Ecosynthetix Inc (ECO)

[willlbone]

Mr Robot says sell E_Corp.

[savin4college]

The wait has been long - but the time is now

Ecosynthetix (ECO.TO or US OTC ECSNF - Gray market) recently outlined its progress in seeking commercialization of its bio-adhesive for the wood panel market during its Q2 results and call.

(did I mention they have US $57M of cash!!! - they do - and a market cap of around US $70M)

They are making solid progress - much slower than anticipated but reflective of the challenges of getting large wood panel mills to stop production to trial new adhesives during the busy production season.

Despite these challenges they are advancing many different dialogues in what is a multi $B annual market for adhesives.

Why do I care about wood panel adhesives?

Because the State of California established regulations against the use of urea-formaldehyde-containing adhesives which are used in the bulk of wood panels.

Better yet - ECO just reported that the US EPA has issued similar regulations for the entire US - effective in one year - so now all panel producers need to find a path to meet this requirement - and ECO's DuraBind adhesive is the one product that meets the performance requirements AND does so at a cost at parity with the Urea-Formaldehyde formulation.

And major retailers - IKEA and Walmart that we know of - have put in place mandates to move to "No Added Formaldehyde (NAF) adhesives in the wood panels they sell that's great for ECO and the few other bio-adhesive makers - none of which can match ECO's pricing.

Listen to Ecosynthetix Q2 Call

Management is impressive and disciplined - focused on cost management and executing on this new product opportunity. They said their dialogues currently touch on 50 different mills that could each account for $500k - $3M in annual revenue - seems like at least $75M in revenue for a company that's currently doing under $15M in its paper coatings business which has been challenged by competing against petroleum-based coatings that are much cheaper with low priced oil (for now).

It's taken a long time - but the progress seems clear and commercial validation is approaching - from there the stock price should start to discount future growth and now longer sell for a modest premium to their cash position.

Who nows - they might even start to go out and talk about the stock - they haven't done so because they prefer (rightly so) to focus their efforts on the business - as the share price is not a factor in funding the DuraBind rollout out.

Very much worth a closer look today.

[TMEvans]

Given the trend of late in the share price, I'm wondering whether anyone's paying attention anymore!

[dmdm]

Lol. Market seems indifferent about it to start the day though.

[TMEvans]

Agreed! Seems like something that should be easier to roll out than some of their other products too.

[dmdm]

Now we are talking. That seems like some very positive news!

[teq0904]

You think insiders are trading the stock today, lol? If it is a rigged game, why do you invest?

[dmdm]

It appears like we will not be getting good news next week?

[xwing229]

Nothing... Margin should start to improve next QR but who knows the progress they made in getting new customerd and increasing volume of ecosphere usage from their existing customer base.

Still believe it's a tremendous buy and hold stock and I'm looking forward to buy more at this price

[dmdm]

How's it going? You heard anything regarding ECO? Nothing going on at the moment.

[xwing229]

Can't say but my guess is that people see it trending for at least another Q since they most likely won't have commercial revenus from building products and they still have corn priced around 7$ in their inventory ( they lag the corn price about 2Q)

Turn around Q looking more as Q4 than Q3 but it's just speculation at this point where margin improves and new revenus should kickin

[dmdm]

Not a good day for ECO today. Have you heard anything?

[xwing229]

Well.. Y/y around 50% is good but -10% q/q is puzzling as they gained more customers.. Asian markets are still weaks and they didn't open up the commercial shipping on building product. They hinted at the cc that a substantial revenue stream will come more in q4 for these new markets and the inventory for corn with higher price will still be used or the next 2Q so no one expect much from them in q3 except for the commercial launch for building product to happen and margin improvment


Beside that it's pretty flat but they are progressing, just not at the speed everyone expected. Cannaccord analyst Elford now put a 7.75$ target and lowered their lbs sold around 35M lbs sold for this year.

Overall not bad but not great. With the usual daily volume it doesn't take much to make it drop...

hope it stays in that range for a while as I want to buy as much as I can before it takes off for real

[dmdm]

Bit of a disappointing reaction no? There haven't been any insider sales so at least there is some confidence there. What are your thoughts?

[xwing229]

Q2 tomorrow... Hoping for a 23% q/q sold lbs increase. Eco must have 23% increase on each Q to meet Sara Elford estimate of 43M lbs for 2013.

Last q/q was 4% with weaknesses in Japan market.. They didn't officialized any new commercial customer but that doesn't mean none turned commercial. They said a undisclosed canadian customer was ramping up pretty fast in last cc.

A bit disappointed that building products line hasn't been officially launched but maybe good news are around the corner..

Let's see if all the r&d $$$ at least helped to increase ecosphere % consumption in the existing customer base.

Oil/corn spread is great and should also help to raise the margins on each lbs sold.

[xwing229]

They don't set a factory for each customer, they have 2-4 production lines (I don't remember exactly) that can produce up to 235M pounds of ecosphere (I think they use only 25-30M pound at the moment). What they pay for the client site is the gear to handle dry ecosphere product because most mills are using a liquid formula to put binder in their recipe. ROI is a couple months only so it's a winning strategy as they only lost 1 client for an external reason. Last Q1, existing clien accounted for 34% of the sale volume increase so I comfortable with how they progress.

They hire a lot of people at the moment and they put milllions in R&D so the fact that they loose money at this stage is not an issue IMO. Canaccord analyst Sara Elford expect them to lose money in 2013.

The wildcard for this year is their first building product commercial shipping. I don't know how loud the market will react but it has the potential to make a good pop once they release the nr

[dmdm]

Yes I would agree. Their costs to bring in a new customer are really high because as far as I can understand they are basically setting up a factory for the production of their product at each customers location. I think that is why it appears like the more customers they get the more money they lose? If they are still singing that tune to us in Q4 then something is off.

[xwing229]

Just Pulp&papet market is 6B$ industry and they already commercial in this market.

They say they can enter up to 60B$ marke with new products..

Oil is up, corn is down, Q2 should be good and they said last cc that they should announce the first commercial shipment for building products later on this year so it might open up another multi billion market..

This is a buy and hold stock for the next decade if you can IMO. Still around 90M$ in the company bank account to fund an aggressive growth.. Things are looking good!

[dmdm]

Ya. It is run by hard working first generation Dutch guys who built it from the ground up. I think there are untapped applications for their products but I want them to start not only growing their customer base but actually make some money from a customer.

[xwing229]

Yes.. This company has a bright future ahead..

[dmdm]

Any one interested in ECO?

[dmdm]

More climbing to do today!

[dmdm]

Going to get a nice lift today!

[dmdm]

Anyone?

[dmdm]

What do people think of this stock?