AJX (ASX) Webcast September 19

Originally posted by hottod ↑

I asked quite a few questions and they were all addressed, which I really appreciate. Below is my summary, not necessarily in the same order as the webcast.

Military
Although FR for Ny Co was already developed 3 years ago, Natick wanted the treated NyCo fabric to be lighter weight/more breathable for soldier comfort. The significant military fabric supplier AJX commenced working with ~ 9 months ago tailored a fabric that came in below the 7.5 oz weight spec set, but then didn’t pass the Pyroman test (heat passed through the more open weave). It was then found that the same treated fabric, after undergoing 25 launderings, did meet the Pyroman test. The aim is to shrink the fabric to make it slightly heavier but still breathable and FR. This sounded like it’s easily doable. The company has plans to also expand this fabric into sportswear and there was later talk of FR NyCo in workwear.

Financials
Now realizing 30 - 70% discount on raw materials because of growing economies of scale.
Current revenues and margins have continued the trends set in May and June.

Geographical Breakdown of Sales
Currently concentrated in US. Recently shipped to Canada and will soon be shipping to Mexico. EU sales are expected to ramp up as sales of Alexiflam NF increase. Sales of NF are expected to commence in EU before US.

Product Breakdown of Sales
Won’t be releasing. It was commented that the company was starting to “make a lot of noise in the market” and competitors were now using information from AJX company press releases to inform competitive tactics.

Product Share
Organic growth in Alexicool revenues contrasts with stepped growth in Alexiflam NF. Slower progress in the FR market is due to higher levels of regulation. By end of next year it is expected that there will be an approx. 60/40 split between Alexicool and Alexiflam NF.

Naming Brands and Customers
Can’t do without authority from customers. Customers mostly want privacy.

Competitive Landscape
Obviously while there are current competitors as well as prospective new entrants, the company believes that there will be two determinants of success in this market – ease of integration of product into current manufacturing processes and cost. They believe AJX is highly competitive on both measures.

FR Standards
Atm, demand for eco-friendly FR is predominantly customer driven. Manufacturer focus is on simply meeting current standards and controlling costs. Therefore company strategy is focused on raising end retailer/user awareness, which in turn drives demand.

Govt has been slow to reform standards. Expecting tighter legislation to be introduced over the next 2 years.

OEKO-TEX approval has been received in last week for FR/PCM product in bedding textiles.

Tents
Described as a very active market over the past 18 months. Testing is continuing in both Alexiflam NF in tenting for UN and Alexiflam PB in recreational tenting. The company noted the contrast in levels of eco-consciousness between the Chinese-based fabric suppliers to the recreational tenting market and the end-users of the product. Consequently, the strategy will be to educate retailers about the hidden dangers of current chemicals used in order to drive demand for change from this end.

Transportation
No longer actively pursuing this market (automotive and public transit) because of lower margins. If regulation changes around FR that provides advantage to Alexium, they may revisit this sector.

Apparel
Working with 3 chemistry platforms over multiple products and multiple customers. The challenge is in product application over a broad range of fabric types and properties – this takes time to work through. In addition, there are long manufacturing lead times and seasonal influences. Therefore, launch of the end product may not occur until more than 12 months after supply of chemical.

Waterproofing in Outdoor Apparel?
Currently there are well-established players in this market and the sums don’t add up supplying chemicals for just one function (waterproofing). It could be worthwhile if a gap opens in the market for an all-in-one, eco-friendly product.

Workwear
Are limited in what they can say so as not to lose competitive advantage. We will need to wait until after product launch to hear more. Are working in a lot of different areas. Applications cover both Alexiflam NF in cotton denim workwear as well as FR in NyCo, similar to the military. While Alexicool is likely to be used in general workwear, it won’t be used in the high laundry cycle FR workwear segment because it is not as durable as the FR developed for this application.

Building Cladding
No active plans atm.

Non-Textile Markets
Bigger than textiles. Alexium is focused on two areas of the construction and building market. The first is PCM for thermal regulation/energy saving in buildings. Alexiflam NF is also described as a “shoo-in” for timber in construction. Current FR timber treatments lead to timber degradation over decades and Alexium believes it has a “good opportunity” to address this legacy problem. It was confirmed that the company can supply a competitively priced and easy-to-apply product into this market. To the question of whether they think it is likely that the company will be able to develop a single formulation addressing both FR and timber preservation the answer was “Think 100%”.

Expand

"To the question of whether they think it is likely that the company will be able to develop a single formulation addressing both FR and timber preservation the answer was “Think 100%”."

Fairly gobsmacking size market.

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