GCIItaconix boosts profit margins by 10 pts in H1, confirms full-year expectations
() , a producer of sustainable plant-based polymers, issued a trading update for the first half of 2024 (H1 2024).
Itaconix reported unaudited revenues of US$2.8m for H1 from US$4.0m a year ago, largely attributed to its decision to decline low-margin business during the period. However, total gross profit margin for H1 exceeded 38%, up from 28% in H1 2023, reflecting the company's primary objective to enhance profitability.
In terms of balance sheet, reported a robust cash position of US$8.0m. Cash use reflected higher finished goods inventories, higher accounts receivable in Europe, and new investments in upgrades to 's facilities in Stratham, New Hampshire to support revenue growth.
On the product development front, launched 2 new products in April 2024 - Itaconix TSI 422, an advanced version of its leading Itaconix TSI 322 cleaning polymer, and Itaconix ONZ 405, a powder version of its current liquid odour neutraliser.
also said that it completed studies on the biodegradability of its water-soluble polymers to advance global regulatory acceptance, with new approvals granted in China, Australia, and New Zealand, expected to generate further revenue opportunities.
Further details on H1 results will be provided in 's 2024 interim report, expected in early September 2024.
John R. Shaw, CEO, commenting: "Enhancing our revenue structure and increasing gross profit margins, while diversifying our revenue streams, pave the way for our next stage of growth. We are positioning ourselves to better capture the commercial value of our performance ingredients with new orders, new volumes in non-detergent uses, and important new product development initiatives. I believe the strategic efforts we are taking now will advance our long-term revenue growth and profitability objectives."
View from Vox
A positive interim update from Itaconix as it reports significantly higher gross margins year-on-year and a more diverse revenue base, with multiple new accounts and significant growth from existing accounts. Revenues lowered due to 's decision to decline low-margin business from a major customer, although it continued to benefit from new orders and ongoing revenues at lower levels from the customer.
Today's announcement follows a recently issued FY23 trading update where reported a 63.9% increase in gross profits, driven by higher volumes and margins, and improved production utilisation. Revenues rose to US$7.9m in FY23 from US$5.6m in FY22, representing a CAGR of 57.2% since 2019. Therefore, from a technical perspective, we see today's dip in revenues as expected consolidation.
The strong balance sheet should allow to target higher-revenue and high-margin growth, and invest in R&D and developing new performance ingredients. reported initial orders in H1 for a new dish detergent application in Europe, a new sustainable leather account, and a new application in mineral processing, with revenues and volume growth from these new accounts expected to be realised in H2 2024 and beyond.
The aforementioned 2 new products - Itaconix TSI 322 and Itaconix ONZ 405 - are already seeing new revenues, expected to accelerate in H2. Combined with strong momentum from new detergent customers in Europe and North America and active product development, Itaconix is on track to meet its guidance of $6m-$6.5m in revenues and 36% gross profit margin in FY24.
Itaconix has a US$2.3bn addressable market for its ingredients within a US$20bn potential for its broader technology platform as it explores new market opportunities. With strong momentum in recurring revenues and margins, is well-positioned for continued growth and firmly on the path to profitability.
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