EcoSynthetix (ECO) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales rose to $3.2 million, up 8% year-over-year, driven by 21% higher volumes and improved demand across pulp, tissue, packaging, wood composites, and personal care markets.

• Gross profit increased to $0.9 million in Q2 2024, with gross margin improving to 27.0% from 18.6% year-over-year; adjusted gross margin reached 31.1%.

• Two new commercial wins were secured on new lines at existing accounts, validating product performance and innovation.

• Robust trial activity and a strong prospect pipeline span pulp, packaging, tissue, wood composites, and personal care, with positive trial results and growing adoption.

• Cash and term deposits stood at $33.2 million as of June 30, 2024, reflecting a strong balance sheet.

Financial highlights

• Net sales for Q2 2024 were $3.2 million, up 8% year-over-year; YTD 2024 net sales reached $7.9 million, up 31% year-over-year.

• Gross margin improved to 27.0% in Q2 2024 from 18.6% in Q2 2023; adjusted for depreciation, gross margin was 31.1%.

• Adjusted EBITDA loss was $0.8 million in Q2 2024, unchanged from Q2 2023.

• SG&A expenses rose to $1.4 million, mainly due to asset relocation costs; R&D expenses remained stable at $0.6 million.

• Net loss improved to $0.7 million ($0.01/share) from $1.0 million ($0.02/share) in Q2 2023.

Outlook and guidance

• Commercial priorities are converting robust trial activity into commercial accounts and expanding usage at existing facilities.

• The opportunity within current accounts alone exceeds the next sales goal of $100 million.

• Free cash flow neutrality is near, with expectations of positive free cash flow in the coming year if momentum continues.