EcoSynthetix (ECO) Q1 2026 earnings summary

Executive summary

• Q1 2026 net sales were $3.8 million (CAD 3.8 million), down 7% year-over-year, with adjusted EBITDA loss improving by 32% to $(0.3) million (CAD 340,000) from $(0.5) million.

• Gross profit margin improved to 24.6% from 21.5% year-over-year, with adjusted margin (excluding depreciation) rising to 30.6%.

• Management remains confident in long-term growth, citing strong customer commitment, robust trial activity, and expects growth to resume in the second half of 2026.

• Strategic focus is on pulp, tissue, wood composites, and personal care, with ongoing diversification away from legacy graphic paper.

• Cash and term deposits totaled $29.8 million as of March 31, 2026, maintaining a strong balance sheet.

Financial highlights

• Net sales declined by 7% to $3.8 million, primarily due to an 18% drop in volumes, partially offset by an 11% increase in average selling price from FX and product mix.

• Gross profit margin improved to 24.6% from 21.5% year-over-year; adjusted margin (excluding depreciation) rose to 30.6%.

• SG&A expenses increased 9% to $1.6 million, mainly from higher salaries and benefits.

• R&D expenses dropped to $0.2 million, reflecting refundable tax credits under new Canadian legislation.

• Adjusted EBITDA loss narrowed to $(0.3) million from $(0.5) million year-over-year.

Outlook and guidance

• Management expects continued softness in top-line results into Q2, but anticipates a return to growth in the second half of 2026 as trial activity converts to revenue.

• Focus remains on converting trial prospects into long-term commercial relationships and supporting existing accounts.

• Key accounts remain committed to bio-based solutions, with robust pipelines in tissue, pulp, and packaging.