Itaconix Share Discussion Threads

[purchaseatthetop] 16/1/2021 11:52

To save anybody clicking:
The company with high operational gearing has a significantly higher fixed cost base and relatively low variable costs. These low variable costs allow it to have very high contribution margins – where contribution is defined as revenue less variable costs – but it has to sell a lot of its products or services to make a meaningful profit. The good news is that once the level of contribution has covered its very high fixed cost bill, each extra bit of revenue adds a much bigger proportional amount to profits.

[parob] 16/1/2021 11:32

Why understanding operational gearing is key to successful investingBy Phil OakleyUnderstanding the relationship between a company's revenues and its costs can keep you away from risky companies and help you spot potential winnershTTps://www.investorschronicle.co.uk/comment/2019/07/10/why-understanding-operational-gearing-is-a-key-determinant-of-successful-investing/

[pastybap] 16/1/2021 10:59

Also an accountant, and joined here fairly recently after reading a suggestion on Twitter. Looked into the numbers in a bit more detail. I'm particularly fond of companies with the potential for significant operational gearing. Examples I've done well with in the recent times include BOTB, BVXP and GAW.

[purchaseatthetop] 16/1/2021 10:09

Gross Margins determine the future of the company. IMO.
The GM in 2018 was 16%
The GM in 2019 was 34%
The GM in H1 2020 was 37%
The 2019 Annual Report stated: "Gross profit margins have improved as expected due to increased plant utilization and a reduced overhead cost structure."

Therefore, it seems to me that ITX will generate higher and higher GM's as its revenue rises. Extra value added ontop of the mere revenue increase. It seems we can get to $15m per annum revenue before ITX has to spend $500k on capex and marginal GM contribution will increase further for at least the next 18 months before we get to $15m.

The new VP Ops Miss Kane will have this firmly in her KPI's.
The financial story is the basis of any belief I have in a company. Then I look at the other aspects. I am an accountant and MBA. I cannot help it. ITX ticks all the boxes.

Dreadful weather here in Gerrards Cross but I am booking Eurotunnel tickets for late March so we can drive to our place in Italy (please God) to make myself feel that there is a future.

[parob] 16/1/2021 08:17

ikoo - HEAT PROTECTOR SPRAY(USA)



And comes with a nice little description of the ITX polymer ingredient (Velasoft):

Our heat protection spray is loaded with 100% naturally derived polymer that helps shield the hair’s cuticle from thermal damage and adds a soft, finishing touch.
Bonus factor: It’s lightweight, easy to wash, and helps hair dry faster.

[elsol] 15/1/2021 17:07

Hi NY boy, re: your comment: "End of the decade hold for a long time now but good to see some potential upside, hoping to see 60-75p by late 2029 GLA"

I'm not sure you will wait 8 years for that valuation. I think John talked of 75m USD sales in his long range plan ?2026? If we are running on 4x to 5x sales (implying much reduced but good above industry growth) at the time then you will probably see that valuation.
Or I think an acquisition will do it sooner assuming 80 to 100% bid premium.

[purchaseatthetop] 15/1/2021 16:39

It was correctly pointed out that the full year unaudited update was early only in Jan 2020 and usually arrived Feb. The Jan 2020 figures were very limited.

I suspect, and I am probably wrong, that this update will be much more detailed and sketch out the progress and direction. Hence it may be later and more detailed.
We can wait.

I am really happy to have a delay as I am transferring a number of tens of thousands from a dreadful Virgin Stakeholder pension and that should arrive in a couple of weeks. Much of it is destined for ITX so the later the update the better.

Have a great weekend everybody and it has been fun this week. Lots of too and forth and constructive discussion. Long may that continue.

[lefrene] 15/1/2021 16:30

A good update would underpin the present price, and a forward looking statement about growth expectations, and the growth in environmental responsibility now being pursued by big industrial conglomerates, might put this company on the map. Or at the very least bring on board some institutions, who have been frightened off by the earlier history of this minnow.

[ragnarr] 15/1/2021 16:15

Due any day now but covid is tending to delays stuff

[hsdeo] 15/1/2021 16:11

Anybody have a view when results may be due?

[astralvision] 15/1/2021 14:26

Yes, that's correct, for a mere $500k they could double capacity.From the July 2020 Allenby note:. Currently, the manufacturing facility is running at just 10-15% capacity but has the potential to generate revenues of around $15m (£11.5m) per annum. Operational leverage is substantial and with modest capital investment of circa $0.5m this capacity could be doubled to $30m.

[lefrene] 15/1/2021 12:39

purchaseatthetop, I agree, I would expect product take up growth here, to be less linear and more exponential.

They may experience the nice problem of not having enough production capacity before too long, but at least they have expanded their capacity four fold I believe. But once they get to that stage they will be able to borrow money at attractive rates to expand rather than dilute shareholders yet again.

I suppose Mr Woodford thought that take up of this technology would be very rapid, and that there would be willing lenders and thus no need for dilution to keep the wheeze on the road?

[purchaseatthetop] 15/1/2021 12:33

Now I cannot wait to see the final figures!!!
Thinking about it you are probably right. It may be that the months 5 and 6 of H1 2020 when the figures increased to $250k per month, (which I interpret as geometric growth) were actually first sales of product to new customers hence providing a large boost that will not occur every quarter.
Anyway....it is fun to scenario plan and then see at the end. The more I consider it the more likely you are right.

[astralvision] 15/1/2021 12:26

I believe brokers set the market expectations, in consultation with the company.They are not going to want to look daft with estimates coming in either way above or way below their estimates.I believe companies have to report if their performance is either above or below market consensus, within a certain band.Therefore I expect $1.7m second half, give it take and likely a smidgeon more, as that's the usual way.That in itself would be a superb performance and sets ITX up nicely for 2021.All the hallmarks of a great growth stockimoGLA

[purchaseatthetop] 15/1/2021 12:19

OK....
H1 2019 $500k ($90k per month)
H2 2019 $600k ($100k per month)
H1 2020 $1,100k ($150k per month months 1-4, $250k per month months 5+6)
That is geometric progression.

I expect
H2 2020:
Months 1-2 $325k $650k
Months 3-4 $375k $750k
Months 5-6 $450k $900k
Total $2,300k

My belief is the geometric growth as opposed to arithmetic growth kicked in around March 2020 and it has been roaring along since. We just do not know it yet.

[the ghost who walks] 15/1/2021 12:08

Below 1.7 would be disappointment, should be higher, 1.8 1.9 above 2 would be good

[the white house] 15/1/2021 12:00

Cheers for your continuing info. I think, more than takings for the last few months, it is the amazing number of new customers that is key for me. For example those with repeating orders, an order for a grand in December will likely be noted as 12X that in a years time. The number of new, wide ranging additional company sign ups is what will make the numbers in 12/24 months escalate and what will get people to sit up and take notice

[purchaseatthetop] 15/1/2021 11:46

N+1 Singer clearly have not been reading the RNS's!

I agree with you Parob. Once I am onboard with a share I am annoyingly enthusiastic. Everybody take note. Ignore 99% of my nonsense.

BTW....I fully expect $2.375m H2 2020. On the button.

[parob] 15/1/2021 11:39

AJS has found a few more products containing ITX ingredients. Will post soon.

[parob] 15/1/2021 10:18

Just a reminder so set expectations. Post 3743 by rivaldo (28/10/20)N+1 Singer have today reintroduced forecasts for this year (next year's will follow 2020 results). They see a total $2.8m revenues for the year, with H1's $1.1m revenues rising to $1.7m in H2, and "cautiously" estimate a similar loss in H2 as in H1. Year end cash is forecast at $1.3m.

[ragnarr] 15/1/2021 10:12

Zac MirAfter being somewhat under the radar of late, no doubt partly due to the fact that speciality polymers are a concept in the rocket science category, it was the turn of Itaconix (ITX) to shine. The shares capped a recent sharp bull run with a 45% rise, in the wake of the appointment of Helen Cane, as Vice President of Operations. Bulls of the stock have gushed over the company beefing up the number of key operatives, with the goal according to Itaconix being that it will be well placed to develop the next phase to develop revenue growth.

[purchaseatthetop] 15/1/2021 10:10

TGTW...IMO there is no way that the BoD would have agreed to the expense of the two new VP's unless the growth was geometric. Also, the two new VP's would not have joined without clear view of recent management accounts as I bet their upside is share options.
I think that the cryptic RNS for the new VP Ops (who will have to expand production capacity) is telling us that there is a lot going on and it is all good.
The ever expanding list of products (thanks Parob) suggests that market penetration is far greater than we can see from looking seven months back now.
I hope I am right for all of us.
Ragnarr....thanks for the comment. These boards should be about communication and community. We help each other help ourselves.

[bosbus] 15/1/2021 10:09

ragnarr
Agreed. That's why I hardly ever post

[ragnarr] 15/1/2021 09:58

Thww / PurchaseCan I just say what a pleasure it is to see two people debate without it turning into the usual vitriol on other threads - well done and long may it continue

[the ghost who walks] 15/1/2021 09:26

If we do hit your forecast I'd be extremely happy and I think the stock would move massively as it would imply massive growth accelration.I actually think we will be 1.8/1.9, I'd be disappointed if below 1.7 and delighted above 2