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EcoSynthetix Inc. reported its Q3 2025 earnings, showcasing a 11% year-over-year increase in net sales to $5.8 million. Despite a reduction in gross profit margin to 34.2% from 36.8% last year, the company highlighted significant advancements in its core markets. The stock price saw a modest increase of 0.92%, closing at $4.37, reflecting investor optimism in EcoSynthetix’s strategic growth plans and market potential.
Key Takeaways
- EcoSynthetix’s net sales grew by 11% year-over-year in Q3 2025.
- Gross profit margin decreased to 34.2% from 36.8% in Q3 2024.
- The company is expanding its presence in bio-based markets, particularly in pulp, tissue, and wood composites.
- Strategic partnerships, such as with Dow in personal care, are driving innovation.
Company Performance
EcoSynthetix demonstrated solid performance with a notable increase in net sales, driven by its strategic focus on bio-based markets. The company has successfully diversified away from legacy graphic paper markets, aligning its operations with sustainable growth trends. EcoSynthetix’s ability to internalize North American production and establish a tolling operation in Europe highlights its operational agility.
Financial Highlights
- Revenue: $5.8 million, up 11% year-over-year
- Gross profit: $1.7 million
- Gross profit margin: 34.2%, down from 36.8% in 2024
- Adjusted EBITDA: $200,000, down from $360,000 in 2024
- Cash and term deposits: $30.4 million
Outlook & Guidance
EcoSynthetix is targeting a $100 million revenue trajectory, buoyed by opportunities in the pulp and wood composites markets, each with potential market sizes of $50 million or more. The company is confident in its growth prospects, leveraging strategic accounts and partnerships to enhance its market position.
Executive Commentary
"We’re seeing good momentum across our core end markets," stated Jeff Macdonald, CEO. He emphasized the significant market potential for SurfLock, projecting it could exceed $50 million with a key customer. Macdonald also noted the consistent tissue market wins, highlighting EcoSynthetix’s competitive edge.
Risks and Challenges
- Declining gross profit margins could impact overall profitability.
- Market volatility in pulp and wood composites may affect revenue projections.
- Dependence on strategic partnerships, such as with Dow, poses potential risks if collaborations don’t yield expected results.
- Increased working capital investment, primarily in inventory, might strain financial resources.
Q&A
During the earnings call, analysts focused on EcoSynthetix’s expansion in the pulp market and customer adoption rates. The company also addressed the progress of its Dow partnership in personal care and the wood composites market’s potential. EcoSynthetix assured readiness to support market growth, emphasizing its strategic initiatives and customer commitments.
Full transcript - EcoSynthetix Inc (ECO) Q3 2025:
Conference Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the EcoSynthetix 2025 third quarter results conference call. At this time, all participants are in the listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided for you at that time for questions. If anyone has any difficulty hearing the conference, you may press star 0 for the operator at any time. Listeners are reminded that portions of today’s discussion may contain forward-looking statements that reflect current views with respect to future events. Any such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on EcoSynthetix risks and uncertainties related to these forward-looking statements, please refer to the company’s annual information form dated February 18, 2025, which is posted on SEDAR.
This morning’s call is being recorded on Friday, November 7, 2025, at 8:00 A.M. Eastern Time. I would now like to turn the call over to Mr. Jeff Macdonald, Chief Executive Officer of EcoSynthetix. Please go ahead, sir.
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Thank you. Good morning, and thank you all for joining us. Yesterday afternoon, we reported our third quarter results. We’re seeing good momentum across our core end markets. Sales were up 11% year over year. More important, in my view, is the strong demand we’re seeing in our key end markets, specifically pulp, tissue, wood composites, and personal care. In our view, it has led to higher quality revenue and an evolution in the composition of our book of business. We’ve largely diversified away from legacy graphic paper into these new end markets that can have a meaningful impact on our growth. Each of pulp, tissue, and wood composites drove significantly stronger volumes in Q3 than the same period last year, well beyond 11%. We’re making good progress with the account that is a leading global pulp manufacturer.
They continue to invest resources to support the product that uses our SurfLock strength aids. They are also increasing the promotion of their product with end customers, driving awareness of its benefits through publications and social media, as well as direct promotion and support around the world by their team members. Key players in their market are trying the new product. The broader market dynamics also support its adoption. The market price differential between more expensive softwood fiber remains well above $200 a ton globally compared to the lower-cost hardwood fiber. That is driving the use of hardwood pulp to be a top priority for any manufacturer that uses pulp in their products. That is exactly where we help. Softwood fiber has greater strength than hardwood fiber or recycled fiber.
Our strength aids enable the production of pulp with superior mechanical properties, or the production of paperboard and tissue with lower-cost fibers while retaining the required strength. At the beginning of the year, demand for our strength aids from the global pulp manufacturer was approximately $1 million on an annual basis on their first line. They’ve now increased their run rate to more than $3 million a year on that line. They operate multiple lines, and we’re on one today. We believe the market potential for SurfLock could exceed $50 million at this customer. While they are a leading global player, they have less than a 20% share of the global pulp market today. We believe the pulp end market is set to be a major component of our growth. On the tissue front, we won two new tissue accounts during the quarter.
These wins were a result of our work with a European distributor, the R&M Group. R&M is one of several distributors that we’re working with as part of our go-to-market strategy in the tissue and packaging end markets. R&M is a great example of the type of high-quality partners we’ve identified. They have a long track record of success in this industry and others, of growing new chemistries and driving adoption based on the product’s benefits to manufacturers and the strong support they provide. They’re an impressive organization, and we believe there’s more runway with them while we work to replicate this success with others as well. One of the key measures of our success today in the tissue end market is our ability to drive repeat wins.
Every one of our wins this year in tissue is a repeat win with an existing customer or a new customer that has already moved to a second line. Every account that we’re commercial with in tissue now has multiple lines using our strength aids. They’ve proven it once and repeated it at additional mills. In the case of one smaller regional tissue manufacturer, we are now commercial across all of their mills as a result of another distributor relationship we work with in Europe. That repeatability with accounts that have really dug in and invested to drive it across their organization is a telling sign of how well our strength aids are working in the tissue end market. In the paperboard and specialty end market, we’re running ongoing trials and volume expansion programs with existing accounts. Paperboard is a more complex trial program, which takes longer than tissue.
Once commercial, the lines use more product than a tissue line, so the opportunity per line is larger. Just before turning to wood composites, one dynamic we’re seeing play out in the broader pulp and paper market is consolidation. There have been a number of interesting and significant transactions this year. Large integrations can be complex and distracting, but we believe some of these consolidations could be a benefit to us in the longer term, with the potential for broader adoption of our technology with players that already use our strength aids or binders, which once again speaks to the repeatability theme. In wood composites, progress continues at our key strategic account that is an international retailer, which is backward integrated into wood panel production. We experienced increased demand from them both during Q3 as well as on a year-to-date basis compared to the prior periods.
They’ve driven usage of our binder across more SKUs at the first mill. Part of the reason for that growth has been our continued push for innovation and improving the value of our product even over the course of this year. We’ve reached a stage now where we know we’re very competitive on a cost basis, even cost-advantaged over the incumbent solution at certain points this year. They’re conducting regular runs of our product at a second mill now, but they’re starting from a very small base. We believe their intent is to grow their usage at the second mill step by step as they build success and confidence, just as they did at the first mill. I recently participated in a group panel discussion at an industry conference where our key customer was also present.
They continue to act as thought leaders in the sector with a clear commitment to drive down their carbon footprint through the use of bio-based glues in panel production. They remain as committed as ever to reaching their 2030 targets, and that will require the other players in the market that produce wood panels for them to pursue bio-based solutions that are cost-competitive and deliver the required performance. We’re a proven enabler of that change based on our work with the international retailer. Moving over to personal care, I often refer to this end market as a warrant on our growth. I still believe that today, but I’m becoming even more confident in it. We’re seeing an uptick in demand from our marketing and development partner, Dow. It’s still off a small base relative to our other end markets, but it’s encouraging.
Dow is building momentum with some of the smaller brands at top 10 players in the space. It’s a positive sign that Dow’s all-natural formulations are being proven in new niche products, but with big players gaining exposure to them. Lastly, a quick update on our work here in Burlington at the Center of Innovation. The productivity improvement that we’ve seen since internalizing our North American production base here at the COI has been great. Having the full team and production under one roof has increased the cycle time on both the commercial production and the research and development side. We believe the footprint we have today, with a tolling operation in Europe serving Europe and Asia and the COI serving the Americas, provides greater flexibility and optionality for both sourcing raw materials and serving our accounts most effectively.
With that, I’ll turn it over to Rob to review the financials. Rob?
Rob, Financial Officer, EcoSynthetix: Thanks, Jeff, and good morning. Net sales were $5.8 million in Q3 2025, up 11% or $600,000 compared to the same period in 2024. The improvement was primarily due to higher volumes of $500,000 or 10%. As Jeff mentioned, we’re seeing higher volumes at our strategic accounts in tissue, pulp, and wood composites. Net manufacturing depreciation, gross profit as a percentage of sales was 34.2% in the quarter compared to 36.8% in the same period in 2024. The change was primarily due to higher manufacturing costs due to product mix. Gross profit was $1.7 million in the quarter on change from the same period last year. SG&A expenses were $1.8 million in the quarter compared to $1.5 million in the same period in 2024. The change is primarily due to higher salary and benefits costs as well as higher repairs and maintenance costs during this quarter.
R&D expenses were $390,000 in the quarter compared to $560,000 in the same period in 2024. The change is primarily due to higher product scale-up costs, which we incurred in the prior year, as well as lower asset depreciation. R&D expense as a percentage of sales was 7% in the quarter. Our R&D efforts continue to focus on further enhancing the value of our existing products and expanding our addressable opportunities. Adjusted EBITDA was $200,000 in the quarter compared to $360,000 in the same period in 2024. The change was primarily due to higher operating expenses, partially offset by higher gross profit when adjusted for non-cash items. We’ve reported positive adjusted EBITDA in four of the last five quarters, and we are adjusted EBITDA positive on the last 12-month basis.
While we still expect some lumpiness in our results from period to period, we are very close to consistently reporting positive EBITDA on a go-forward basis. As of September 30, 2025, we had $30.4 million of cash and term deposits compared to $32.2 million as of December 31, 2024, representing a change of $1.8 million. During the first nine months of 2025, we invested $1 million to purchase and retire 346,000 shares. We also increased our working capital investment, primarily due to $1.2 million higher inventory compared to December 31, 2024. We have demonstrated our ability to responsibly manage our cash reserves through multiple cycles while continuing to invest in our long-term growth strategy. With that, I’ll turn it back to Jeff for closing comments.
Conference Operator: Thanks, Rob. Through the course of 2025, we’re seeing significant demand growth in our key end markets: pulp, tissue, wood composites, and personal care. Our ability to successfully diversify into new strategic markets through innovation and strong customer support has set the stage for sustainable and profitable longer-term growth. The composition of our revenue base is of a higher quality today. Our improving gross margin profile demonstrates that. It’s indicative of the shift in our book of business to more strategic and higher-value applications of our technology. The demand outlook from our key accounts in pulp and wood composites underpins our confidence. Each account continues to publicly highlight targets that align directly with increased usage of our strength aids and binders. In pulp, the strategic account has identified a multi-million metric ton opportunity for the increased use of hardwood fiber to offset pricing and capacity constraints of softwood fiber.
In wood composites, it’s the strategic account’s 2030 plan to reduce its carbon footprint through the use of bio-based glues. Successfully supporting the demand profile for these two accounts and their supply chains position us for a significant step up in growth over time. These opportunities are augmented by our momentum in the tissue end market and personal care. We’re engaged with the right players in our core end markets to deliver for shareholders. With that, I’ll ask the operator to open up the call to your questions. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you’re using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Brian Morrison. Your line is now open.
Brian Morrison, Analyst: Hey, good morning, Jeff. Good morning, Rob.
Conference Operator: Good morning, Brian.
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Good morning.
Brian Morrison, Analyst: Good morning. Let’s start with SurfLock on the pulp side. Last quarter, you had a second purchase order from a major pulp client, and then you said in the release that they’re adding additional resources. Can you maybe just define what that means and what feedback you’re getting with respect to the client reception to their product?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, sure. We’re seeing an increased number of people simply in major centers around the world that are educating customers on their ability to use more hardwood fiber. Those teams are actually on lines helping customers to implement their enhanced hardwood fiber solution. That team has expanded over the course of this year. I guess in parallel to that, and part of how we see this is they’re putting out some really interesting publications in some of the technical journals in the market on the use of their hardwood fiber and lots of social media high-fives and explanations of how well this is going from their side. That gives us some confidence that their end marketing efforts are going well. We’re seeing and hearing about them more and more out in the market in the broader pulp use space.
Brian Morrison, Analyst: Jeff, have you seen any additional players take note and start to accelerate their interest in the product? On that front, are you seeing, what can you say with respect to the cadence of trials or service providers? Is that increasing in terms of the number and volumes?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, so I guess we should probably separate those. On the pulp side, our first customer has been at this now for a while, and it is a major undertaking when you consider the scope of a pulp mill. Absolutely, others in that same space have taken interest and have, let’s say, an early start in that work. Our initial customer clearly has a lead. In the end markets of tissue and paperboard, we have continued to expand through the course of this year the distributor relationships that have proven to work really well. We did a press release together with the R&M Group of their success, and I really consider them to be a model of the kind of partners we need to be looking for in their capabilities, their approach to business, including their financial strength, their ability to support their customers.
We’re really happy with that one, and that becomes a model for replicating it elsewhere. We’re actually seeing distributors where we had to search them out at first. Some that even we may have had some initial discussions with have recently come back and said, "Hey, that thing you told us about, we’re hearing more about it. Can we reopen those discussions?" I think that’s going really well, and it shows that the market is really taking notice of what we’re doing.
Brian Morrison, Analyst: Okay. So in your press release, you say that pulp could be a major component of long-term growth. I’m just wondering, to the extent you have visibility, how should we think about maybe a cadence in terms of volume growing here?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, I guess that’s probably the most challenging part of where we are right now. We’re excited. It’s showing up in our numbers. Our customer is clearly investing a lot. I’ll put it in the tens of millions of dollars in their efforts to push this forward. I’d also say for them, as such a large entity and this being such a major undertaking, I think it’s still pretty early for them. Our visibility is not great today. What we’re relying on is the ramp-up, the consistent ramp-up in the need for our product to say that it’s going well and maybe what we might need to be prepared for six months out. The good news is that our operations, both of them, are fully capable of delivering this product, and we’ve added some suppliers within our supply chain to make sure that that doesn’t become a constraint.
We’re actually also making a pretty significant investment right now in Europe in putting some more tools in place within the operation to be able to flexibly use more raw materials and have raw materials on hand that we need to support this. We’re ready to go. The press release we put out was, the whole thing was in pretty short term. Things were going really well, and they placed a quick call to us requiring more product in fairly short order. What we did was demonstrate to them that we can unlock both operations simultaneously and get them what they needed in the rapid timeframe they had asked for it. That gave them confidence. It also showed ourselves just what we can do to make these operations work to serve a big opportunity.
Brian Morrison, Analyst: In your prepared remarks, Jeff, you mentioned I thought it was very interesting. You mentioned vertical integration of pulp producers into the tissue market. Wouldn’t it be a natural evolution for potential pulp producers moving into tissue to utilize your product as well?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, I don’t think I quite put it in that detail, but there is some interesting consolidation going on. There are players that, in their history as organizations, are backward integrated to pulp. Certainly, their understanding of hardwood pulp flowing all the way through to tissue has helped with our efforts in one customer in particular at both ends of the business, where we’re working with them in tissue and also working with them back upstream in the pulp end of their business. There have been some other, I think what you’re probably referring to, some interesting ventures between pulp manufacturers and tissue manufacturers where, in my view, if it’s been proven in tissue for one of the players, it seems to be a no-brainer to then roll out those results at some of the new operations you have under your fold.
I think stuff like that can be an accelerator for us. Integrations can sometimes be sort of messy and distract people, but the savings we offer, I think, can play right into the synergies that these companies are reporting in coming together under new consolidated entities. We see it as a net positive for sure.
Brian Morrison, Analyst: Okay. Good. I want to go back to one of the questions I asked just in terms of the range of trials ongoing, your progress with service providers. Can you give us maybe a ballpark in terms of the percentage increase or number of trials that are ongoing just to get a range of how much momentum you have?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: I can’t give you an exact percentage, no, but our trial activity is well up again over the course of this year. That’s partly with existing service providers having more experience and fanning that out, but it’s also through the addition of some new service providers as well. Momentum continues to build. We’re actually seeing tissue wins come through on a quarterly basis now. That’s the best direct indicator we have. I noted them in my comments, and we also did a press release to highlight two of them that just came in through the R&M Group. That momentum is definitely building, and the pipeline behind it is building as well.
Brian Morrison, Analyst: Okay. I’m going to switch gears here for a second. I think maybe the most exciting new news in the press release was what you alluded to with respect to Dow. Maybe can you elaborate on what’s progressing so well there? I guess with respect to that, should we anticipate some potential news here and the potential for it to hit the bottom line in 2026?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: I mean, they’re certainly sounding like they see bigger things ahead, which has got us excited. What we see that we can count so far is just a steady increase in their business to the point where the results you see in this quarter has an impact from their contribution, a meaningful impact in the direct results as well as the growth, the profitable growth. I think the biggest indicator, as I referred to, is that the wins that they’ve had leading up to today have been niche brands that maybe haven’t been tied to a major brand in many cases. What we’re seeing within this year is some of those smaller brands within the portfolio of large personal care companies. Think about kind of the top five personal care companies. We’re seeing some wins within their portfolios.
What that says to us, and it’s backed up by discussions with our partner, is that there’s more trialing activity in those kind of products and in larger products as well that’s progressing quite well. It is showing up in the numbers more and more, building off a very small base at first to the point where it’s a meaningful contribution now to our bottom line and some good signals of good stuff to come.
Brian Morrison, Analyst: Just remind us the margin profile, why it’s such an attractive margin profile in that business.
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, I’ll just put it in. It’s roughly 3x what our normal margin profile would be.
Brian Morrison, Analyst: Okay. Wood products, maybe just you talked about it a little bit in terms of progressing with line one and two now, I guess. Maybe update us with respect to the external clients. Is there progression on that front?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, I would say there’s progression in terms of being ready. It was interesting to be at the Wood Industry Conference a few weeks ago with the end customer and some of their supply chain and to see some of those discussions and that push happening. I think at the beginning of that conference, and I do think there was maybe a bit of a turning point in thinking at that conference. I think at the beginning of the conference, you had some skeptics as to whether the big market leader was going to stick to its 2030 commitments. They made it super clear that they’re not coming off those commitments and that they feel the solutions are already in place for them to get there.
It is just about driving them forward, and those that are with them are going to be with them, and those that are not are not going to be with them. They were already encouraging the industry not to look at who else could squeeze in there for that 2030 goal. They called that a done deal. They were already talking about, "How can you help us for our goals beyond 2030 now?" because that is the timeframe we are thinking of. They consider this now operational. They consider it proven, and they are clearly pushing their supply chain to get on board as well, along with their continued implementation of the solution. That was encouraging.
Brian Morrison, Analyst: Yep, for sure. If they maintain their 2030 emission targets, should we not start to see things ramp up quite meaningfully in the next year or so? What does that mean in terms of a potential addressable market for you?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, it’s not a long time now for such a level of industrial change out to 2030. The needs of that one customer equate to roughly 17 lines of production. For us, that would require somewhere between $50 million-$60 million worth of Durabind products to support. That’s kind of the timeframe and the magnitude that we’re faced with today. It’s a lot of change, but we’re ready to support it. I think they’ve now got the teams in place, and I think they’ve done enough with a few suppliers that the readiness is there in their supply chain to get there as well. It was just great to hear that they are so emphatic about sticking to that goal.
Brian Morrison, Analyst: For sure. If we have $50 million in pulp, we have $50 million in wood products. I guess I see where your confidence lies in terms of hitting this $100 million top-line target. What needs to happen for you to really go out there and put a timeframe on this?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Seeing the trajectory and getting there. So far, it’s been about replacing the legacy business, getting things happening in a commercialized way with these key leaders in each of these segments, which I think we’ve done now. I don’t think any company our size could hope for a set of first-adopter customers like we have to drive this success. Now it’s just really seeing the momentum step by step that puts us on that path toward $100 million. As soon as we can see that trajectory, then we’ll stick a pin in it again.
Brian Morrison, Analyst: Okay. You feel like it really feels, Jeff, like we’ve hit this inflection point now that we should start to see that trajectory start to move up in 2026. Is that fair?
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Yeah, it is for sure. I think you said it’s $50 million-$60 million with one opportunity, $50 million-$60 million with another. Keep in mind, that’s serving one customer in one segment and one customer in another segment. I think what makes us even more excited is that those are the thought leaders in those spaces. If they really go, then the rest of the market follows them. That’s historically proven over changes with the leading retailer. Certainly, from a cost perspective, if the leading pulp manufacturer goes in that direction, others have to follow.
Brian Morrison, Analyst: Yeah. No, I agree. That’s what gets me excited about this story. Thank you for your time. Thanks, Jeff.
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Thanks a lot, Brian.
Conference Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. There are no further questions at this time. I will now turn the call over to Jeff for closing remarks.
Jeff Macdonald, Chief Executive Officer, EcoSynthetix: Okay. Thanks very much again to everybody for joining us, and we look forward to checking in with you again soon.
Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please.
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