Itaconix Share Discussion Threads

[tictac] 02/4/2024 15:55

There's a degree to which I think this may be good news. Perhaps a solid business emerging which can afford to push, a little, on margins.

Anyway, the TicTac £68 pound long term target is unchanged!

[purchaseatthetop] 02/4/2024 15:17

I really hope you are right there. With the costs and extra risks of revenue for a 9% gross margin it cannot be worth the effort. Better to have a better reference price with higher value added customers. Good luck.

[lefrene] 02/4/2024 14:23

PTT I believe the net margin on the unwanted business was 9%. As it was bulk I presume the supplied product was mixed with other ingredients to create products to sell into the same end markets as ITX?

9% net margin if one considers cost of capital, and the depreciation of plant and machinery, staff pension plans and all the rest of under lying long term costs, very likely means in real terms that an enterprise would lose money? It's easy to get into a situation where you're working for nothing, the turnover looks good, but there are always a lot of unseen passengers to carry.

JS, has decided that the company will only do business at a reasonable price, plainly he has confidence that other income streams with sensible margins are picking up, and we don't need a department running fast to stand still.

I have had the experience of selling a high turnover business to someone who simply didn't understand that although the turnover was high, the margins were slim (industrial staff employment agency) . I later learned that it took them just 4 months to destroy a business turning over £100k per week.

[purchaseatthetop] 02/4/2024 13:47

Lefrene. But let’s assume the gross margin on the lost business is 32%. That it is product. If the gross margin was 80% then I can see why a customer might feel gouged but to lose business (snd operational gearing) with such a low gross margin seems like the story does not add up.

[cordwainer] 02/4/2024 13:37

I fear ITX having to make legal claims over their IP eventually, but I hope not.
Having lost some custom over pricing, there remains hope that new significant customers may come forth.

[dexdringle] 02/4/2024 12:24

How many other clients will see this and think "maybe I can get my ingredients cheaper somewhere else too then"

It's all very disappointing. Our expectations were for extraordinary. Ordinary simply won't cut it.

You can't just demand premium margins simply because you want them.

[lefrene] 02/4/2024 10:41

It seems the Board have decided that they won't be hustled into being a cheap supplier to some other part of the industry, and will let that end user get basic ingredients from a producer perhaps with less of a moat that needs thin margin high turnover to survive.

The capacity that has been making the thin margin stuff will now be available to produce higher value product. The good news would be that the super absorbents are opening up, and that ITX will have the capacity to satisfy that market without just yet having to build new capacity.

They are demonstrating that they won't be 'owned' by their clients, and sending that message out to the industry. ITX has the patents, their product improves the clients end product at no extra cost above previous ingredients.

I believe they are doing the right thing, even if today the market doesn't like it.

[dexdringle] 02/4/2024 10:17

After a short period of optimism, we are now back in limbo again re whether this thing has significant commercial viability.

The board need to come up with something quickly otherwise we'll be back down at £1.50 before you know it.

[geraldus] 02/4/2024 10:12

Well at least he didn't mention the roof or AI for that matter.

[dexdringle] 02/4/2024 09:38

Presumably, the major US client can satisfy their ingredient needs elsewhere. Perhaps the ITX moat isn't as deep as we hoped. ..

[purchaseatthetop] 02/4/2024 09:22

“whilst gross profit margins will improve”

Opaque as hell. Is this gross margin % or total gross margin? What loss of income is it? Is it product or formulations? If the former then I cannot see how gross profit % can fall.

[geraldus] 02/4/2024 08:59

If they run true to form the forthcoming results will herald good news of some sort.This will be followed by an ebullient interview with JS.It does make me think about the acceptable margin for the holy grail of the SAP,now moved into 2025.

[lefrene] 02/4/2024 08:48

I see it as a positive for the longer term, they're not going down the route of being a cheap commodity producer. ITX adds value to the clients product and deserve a slice of that added value.

[geraldus] 02/4/2024 08:28

Anybody have broker comment on today's news?

[nobbygnome] 02/4/2024 08:28

As a non holder I see this ultimately as good news. Margins are critical to ITX so better to stick to their guns.

And yes in the short term I fully understand the short sighted market will take it badly particularly after the dramatic rise. However when the price settles, it could be the time to wade in…

[blackhorse23] 02/4/2024 08:20

Money moving to APH [LSE] , excellent profitable healthcare company

[parvez] 02/4/2024 07:56

They need economies of scale to make it - I feel sorry for shareholders here.

[nchanning] 02/4/2024 07:47

Jsut lost 1/3 of revenue in what's supposed to be a sticky business . This is a car crash sorry to holders

[pugugly] 02/4/2024 07:26

Mr Market will not like this - nor I suspect will PI's - 10% hit on opening??

[purchaseatthetop] 02/4/2024 07:14

This is the problem. The customers see cost per unit as most important while JS talks about USPs and value added for customers. Sorry to see this because it looked so much better. Best of luck.

[geraldus] 02/4/2024 07:10

I would imagine that could possibly be Croda in today's RNS.To attain higher margins I see less of Partnerships going forward. Nouryon have never contributed much over the years either.

[elsol] 31/3/2024 21:47

I agree Parob, more investors are getting interested now since ITX's business delivery risk is lower now than ever before plus quite a few big name brands are adopting our ingredients with significant 'on sell' opps. for larger product portfolios - we also have plenty of cash runway with improving profitability in 2024 so its unlikely we will ever need to worry about further financing dilution (unless for one off large client growth linked investment or inorganic growth possibilities - M&A). Still lots of 'would-be' ECO chem investors imo still out there yet to find ITX though which is the interesting aspect for exiting shareholders...