PowerPoint PresentationEcoSynthetix Inc.
Certain statements contained in this document and any amendment or supplement hereto constitute forward-looking statements. All statements other than statements of historical fact may be forward-looking statements. These statements relate to, but are not limited to, future events or future performance, our expectations regarding the Company’s growth, results of operations, estimated future revenues, requirements for additional capital, production costs, future demand for latex-based products, business prospects and opportunities. Forward-looking statements are often, but not always, identified by use of words such as “may”, “will”, “should”, “could”, “seek”, “anticipate”, “contemplate”, “continue”, “expect”, “intend”, “plan”, “potential”, “budget”, “target”, “believe”, “estimate” and similar expressions. Such statements reflect the Company’s current views and beliefs with respect to future events, are subject to risks and uncertainties, and are based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements.
Specific forward-looking information contained in this document includes, among others, statements regarding: (i) the price of oil and SB Latex; (ii) the demand for the Company’s products including the Company’s ability to guarantee successful mill trials; (iii) the Company’s competitive advantages and ability to compete successfully; (iv) the nature and characteristics of the Company’s intellectual property; (v) the Company’s ability to expand production capacity; and (vi) general economic conditions.
With respect to forward-looking information contained in this document, the Company has made material assumptions regarding, among other things: (i) that the general business, economic and competitive conditions remain favourable; (ii) that our intellectual property rights are adequately protected; (iii) our ability to obtain the materials necessary for the production of our products; (iv) our ability to market products successfully to our customers; (v) that we will continue to face no direct competition; (vi) changes in demand for and prices of our products or the materials required to produce those products; (vii) labour and material costs remaining consistent with our current expectations; and (viii) that we do not and will not infringe third party intellectual property rights. Some of our assumptions are based upon internal estimates and analyses of current market conditions and trends, management plans and strategies, economic conditions and other factors and are necessarily subject to risks and uncertainties inherent in projecting future conditions and results.
Some of the risks that could affect the Company’s future results and could cause those results to differ materially from those expressed in the forward-looking information include: (i) an inability to protect, defend, enforce or use our intellectual property and/or infringement of third-party intellectual property; (ii) our dependence on certain customers and changes in customer demand; (iii) the availability and price of natural feedstocks used by us in the production of our products; (iv) the inability to effectively expand our production facilities; (v) variations in our financial results; (vi) increase in industry competition; (vii) the risk of volatility in global financial conditions, as well as significant decline in general economic conditions; (viii) our ability to effectively commercially market and sell our products; (ix) our ability to protect our know-how and trade secrets; (x) company growth and the impact of significant operating and capital cost increases; (xi) changes in the current political and regulatory environment in which we operate; (xii) the inability to retain key personnel; (xiii) changes to regulatory requirements, both regionally and internationally, governing development, production, exports, taxes, labour standards, waste disposal, and use, environmental protection, project safety and other matters; (xiv) enforcement of intellectual property rights; (xv) a significant decrease in the market price of petroleum; (xvi) a shortage of supplies, equipment and parts; (xvii) the inability to secure additional government grants; (xviii) a deterioration in our cash balances or liquidity; (xix) the inability to obtain equity or debt financing; (xx) the ability to acquire intellectual property; (xxi) the risk of litigation; (xxii) changes in government regulations and policies relating to our business; (xxiii) losses from hedging activities and changes in hedging strategy; (xxiv) insufficient insurance coverage; (xxv) the inability to expand technology; (xxvi) the impact of issuance of additional equity securities on the trading price of the Common Shares; (xxvii) the impact of ethical, legal and social concerns relating to genetically modified organisms and the food versus fuel debate; (xxviii) the risk of business interruptions; (xxix) lack of a public market; (xxx) fluctuations in the market price of the Common Shares; (xxxi) our intent to retain earnings; (xxxii) the costs of being a reporting issuer; (xxxiii) the company is a holding company; (xxxiv) tax risks; (xxxv) the impact of changes in interest rates; (xxxvi) the impact of changes in foreign currency exchange; and (xxxvii) credit risk. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. These factors are not intended to represent a complete list of the risk factors that could affect us. Risk factors should be considered carefully and prospective investors should not place undue reliance on forward-looking information.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying those forward-looking statements prove incorrect, actual results may vary materially from those anticipated in such forward-looking statements.
Although the forward-looking statements contained herein are based upon what the Company believes to be reasonable assumptions, the Company cannot assure that actual results will be consistent with these forward looking statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Forward-Looking Statements increasing
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To be one of the world’s leading developers and marketers of bio-based chemical solutions
VISION OUR
EcoSphereTM
industry’s largest manufacturers
customers
DuraBindTM
5
building materials
PF (28%)
MUF (29%)
>32B lbs global wood composites binder market
Wood Composite Binder Volume Paper & Paperboard Volume
6Source: Transparency Market Research
$26* $ / oil barrel
Sheet1
Oil Prices $ (WTI)
Jan-10
$ 101.33
$ 72.9
3.67
$ 2,234
1406
$ 2,167
$ 1.01
Feb-10
$ 104.15
$ 79.7
3.54
$ 2,296
1397
$ 2,174
$ 1.04
Mar-10
$ 110.22
$ 83.8
3.56
$ 2,430
1553
$ 2,211
$ 1.10
Apr-10
$ 114.85
$ 86.2
3.53
$ 2,532
1615
$ 2,286
$ 1.15
May-10
$ 116.53
$ 74.0
3.64
$ 2,569
1612
$ 2,142
$ 1.17
Jun-10
$ 118.07
$ 75.6
3.46
$ 2,603
1568
$ 2,047
$ 1.18
Jul-10
$ 118.84
$ 79.0
3.65
$ 2,620
1591
$ 1,990
$ 1.19
Aug-10
$ 113.17
$ 71.9
3.93
$ 2,495
1594
$ 1,984
$ 1.13
Sep-10
$ 111.63
$ 80.0
4.64
$ 2,461
1615
$ 2,042
$ 1.12
Oct-10
$ 108.46
$ 81.4
5.21
$ 2,391
1543
$ 2,201
$ 1.08
Nov-10
$ 107.82
$ 84.1
5.4
$ 2,377
1570
$ 2,223
$ 1.08
Dec-10
$ 114.90
$ 89.8
5.7
$ 2,533
1589
$ 2,289
$ 1.15
Jan-11
$ 118.12
$ 92.1
6.11
$ 2,604
1672
$ 2,365
$ 1.18
Feb-11
$ 124.01
$ 97.0
6.745
$ 2,734
1767
$ 2,527
$ 1.24
Mar-11
$ 129.00
$ 106.7
6.655
$ 2,844
1834
$ 2,579
$ 1.29
Apr-11
$ 136.49
$ 113.5
7.37
$ 3,009
1833
$ 2,866
$ 1.36
May-11
$ 144.61
$ 102.7
7.205
$ 3,188
1998
$ 2,968
$ 1.45
Jun-11
$ 147.69
$ 95.4
7.25
$ 3,256
2060
$ 3,078
$ 1.48
Jul-11
$ 154.00
$ 95.7
6.96
$ 3,395
2076
$ 3,186
$ 1.54
Aug-11
$ 152.91
$ 88.8
7.28
$ 3,371
2160
$ 3,031
$ 1.53
Sep-11
$ 152.68
$ 79.2
6.9
$ 3,366
2088
$ 2,586
$ 1.53
Oct-11
$ 138.30
$ 93.2
6.33
$ 3,049
1921
$ 2,232
$ 1.38
Nov-11
$ 123.79
$ 100.4
6.38
$ 2,729
1806
$ 2,208
$ 1.24
Dec-11
$ 115.80
$ 98.8
6.09
$ 2,553
1731
$ 2,597
$ 1.16
Jan-12
$ 118.62
$ 100.2
6.365
$ 2,615
1823
$ 2,784
$ 1.19
Feb-12
$ 128.01
$ 102.3
6.5
$ 2,822
1989
$ 3,057
$ 1.28
Mar-12
$ 141.20
$ 106.2
6.62
$ 3,113
2089
$ 2,955
$ 1.41
Apr-12
$ 145.20
$ 103.3
6.505
$ 3,201
2105
$ 2,674
$ 1.45
May-12
$ 141.61
$ 94.7
6.41
$ 3,122
2123
$ 2,264
$ 1.42
Jun-12
$ 126.01
$ 82.4
6.485
$ 2,778
1963
$ 2,350
$ 1.26
Jul-12
$ 117.39
$ 87.9
7.9
$ 2,588
1754
$ 2,468
$ 1.17
Aug-12
$ 119.48
$ 94.1
8.315
$ 2,634
1865
$ 2,304
$ 1.19
Sep-12
$ 118.66
$ 94.5
7.905
$ 2,616
1881
$ 2,380
$ 1.19
Oct-12
$ 119.57
$ 89.5
7.685
$ 2,636
1882
$ 2,307
$ 1.20
Nov-12
$ 120.02
$ 86.5
7.515
$ 2,646
1855
$ 2,236
$ 1.20
Dec-12
$ 118.39
$ 88.3
7.275
$ 2,610
1848
$ 2,326
$ 1.18
Jan-13
$ 119.16
$ 94.8
7.32
$ 2,627
1854
$ 2,451
$ 1.19
Feb-13
$ 120.66
$ 95.3
7.26
$ 2,660
1830
$ 2,530
$ 1.21
Mar-13
$ 123.83
$ 93.1
7.425
$ 2,730
1866
$ 2,258
$ 1.24
Apr-13
$ 122.52
$ 92.1
6.69
$ 2,701
1828
$ 2,229
$ 1.23
May-13
$ 119.16
$ 94.8
7
$ 2,627
1791
$ 2,245
$ 1.19
Jun-13
$ 117.16
$ 95.8
7.14
$ 2,583
1763
$ 2,136
$ 1.17
Jul-13
$ 113.67
$ 104.6
0.6565
$ 2,506
1661
$ 2,136
$ 1.14
Aug-13
$ 104.74
$ 106.6
6.275
$ 2,309
1589
$ 2,212
$ 1.05
Sep-13
$ 105.23
$ 106.3
5.035
$ 2,320
1650
$ 2,329
$ 1.05
Oct-13
$ 107.73
$ 100.5
4.37
$ 2,375
1615
$ 2,377
$ 1.08
Nov-13
$ 109.77
$ 93.9
4.26
$ 2,420
1594
$ 2,254
$ 1.10
Dec-13
$ 108.23
$ 97.6
4.29
$ 2,386
1600
$ 2,260
$ 1.08
Jan-14
$ 111.36
$ 94.6
4.28
$ 2,455
1625
$ 2,277
$ 1.11
Feb-14
$ 115.76
$ 100.8
4.465
$ 2,552
1649
$ 2,221
$ 1.16
Mar-14
$ 119.39
$ 100.8
4.79
$ 2,632
1647
$ 2,132
$ 1.19
Apr-14
$ 118.21
$ 102.1
5.03
$ 2,606
1656
$ 2,167
$ 1.18
May-14
$ 116.98
$ 102.2
4.935
$ 2,579
1662
$ 2,119
$ 1.17
Jun-14
$ 114.90
$ 105.8
4.555
$ 2,533
1621
$ 2,197
$ 1.15
Jul-14
$ 113.26
$ 103.6
3.87
$ 2,497
1670
$ 2,267
$ 1.13
Aug-14
$ 116.03
$ 96.5
3.78
$ 2,558
1669
$ 2,194
$ 1.16
Sep-14
$ 112.63
$ 93.2
3.6
$ 2,483
1631
$ 2,175
$ 1.13
Oct-14
$ 110.50
$ 84.4
3.465
$ 2,436
1621
$ 2,031
$ 1.10
Nov-14
$ 105.55
$ 78.5
3.65
$ 2,327
1581
$ 1,843
$ 1.06
Dec-14
$ 104.37
$ 69.0
3.9
$ 2,301
1459
$ 1,592
$ 1.04
Jan-15
$ 93.85
$ 52.7
3.865
$ 2,069
1245
$ 1,537
$ 0.94
Feb-15
$ 83.28
$ 49.6
3.845
$ 1,836
1172
$ 1,646
$ 0.83
Mar-15
$ 82.10
$ 49.6
3.86
$ 1,810
1277
$ 1,810
$ 0.82
Apr-15
$ 82.37
$ 50.1
3.805
$ 1,816
1467
$ 1,934
$ 0.82
May-15
$ 86.00
$ 59.2
3.66
$ 1,896
1495
$ 1,937
$ 0.86
Jun-15
$ 90.86
$ 60.2
3.68
$ 2,003
1513
$ 1,964
$ 0.91
Jul-15
$ 91.63
$ 57.0
4.07
$ 2,020
1503
$ 1,698
$ 0.92
Aug-15
$ 93.03
$ 47.1
3.75
$ 2,051
1428
$ 1,660
$ 0.93
Sep-15
$ 91.22
$ 45.0
3.84
$ 2,011
1458
$ 1,578
$ 0.91
Oct-15
$ 84.41
$ 44.8
3.9
$ 1,861
1262
$ 1,546
$ 0.84
Nov-15
$ 83.42
$ 40.8
3.79
$ 1,839
1226
$ 1,496
$ 0.83
Dec-15
$ 82.51
$ 33.6
3.79
$ 1,819
1233
$ 1,507
$ 0.83
Jan-16
$ 79.61
$ 26.5
3.78
$ 1,755
1205
$ 1,531
$ 0.80
Sheet2
Sheet3
8
8
Generally soft demand dynamics
Challenged coated paper
change
Proprietary Continuous
and technicians
Global Collaborative Partnerships
into market relevant offerings 11
Technical expertise in the production of formaldehyde- based resins
Application of resins in manufacturing particleboard, fibreboard, plywood, & others
Engineering and procurement of turnkey plants producing formaldehyde and resins
36 years experience licensing technologies in 37 countries
Wood Composite Development & Support Partner
1 12
75% Resource Allocation 25% Resource
Allocation
Performance Sustainability
DuraBind’s compelling, multi- faceted value proposition gaining traction with industry
Momentum towards commercialization
Expanded customer support
Kronospan M&P Kaindi
Top Global Wood-Based Panel
Source: Sonae Industria corporate presentation, March 2015
Case Study
Source: Fishersolve
Potential to accelerate plant conversions due to industry concentration 16
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000
Sappi
APP
UPM
Verso
USD millions (except gross margin)
Q4 2015
Q4 2014
FY 2015
FY 2014
Gross Margin adjusted for manufacturing depreciation 18.7% 21.6% 20.3% 22.3%
Financial Summary
Research & Development (USD, millions)
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 $-
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015
Strict financial discipline with targeted investment in high growth areas
Selling, general and administrative expenses and research and development expenses excludes share-based compensation, depreciation and amortization, provision for termination benefits, impairment loss on PP&E and foreign exchange losses
USD millions
Adjusted EBITDA (loss)1
$(8.3) $(2.3) $(1.6) $(2.0) $(2.1) $(12.6) $(2.9) $(3.6) $(3.3) $(2.8)
Cash Balance (as of Dec 31, 2015)
$60.7 M with no debt
Adjusted EBITDA – cost control reducing burn
20
1) Adjusted for the provision of termination benefits, unrealized foreign exchange translation losses.
Adjusted EBITDA is defined as consolidated net income (loss) before interest, income taxes, depreciation, amortization, accretion, and other non-cash charges deducted in determining consolidated net income (loss).
$1.4 million: cash burn in Q4
Robust balance sheet – foundation to drive growth
235 million pounds of production capacity
Expanding product line in paper and paperboard
Entering new markets in building products
Well positioned to drive growth
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