My notes from the conf call:
Revenue grew despite no sales to GKA, and customer base is far more diverse.
Most customers are in early stages and have only made small orders compared with what they'll need in the future.
EU market had no impact on FY H1 sales and not likely for H2 either.
Regulatory approval expected in India and Canada -- will accelerate growth further.
In 2011 new products introduced all of which were well received.
Cost base is lower and margin is better.
Company was cashflow positive in CY 2012.
Supply chain is fully invested, can support $250m in sales.
Existing inventories support $150m in sales w/o additional cash spend!
The number and quality of new SKUs is much greater today than 1 year ago.
200 active clients globally, many is USA, Mexico, China
Growth in retail sales of products containing Stevaia is double-digits (48%) in a market that was otherwise not growing at all (consumer foods)
Europe is currently undergoing significant launch activity, and PureCircle will be dominant in EU.
Since EU approval, many new SKUs from Danone and CocaCola (Sprite in France)
CSD area had major launches in last 3 months. Across multiple countries and products incl. recipe reformulation of some famous drinks !
Carbon and water footprint study done and being touted as very advantageous for the Stevia plant.
PureCirlce's supply chain covers everthing from leaf to marketing, and their GKAs are strong because of this.
Broad product portfolio
Outlook: little visibility until industry is established. Rapid growth not until 2013/2014 (prudent)
H2FY12 expect 30-50m in sales (Edit: the high-end of which would give PureCircle a record year despite no orders from GKAs)
Long term focused. Confidence never higher. Portfolio of products and customers is basis for confidence.
Q&A
BGKA (beverage global key accounts) inventory was ~290 tonnes. They expect that by end of CY12 GKA's inventories will not be sufficient and thus new orders will follow.
CapEx is at maintenance level - no more needed (2-3m$ max). Net debt may increase modestly until June 2012.
Full year rev guidance same as last year. Margins and SG&A expected to be the same as H1.
Debt schedule in SEC filing. Principal paid is $6m per year with a lump of $65m due in 2016.
Q: How much RebA do Coke & Pepsi use today? What % is that of global use?
A: Several 100's of tonnes annually today. That is 60-70%. Marketshare (use of Stevia) of Coke & Pepsi dropping.
Tonnage will increase dramatically in next 6 months as new products hit shelves
Q: Low production today - will it continue long? What about exceptional costs?
A: Already resuming production will remain lower until CY2013.
Q: Why will gross margins not improve over H1?
A: Margin targets in biz model are 40%+.
Q: CSD launches: limited visibility but when will you have more visibility?
A: We are in close consultation with all BGKA's! At all levels: CxO, Marketing, Applications, Logistics, etc. 2 of the biggest BGKA's still have inventories - that is the issue today. We expect inventories to drop soon.
Recent "unstoppable trends" of core brand new product launches.
Advantage of PureCircle: refining capability, complementary products for taste and volume capability.
Industry in 10-15 yrs is $10-$15 billion, and PureCircle expects to have 30% of that.
Barrier to entry is high today. Competition needs IP to compete and nobody has what PureCircle has.
Q: Monk fruit potential to displace Stevia as sweetener?
A: PureCircle already has 1 molecule launched in 2010 base on monk fruit extract. But it is expensive (500$. / kg) so
Monk Fruit will remain a niche product. Furthermore, it's hard to grow. Legally protected in china (?) Commercially
it is not a threat to Stevia, and in face "Monk fruit needs stevia to succeed".
