There is much to like about this presentation as others have said. Here is my take on key points
Strategy
- Identify key markets in significant transition that are underserved by current market players and/or structure
- Attack those markets through combination of novel technology and unparalleled integration support
- Leverage low-capital manufacturing strategy and key relationships with major industry players to price competitively and impact target markets quickly
I’ve always liked their strategy. They have taken steps to reduce capital costs and yet facilitate global reach, and we know from newsletters and updates that they pay close attention to moves in the market as well as trying to push the legal environment or purchase criteria in their favour. That might result in slower but longer run outcomes and I think it serves us well as it positions Alexium as an innovator.
I do believe that their approach to implementation is actually a source of c
ompetitive advantage. It serves two purposes – it provides the potential to build a strong relationship with the prospect/customer, it deepens Alexium’s understanding of a prospect/customer’s needs and because it involves working alongside the prospect/customer it reduces the likelihood of them looking elsewhere for a solution. It might take longer in terms of the sales cycle and it might be a low or no margin phase but there is plenty of evidence that major sales are influenced by the quality of relationships and in most cases companies will only switch if there is good reason to do so. It seems to me that Alexium has made it comparatively easy for businesses to switch once they are satisfied with the chemistry.
I’ve spoken enough times about the time to commercialisation and whatever the naysayers might want to have us believe Alexium has performed particularly well considering the first
announcement of what has become Alexiflam was made in mid-2012.
A study by Mckinsey, “ Chemical innovation – An investment for the ages” suggests that commercialization can vary from an average of 4 years for product line extensions into existing markets to an average of 11 years for new products into existing markets. Success rate is 30-50%. Alexium fits the latter more closely than the former and was a new, unknown player so it is hard to argue that either the strategy has been wrong, or that they have failed because of heightened expectations last year.
Other observations:
Fire retardant market slide
We are still seeing an image of aircraft seats – I think it is reasonable to assume that means that this is still somewhere in the pipeline.
Outdoor market
Working with ICL. This company keeps cropping up. I’m keeping my eyes on developments with that business as well as its relationship with Alexium.
It will be interesting to see how well the statements about developing standards and becoming a leader in certification testing of FR tent fabrics. However I am guessing that it will serve them well. It is a bit like people thinking of the DuPont system when they thought of safety practices many years ago. Or of Gore-Tex when they think of waterproofing. There is always value in associating a company to a standard. Sure it might not be visible in dollars right now but there is enormous brand value and thus stored value in such an association. Not a bad thing if you are intending that one day you will sell the business to the highest bidder.
Military
Enough said. It is still there and that means there are still $ to come. Anybody who has ever worked with the military knows that it is a grinding bureaucracy.
Alexiflam
Alexium has developed a ground-breaking new FR cotton technology that:
- Performs to the same level as the incumbents (mentions 2)
- Cost-competitive on raw materials
- Much lower variable cost to convert
- Zero reportable levels of formaldehyde
Alexium is in negotiations to license this technology with three global chemical suppliers.
The key differentiator here seems to be the formaldehyde content. In case you don’t know its risks this is a comment from a scientific paper
Study of a novel phosphorus-containing flame retardant for cotton fabric W W Gao, Y H Lu, F Xu, G X Zhang and F X Zhang,
Proban and Pyrovatex CP, however, have the shortcoming of releasing formaldehyde which is known as a carcinogenic compound [8]. So, it is important to develop halogen-free and formaldehyde-free FRs for cotton fabrics.
Or this
http://www.corpapp.com/blog/2010/08/formaldehyde-free-flame-retardant-treatment-proban-pyrovatex/
I am not going to vouch for either of these since I am not a chemist but……..
And there is the licencing agreement again!
I know some people have been concerned about the fact that a licence agreement was mentioned many times last year, but I’d rather it take longer and be right. And to be honest the longer it goes before negotiations are finalised the stronger our position is likely to be.
Resins/Epoxy
There is ICL again.
so yes - helpful, no histrionics, and probably repositions things nicely.
And as a final aside I think we might just be among some pretty heavy hitters. (apologies to the person who has already posted this some time ago but it is worth noting again)
Conference participants:
Alexium International Group Limited ASX –
Ashland Global Holdings, Inc. NYSE – With annual sales of approximately $6 billion and approximately half of our sales generated outside North America, listed among the FORTUNE 500* and S&P MidCap 400*.
Chase Corporation NYSE –not a baby - $863.91m
http://chasecorp.com/userfiles/file/Investor Presentation-CCF-January-17-2017.pdf
Ecolab Inc. NYSE – ECL market cap $37.02 b
Ferro Corporation NYSE -market cap $1.21 b
KMG Chemicals, Inc. NYSE –market cap $502.94m
OMNOVA Solutions Inc. NYSE –market cap $423.04m
PolyOne Corporation NYSE – market cap $ 2.82b
RPM International Inc. NYSE – market cap $7.58
Does the industry take us seriously? Guess we shall see on the day how they respond but someone thinks we are a serious player.
I wish Dirk well. He has spent plenty of time with Nick but he is a chemical engineer PhD (I think with his own name to a patent - outside Alexium) so he is no intellectual slouch and I think he will probably bring a measured style to what he does. I remember that Jstall posted a number of times last year about the atmosphere in Greer. I think that given Nick is based in Washington that can be attributed as much to Dirk as to the energy and inspiration that Nick has bought to the business. I'm looking forward to seeing Dirk's approach and to seeing it translate into communications overall.
and if it isn't clear - these are my opinions - DYOR
Parsifal
(20min delay)