in the near term here. So we started with a very good first half, record half year revenues, our fourth half of revenue growth, excellent commercial progress. But what's most exciting is we achieved our first half of breakeven EBITDA profitability. We expanded our overall revenues to existing customers. We've landed new important customers, and we achieved that breakeven profitability while still investing in new applications, new products and key operating improvements, and we ended the half with $5 million to fund continued growth. If you're new to us on this call or want a quick refresher, we have a very straightforward business and value proposition. Itaconic acid is a natural metabolite found in our bodies in nature, safe and effective. It's produced at industrial scale by fermentation using plant-based feedstock from corn. We purchase it on the open market. We bring it into our U.S. operations to react it using our patented processes to produce a broad line of proprietary safer ingredients that improve the performance, affordability and sustainability of consumer products. We ship our ingredients either directly or through partners around the world to be used in hundreds of consumer products. Generating demand and revenues for our ingredients is also straightforward. Consumer products -- consumer brands are constantly looking for new competitive opportunities and advantages by formulating new products or reformulating existing ones. We use a range of direct and indirect efforts to influence brands to formulate or reformulate using our ingredients. When we're successful, we or a partner or distributor receive a purchase order to supply our ingredient, usually to a contract manufacturer that's making the end product for brand, relatively rarely, less than 10% of the time, the brands actually that we work with actually produce their own products. Very simple business on it. We operate in three segments. Performance ingredients are where we produce and sell our key products. Sparks Formulated Solutions is how we accelerate the process of influencing brands in North America to develop and produce itaconic-based formulations. Through that, we also sell some other ingredients to the contract manufacturers that need to produce our formulations and capture some additional gross profits from these sales to support our technical marketing and sales efforts. Our third area is Bio-Asterix, which are specialty itaconic monomers and polymer bindings used to make plant-based ingredients. Laura will show you how we are turning demand for our ingredients into attractive financial results. Our goal is to become a large specialty ingredient company. We started the 2026 financial year with record revenues and major profitability milestones. We're confident we will have the reorder rates from existing customers and new customers for a strong second half. Beyond 2026, we believe we have the ingredients and customer base to reach $30 million in revenues in the next 3 to 4 years, and we can do it comfortably with our existing U.S. operations. Beyond $30 million, we have broader growth opportunities in our core detergent applications, and we are progressing new potentials in crops and paints. We had a first -- great first half, and we're just getting started. Let's have Laura get you into the financial details.

Thanks, John. Hello. I'm Laura Denner. I'm the Chief Financial Officer of Itaconix, and I'm delighted to share the exciting financial progress that we've made over the first 6 months of 2026. So we did achieve $8.3 million in total revenue. This was an increase of 72% half-over-half. Again, the primary driver of this success was the Performance Ingredients business. The Performance Ingredients are those proprietary polymers that we manufacture and sell. The revenues in this business unit more than doubled to $6.7 million. This growth reflects both higher reorder volumes from existing customers and contributions from new customer wins. Gross profits increased as well by 74%. This contributed $3 million of overall gross profit. Our margins remained stable at 36%. So maintaining margins while growing at this rate demonstrates the value that our customers are putting on our polymers as well as the pricing discipline that we do have. But I think to John's point, the most important thing that we achieved this year was -- or this half was our adjusted breakeven EBITDA. And we did all this while continuing to invest in product development, commercial expansion and production capabilities for our future growth. So as we turn our attention to the revenue buildup, we saw our fourth consecutive half of growth. North American revenues increased by about 29% half-over-half. EMEA grew at an impressive 166%. So as a result, EMEA now accounts for approximately half of the group's revenue compared to about 1/3 in H1 2025. So after many years of developing this market, the sales volumes in EMEA have hit that new phase of takeoff for us. This also is an important milestone because it helps reduce our reliance on any single geography and allows us to build a more resilient, broad revenue base. North America -- our North American revenues, which are comprised of both our Sparks and our performance ingredients grew as we engaged with more customers to bring tablets and capsules to market. We expect to be able to achieve our near-term goal of 600 million unit dose detergent pods in North America in 2026. EMEA revenues, which are comprised solely of our performance ingredients, showed significant adoption by customers in that region. Our detergent polymers are providing those key claims that, that market is looking for. John will go into some of the use cases shortly to show you those key claims that we can support. And in 2026, we did land a new EMEA customer that has the potential to bring in some significant volumes. So we're currently monitoring the reorder rates, but we're enthusiastic at the progress of this opportunity converting to a customer. So now that we've achieved growth in EMEA, we are looking at other markets to assess the progress that we can make in those geographies and for future expansion. This is really just an assessment base though. So as we look more closely into where the growth is coming from, we use our land and expand strategy, and we're seeing some good results. A significant portion of our revenue growth came from existing customers increasing their order volumes. So this is their products gaining wider distribution and greater market acceptance. These reoccurring orders are a key indicator of our sustainability for the growth that we're seeing. At the same time, we successfully added two new major customers during this period, one in North America and that one in EMEA that we just discussed. We also brought on 10 new smaller accounts. So the combination of the expanding activities that we're seeing with existing customers and bringing new customers in gives us that confidence that we need for our medium-term growth ambition. So how is the growth supported by our customer base? As the business continues to scale, we're seeing a broader mix of opportunities move through the pipeline from major customer wins to smaller emerging accounts. In the first half, two of our customers contributed over $1 million, representing about 40% of our revenues. It's important to note that these customers are contract manufacturers, and they are manufacturing for multiple different brands. So there is that additional layer of diversity beyond the headline customer count. We are also seeing growth across midsized accounts that contribute between $500,000 to $1 million, along with a wider base of smaller customers coming online. So this broader revenue distribution reduces the concentration risk and demonstrates the increased adoption of our technology across the detergent sector. Taken together, our customer diversity gives us that strong foundation that we're going to need for a long-term growth strategy. So as we continue to grow our revenues, this did translate into improved profitability. Gross profits increased by approximately $1.2 million during the period. At the same time, we did increase administrative expenses by about $1 million. This was to support future growth initiatives. So despite these investments, we did achieve breakeven adjusted EBITDA. This is in comparison to the first half of 2025, where we had a $200,000 loss. So most importantly, what this does is it puts us on our track to achieving a small positive EBITDA for the full year. So as we continue to invest in our growth, those administrative expenses that did increase by about 49% half-on-half to about $3.2 million. Much of that was an increase that is reflected at targeted investments. So one, from additional personnel; two, product development initiatives. There were some transportation costs associated with the higher demand in EMEA that we saw and then -- and finally, some commercial activities that we were doing. It's important to know that these costs are proportional to our revenue growth. So they are variable in nature, so they will scale alongside our revenues. So as we talked about additional personnel, we went from an average headcount of about 26 employees to 33 employees. This was done primarily to support those volumes in manufacturing. We also were doing a lot of work at innovating new formulations for the detergent market as well as developing some of those new revenue opportunities in crops and in paint. So that's where a lot of our administrative dollars went. So alongside with the investment in people, we continue to optimize our throughput in the plant that we have here in our Stratham facility. We've done most of the improvements to date without a significant CapEx expense. So that puts us in a good position. We believe we have all the infrastructure we need to make it to $30 million, which is our medium-term objective and beyond. One of the things that I do like to mention here when we talk about the Stratham facility is that we do have an exceptional metric that is way beyond our peer group. Our fixed asset turnover is 15x for the period. So what our equipment can do out there is generate significant revenues. We expect that to continue to grow as we continue to scale the volumes in our facility. So we believe that our existing facility has all the capacity that we need, and we can further leverage that asset base. Lastly, our balance sheet remains strong, giving us the flexibility to support all these initiatives that we're working towards. We did end the half with cash and investments of $5.1 million compared to $4.4 million at the end of 2025. Working capital was about $4.4 million at the period end. We benefited from some lower inventory balances as a timing effect due to one large customer order leaving at the end of June. So inventories were slightly lower than our target. We probably will invest again back into working capital of $300,000, $400,000. However, we left the period in a good cash and working capital position. During this period, we also did some capital spending to support the growth that we're looking to do. This includes the implementation of an ERP system. We're in process of doing that. We plan to have that live by the end of the year and be utilizing that for the full year of 2027. We did some production optimization projects, and we did some capital work on developing those future applications. So all that was capitalized on to our balance sheet. But overall, we left the current period in a great cash position with sufficient funding for our medium-term growth ambitions and beyond. So I think what we've been able to achieve here in the first half of 2026 was an important period for Itaconix, and it shows some of the impressive metrics of what we can do here. We delivered strong revenue growth. We maintained stable gross profit margins. We achieved EBITDA breakeven for the first time in the company's history. All at the same time, we're using our land-and-expand strategy to continue to further our work with existing customers by increasing volumes. New customers are coming online, and there's a broader, more diverse base of customers across all geographies. What we're doing is we're continuing to invest in people, systems, product development, production capabilities needed to support that growth. We're all doing this within our existing infrastructure. So our Stratham facility has all the capacity that we need to support that medium-term growth, and we have those impressive fixed asset turnovers. And finally, we have the cash and investments that we need, leaving the first half to support all of our growth plans and to continue to invest in those future opportunities. So overall, these results show clear progress towards our goals of building a large, profitable, attractive specialty ingredient company. So I'm going to turn it back over to John to talk a little bit about our growth path, and how we're going to achieve those ambitions.

Thank you, Laura. What a great financial position to be in. To talk about our growth graph on it. We are in a very strong position. We are expanding revenues from existing customers. We're landing new customers, investing in new products, applications and production capabilities. But what next? Where can we get to? And what do we need to do to get there? In the second half of 2026, we need to exceed the $14.8 million in revenues and have clear EBITDA profitability. And as Laura said, we need reasonable reorder rates from our new customers and to just keep doing what we're doing. Our next horizon is $30 million in revenues. And why $30 million? Because we think that is when you will see our full financial capabilities as the attractive specialty ingredient company that Laura just outlined to you. We have the valuable products, the existing customers, the pipeline of new customers and the production capabilities to get there. You've seen how expansion and demand from our existing customer drives our growth. For $30 million, we need one more large EMEA detergent customer and success with purpose-driven brands in North America, and we are on it. So where do we get in 3 to 4 years? Not sure, but not sure when we'll get to the $30 million, but it will be 3 to 4 years, but we will get there. But we're not here to build Itaconix to be a $30 million company. We're here to build it to its true potential of at least $100 million. Now that's going to take a while longer, but we're already working on it. We will get far beyond the $30 million within the detergent uses, and we're investing in developing new product opportunities in paints and crops right now, and paints and crops right now are leading the way to get us there. Our core product area is dishwashing detergents. There are 70 billion annual dishwasher cycles across EMEA, North America and slightly beyond. Our high-value plant-based multifunctional scale inhibitor for dishwashing detergents is currently less than 4% of these cycles per year. Very small percentage. We have great opportunities. The number of laundry machine cycles is even much larger than dishwashing machines. People use their laundry machines more often than they use their dishwashing machines at home. Our high-value plant-based multifunctional odor neutralizer doesn't even register as a fraction of a percentage of these laundry cycles. So our path of $30 million and beyond will be driven by these core ingredients and applications. On top of these revenues are large new applications we're pursuing, the plant-based polymer binders for paints and soil additives for plant health. So overall, the installation of automatic dishwashing machines is growing in the world. So the number of dishwashing machine cycles is growing. There's also demand for safer ingredients. First, on regulatory bans on the use of phosphates, which our scale inhibitors replace. And there's also the consumer desire for safer chemicals in their home, and we are a safe chemical. Global -- the other key one driving our demand here is the global brands who we do work with are steadily advancing their performance. They have their own process of how they come up with next-generation formulations. But when they do come out and push formulations and costs better, all the remaining brands need to keep up with better performance and cost. And that's where we work with brands. We start in North America working with these brands to accelerate their introduction of next-generation products with our SPARX-formulated solutions and our deepercleaning.com programs. Our Itaconix TSI scale inhibitor polymers manage the detrimental effects of water hardness and cleaning, particularly in dishwashing detergents. If water hardness is not managed, then you'll have calcium and other minerals that positive spots or film. Phosphates are used for spotting and filming. They were used, but increasingly banned due to the environmental damage they do when they cause in waterways. Our TSI products are gaining market share as leading replacements for the phosphates. And you can see the kind of performance that we can get in terms of managing spotting and filming with the best of them in both European formulations and North American formulations. So let's look at why they're doing -- we're so good as a replacement. Our TSI polymers reduce the overall product cost if properly formulated. You need less of our polymer, far less because of their multifunctional performance. Compact detergents, less cost, less chemicals, same or better performance. This is why our revenues are growing and will keep growing. It is a great product. We're not just waiting for brands to figure out how to properly formulate with our polymers. We are creating our own next-generation formulations to bring to brands. We're patenting them, and we're collaborating with market leaders to get them out to gain market share for our customers and to drive our growth. Let's start with a new triple chamber pod that we have. There's two liquid chambers and a powder chamber. We patented this. It's 3.3 grams less per dose than the super premium market leader in the United States. 3.3 less grams per dose, same performance. This is what our customers in North America are looking for to bring that next-generation multi-chamber dish pods. But it gets even better. We knew we could push innovation even further using Bonals tablet presses to be able to go to an unwrapped naked detergent tablet. And by the way, Bonals knew it too. That's why we're collaborating of bringing a new generation of detergent tablets into North America. We've developed and patented an 8-gram dish detergent tablet using our Bonals development press line here in Stratham. No plastic wrapper, high plant-based content, super premium performance, 7.7 grams less per dose than the super premium market leader. Think about that, 7.7 grams across -- if we could do that across 70 billion dishwasher cycles, the annual savings in the chemicals used would fill up tractor-trailer trucks bumper to bumper from London to Edinburgh. That's how much 7.7 grams of savings can do in just terms of the volume of chemicals that could be reduced. That's what we do in dishwashing detergents. We know many of you have tried them at home. We've gotten some orders and delivered them into the U.K. Go to deeperclean.com and order some and try them in your home. They work great. So let's turn to the laundry machine cycles, which is a much larger market than dishwashing machines. Our odor neutralizers are easy to use and extremely effective on major classes of odors and odor control and odor control claims are the next frontier in terms of laundry machine -- laundry detergents, and we have an excellent product to do that. How to go about it? Well, let's go back to our 8-gram tablet design and use it for a laundry tablet. Make sure it has great performance. It dissolves in cold wash cycle, and that's what we've done. We -- one 8-gram tablet is good for lightly soiled load, two tablets for a regular load and three tablets for a heavily soiled load and you get outstanding cleaning performance. And on top of the cleaning performance, you get outstanding odor control. great performance and great performance against the latest and greatest detergent format being introduced by the global laundry detergent cleaner leader. That is a 23-gram unit dose product that is getting introduced across North America right now. I think a lot of brands are going to want to talk to us when we get this tablet launched in the first half of 2027. So we have two ingredients that are enabling new generations of solid unit dose detergents in very large consumer product categories. They're cost-effective, plant-based and safer for your family and the environment. I think we're going to be a large profitable specialty ingredient company with these two ingredients. But our ambitions are much higher than just detergents because we have at least two more potential game changers in our Itaconix technology platform. First is our new class of safer paint, no emissions of volatile chemicals, less toxic ingredients, higher plant-based content. We have a patent on our plant-based binder that's used in the paint. We've also filed a patent for the paint formulation, and we've trademarked the name for this entirely new class of paints. We're collaborating with a leading paint company to optimize our formulations. It is a gradual, careful process to get it right, but we're making tangible progress, and we will get it right. Our second opportunity is plant nutrition. We have known for many years that our polymers might improve plant growth. We did a hyperponic growth study internally several years ago that showed we increased the number of blossoms on Snapdragons by a dramatic amount. We found the opportunity beginning of this year with the hiring of Nick Spodden to go out into the field and start field trials in the U.S., and that's what we've done. We're on over 100 acres of row crops across multiple states in the United States. They are out there, they're performing, and we expect to have firm evaluations in hand of what happened out in the field by later this year, early next year. If these go well, we expect to scale this to at least 10,000 acres next year to expand the evaluation. So paints and crops, large attractive new horizons for Itaconix. So we have big potential in detergents, paints and crops. What do these say about our outlook? We have a very strong first half. We're confident in our second half. We have very tangible programs in place for the medium term, the 3 to 4 years to hit $30 million, and we have higher ambitions and efforts in place to go far beyond the $30 million. We are just getting started. So well, I'd like to say that Laura, Yvonne Durant, our Board and really our entire Itaconix team, I appreciate the support and confidence from our shareholders, particularly our long-term shareholders over the last couple of years as we structured the results and milestones to be able to achieve the results we have in the first half. We have fundamentally structured our customer base and our product line to succeed in the future, and we're just getting started. So thank you for all of your support over the last few years. And with that, let's get to all your questions on it. We have many, many questions in it -- on it, which we have consolidated.

We received over a 100 questions. So we tried to break them down into categories and group questions that were similar in nature together. But we are intent is to try to answer all of the questions that you guys have submitted to us.

Yes. So what we'll do here is we have consolidated into major topics. We will go through -- these cover the best we can, the 100 questions we have. We will go back over the next two weeks and go back within the IMC platform and answer every single question that you submitted. So we will get to everything on it, but we wanted to be as efficient as we could with the time we have available this afternoon. So these are the topics that we have on it. Are we going to go through each one on it.

That's great, guys. So if we just dive straight into the first group of questions, which is on financial performance. What are the commercial and operational needs for consistent profitability?

I can take that one. So I think we're very focused on our medium-term ambition of $30 million. We have all the capacity that we need here to achieve that revenue target. We have the people that we need. We'll probably have to scale a little bit as the volumes grow just due to the number of transactions, but we have the infrastructure, we have the foundation in place. From a revenue perspective, I think John will talk a little bit more about it. But during the presentation, we really need one more major customer win in EMEA, and then we need further traction in our U.S. market on that unit dose. detergency.

Next question here is, does the company currently have any plans for its tax loss carryforwards?

So we do have some sizable tax losses. They are -- we have every intention of using these in the future to offset any profitability that we see. So we don't see them expiring anytime soon. So we'll be able to utilize those in the future.

I'd say we don't see any special transactions. They're very difficult to use those within transactions anyway. So I think it's the normal course of business.

And moving on to questions on fulfillment operations. What facilities does the company currently use?

So we currently produce out of our Stratham facility, and we do use third-party warehousing. We have some facilities here on the New Hampshire Seacoast that we store raw materials and some finished goods in. And then we do use third-party warehousing in Belgium to supply our EMEA customer. And that's really the footprint that we use to kind of make sure we can supply in North America and in EMEA.

I'm sticking with Stratham questions. What are the capabilities of Stratham operations?

So we're currently running 24-hour shifts. So we run -- once we're up and running, we continue to run our production process. We can -- we kind of moderate based on our demand. Right now, we're running anywhere between 3 to 4 days to meet the revenue demand that we have. But within the facility, we're continuing to increase throughput, and we can increase the number of days we run. So we have all the capacity that we need here at the Stratham location.

Yes. I think our operations team has done a tremendous job of increasing our hourly throughput, and we think we're going to continue to get advances on it. And they've guaranteed Laura that they will on it. So it's great progress there.

How is the company mitigating risk from potential plant disruptions?

So a couple of things that we mentioned. We do warehouse materials offsite. We do have backups for key pieces of equipment here for any minor breakdown in the plant facility. So that's how we're mitigating currently having one facility. We have warehouses off-site that hold sufficient inventory to meet near-term customer demands, and then we can get up and operating pretty quickly on any key piece of equipment.

Next one here is, when do you anticipate a need for an additional production operation?

Right now, within our medium-term ambitions, we have all the capacity that we need on it. So for right now, we're all set in terms of that in terms of additional operations, we will be increasing our production capacity here in Strata.

And following up from that, where do you expect to locate such an operation?

That's going to take some time to figure out exactly where. A lot of it is going to depend on where the demand develops. It will be outside of the U.S. It will depend on the concentrations and the best supply chain we have, but we have not made any determination right now where to place it.

And last question from this section is, how do you expect to fund the development of such an operation?

I think that's something we'll look at in the future. It will look -- the company will look dramatically different once we reach that stage. Our financials will look significantly different, will be $30 million plus and with many different options of how we can do it. We can partner with people, we can collaborate with people on a site. The main thing we're not -- we do not plan to use our current -- we don't really want to use our equity, particularly where we are now at all to do that. So no plans to dilute our equity at all where we stand right now. We will look dramatically different as a $30 million company, both from our debt capabilities and our ability to collaborate with people.

And moving on to questions on the supply chain. Do you have alternative sources of itaconic acid other than from China?

Itaconic acid is only produced in China right now. There are multiple producers there, and there are no alternatives to it. That is the case with itaconic acid, but you have to understand that for detergent producers and our customers, many of the ingredients that they use are dependent on China. It's not just us. It is an industry situation. It's not just specific to us. So we are very comfortable with the capacity and capabilities of all of our Chinese suppliers. We have very close relationships with them. So we do not see any issue with the supply of itaconic acid right now.

Understood. And how is the company managing fluctuations in shipping costs, shipping times and tariffs?

So we work very closely with our suppliers, and they help keep us updated. We're also monitoring kind of just the -- what's going on in the business. So when we do see those pricing increases, we'll review our current prices by account, and we'll see if there's a need to increase prices. So we do some selective price increases. Sometimes we'll do a surcharge if the nature of the increase is temporary. For example, the current tariffs in July that were just announced, we did do a small surcharge to some of those customers. And hopefully, we can remove that when the tariff situation kind of normalizes and we can determine whether it's permanent or just that temporary in nature.

Just we're very confident of maintaining our overall margins in it. I think we're very diligent, Laura and the operations, we are very diligent of coordinating what our cost position by account with what our profit margins are.

Fantastic. How is the company mitigating potential risks from raw material supply disruptions?

So again, we have very close relationships with our suppliers. So we, first of all, maintain a certain level of raw materials here in our third-party warehouses and on site. And then we do work with our suppliers to maintain inventories at various warehouses so that we can pull on them for various surges in demand that we see. So we have kind of multiple layers of making sure we have the right raw materials that we need.

And switching gears on to sales expansion. Is the recent volatility in oil prices creating major new urgency for brands to switch away from fossil-based ingredients?

Well, it creates interesting discussions. People do come back and ask whether we have -- our pricing is still the same for the pre-Iran prices that we gave them. But overall, I remember our core value is cost and performance always. We do not need external forces like changes in fossil-based ingredients to create demand for our product. Also, you have to be careful that formulations do not react quickly. From the beginning to the end on a formulation change, that can take a year or more. I can assure you, when we have control over the formulation like we do in our Spark formulated solutions and our deeper clean and everything we develop, we've already put plant-based -- maximize the amount of plant-based ingredients we can get in there for the performance and cost that we need. So we are showing customers how to get there with plant-based ingredients. And I think that's one of the effectiveness of our formulation work and our deeper clean work.

Next question is, do you expect any of your new detergent customers to become your largest customer in 2027?

No. The progression to being the largest customer takes a couple of years. Our largest customer right now and really where most of our growth is coming from customers that we started in on a couple of years ago. So the new ones that we see now, they will be significant parts of our revenue. I think even more exciting is how big they'll be for us three years from now as you just do that steady progression in size on it. So I think our current customers will continue to be our major source of revenues.

Next one, what are your plans to expand sales beyond EMEA and North America?

Well, we do sell globally. We are in formulations throughout Asia Pacific. We are across the Americas, across Europe on it. Some of that is directly in some specialty applications. A lot of it is also through our global collaborations with Croda and Home Care and Nurion and hair styling, and they're effectively taking us everywhere. So we are in foot odor control in India. We're in fabric sprays in China. We are -- do have a global footprint with our current demand. What we are doing is careful work when you look at the following -- we are going to follow automatic dishwashing machines around the world, and we are going to follow increased usage of automatic dish machines around the world. And we are studying specific segment regions where we think there are new opportunities for us. What is nice when you get into those territories is it's less of a battleground against the global -- the brands we can get to work with, it's less of a battleground against the global players relative to what it's like in North America and Europe on it. So we do think we will follow the non-phosphate solid unit dose detergents around the world. Remembering that a lot of parts of the world do still allow phosphates. And if you're allowed to use phosphates, that's always a cheaper solution than the safer formulas that we have.

Moving on to questions on intellectual property. Are you working on additional intellectual property, or are you covered now?