Release Date: March 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alexium International Group Ltd (ASX:AJX, Financial) has a strong focus on thermal regulation and flame retardant technologies, which are applicable in various markets including bedding, apparel, and automotive.
- The company holds 25 global patents and continues to innovate with new technologies, particularly in the flame retardant (FR) space.
- Alexium International Group Ltd (ASX:AJX) has made significant strides in improving the comfort and performance of its products, particularly in military applications.
- The company has a strong ESG commitment, focusing on sustainability and reducing the carbon footprint of its products.
- Alexium International Group Ltd (ASX:AJX) has secured new sales professionals and is actively expanding into new markets such as cold chain packaging and footwear.
Negative Points
- The bedding market, a core segment for Alexium International Group Ltd (ASX:AJX), has been down, impacting overall revenue.
- The company's progress with military contracts has been slow, described as moving at a 'glacial pace,' which affects potential revenue from this segment.
- There have been challenges in scaling up sales in tactical gear, leading to a strategic pivot towards larger public tenders.
- The company has faced difficulties in maintaining a stable sales team, which has impacted its ability to drive revenue growth.
- Alexium International Group Ltd (ASX:AJX) has a high concentration of revenue in the bedding market, which poses a risk if this market continues to underperform.
Q & A Highlights
Q: Discuss the developments and progress we are making with ultimate Tier one mattress manufacturers as a backup insurance to SSB, which is Serta Simmons Bedding falling over.
A: We are working with other top-tier mattress manufacturers and have active projects with them. We are also engaging with Tier one suppliers globally, including in Australia, New Zealand, Asia, and Europe. This diversification aims to reduce dependency on SSB and grow our customer base.
Q: What is the progress or roadblocks with body armor suppliers?
A: Progress has been slow with small tactical gear suppliers. We are shifting our strategy to target large public tenders and institutions like border patrol and federal law enforcement. This approach aims to secure larger volume contracts and streamline adoption.
Q: When does the company now expect to be cash flow positive?
A: Achieving cash flow positivity is our primary goal. While we are close, we are not setting a specific date to avoid unfulfilled promises. We will keep investors updated regularly on our progress.
Q: What areas does the company expect to pick up the additional revenue required in the second six months?
A: Revenue growth is expected from new products in the bedding market, such as DelCool and Eclipsys mattresses, and new flame retardant (FR) opportunities. These products are in various stages of testing and commercialization.
Q: Are there any thoughts to de-list the company in the future to save money or lessen ASX and shareholder responsibilities?
A: No, there are no plans to de-list the company. Being a public company provides liquidity and choice for shareholders, and the cost difference between being public and private is not significant enough to justify de-listing.
Q: What is the state of product testing by the Army for an FR uniform?
A: We have made significant progress and passed the most rigorous flame-resistant uniform test. We are now working on improving the comfort and aesthetics of the fabric. The next steps involve further testing and awaiting a formal bid from the Army.
Q: What are the company's major revenue gains for the coming 18 months?
A: Major revenue gains are expected from DelCool and Eclipsys in the bedding market, Eclipsys in athletic gear, and new FR opportunities. These products are in various stages of commercialization and testing.
Q: Are there any developments with respect to top of bed and accessories?
A: We are active in DelCool and Eclipsys pillows and expect to launch DelCool mattress toppers in the second half of this calendar year. These products are gaining traction and are expected to contribute significantly to revenue.
Q: Regarding the FR socks, are you able to provide an estimate of the size of that market in the US?
A: The FR socks market is substantial, especially in the bed-in-a-box segment. We estimate it to be in the millions of mattresses, with significant revenue potential for Alexium.
Q: Could you comment on the decision to go with an exclusive agreement for the new FR chemistry?
A: The exclusive agreement was made to expedite market entry and secure a volume commitment. This agreement is for one year, after which we plan to take the product to the broader market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
