Earnings call transcript: EcoSynthetix sees 57% revenue rise in Q2 2025

EcoSynthetix Inc (ECO) released its Q2 2025 earnings, showing a significant 57% increase in net sales compared to the same period last year. The company’s stock price rose by 2.52% following the announcement, reflecting investor optimism fueled by strong financial performance and strategic growth initiatives. According to InvestingPro analysis, the stock appears undervalued, with an "GREAT" overall financial health score of 3.08 out of 5.

Key Takeaways

• EcoSynthetix reported a 57% year-over-year increase in net sales for Q2 2025.
• Gross profit surged by 66% year-over-year, reaching $1.4 million.
• The company reduced SG&A expenses by 14% and decreased R&D expenses.
• The stock price increased by 2.52% post-earnings announcement.

Company Performance

EcoSynthetix demonstrated robust performance in Q2 2025, driven by increased sales volumes and higher average selling prices. The company has maintained a positive adjusted EBITDA for three of the last four quarters, indicating improved operational efficiency. The strategic focus on core growth markets such as pulp and wood composites has positioned EcoSynthetix favorably against industry trends and competitors.

Financial Highlights

• Revenue: $5 million (up 57% YoY)
• Gross profit: $1.4 million (up 66% YoY)
• Gross profit margin: 33% (up from 31.1% last year)
• Adjusted EBITDA: $240,000
• Cash and term deposits: $30.7 million (down $1.5 million from year-end)

Outlook & Guidance

EcoSynthetix is focusing on expanding its footprint in the pulp and wood composites markets, with a plan to reduce the carbon footprint in wood composites by 30% by 2030. The company is exploring additional pulp mill opportunities and aims for significant growth in its core markets. Analyst consensus from InvestingPro supports this optimistic outlook, with price targets ranging from $29 to $35, suggesting potential upside. A detailed analysis of growth prospects and market positioning is available in the Pro Research Report, part of the comprehensive coverage of 1,400+ US equities on InvestingPro.

Executive Commentary

CEO Jeff McDonald stated, "We’re well positioned for significant growth in all three core markets," highlighting the company’s competitive advantage in bio-based solutions. He emphasized the durability of their bio-based glues, saying, "Bio based glues are here to stay."

Risks and Challenges

• Supply chain disruptions could impact production timelines and costs.
• Market saturation in the packaging industry may limit growth opportunities.
• Macroeconomic pressures may affect consumer demand and pricing strategies.
• The need to maintain strong cash reserves could limit investment in new initiatives.
• Competitive pressures in the pulp market could challenge market share expansion.

Q&A

During the earnings call, analysts inquired about the company’s production expansion plans and competitive landscape in the pulp market. EcoSynthetix confirmed the tripling of its production run rate for a pulp manufacturer and is considering multiple production line expansions. The company also plans to maintain strong cash reserves to support potential growth opportunities.

Full transcript - EcoSynthetix Inc (ECO) Q2 2025:

Conference Call Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the EcoSynthetics twenty twenty five Second Quarter Results Conference Call. At this time, all participants are in a 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. 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 EcoSynthetics’ risks and uncertainties related to these forward looking statements, please refer to the company’s annual information form dated 02/18/2025, which is posted on SEDAR. This morning’s call is being recorded on Wednesday, 07/30/2025, at 08:30 a.

M. Eastern Time. I would now like to turn the conference call over to Mr. Jeff McDonald, Chief Executive Officer of EcoSynthetics. Please go ahead, sir.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Thank you. Good morning, and thank you all for joining us. Yesterday afternoon, we reported our second quarter results. It was a much better quarter with revenue up 57% off a soft second quarter in 2024. That growth was primarily driven by higher volumes, which increased 50% compared to last year.

At the same time, we reported adjusted EBITDA of CAD240000, an improvement of CAD1 million compared to the same period last year. Q2 also represents the third quarter of the last four where we’ve reported positive adjusted EBITDA. As a result, we have now generated positive adjusted EBITDA of CAD200000 for the last twelve month period, the first time ever that the company has achieved that milestone over a twelve month timeframe. Our book of business is growing primarily from our two key strategic accounts in the pulp and wood composites markets. That’s important from the perspective of how the business is changing and strengthening and where we’re going, and it’s starting to show up in our financials.

On the pulp side of the business, we continue to make strong progress with a leading global pulp manufacturer. Earlier this month, we announced a new purchase order from them for $800,000 worth of material for immediate delivery, which is great progress. Earlier this year in February, we announced the first purchase order from them for just over $1,000,000 At the time, the customer believed that inventory would be sufficient to support production for their existing customers during calendar twenty twenty five. Based on the new purchase order and further feedback, it appears that they’ve roughly tripled their run rate production at this stage. We’re optimistic of additional growth beyond this level as well.

This new purchase order demonstrates the consistent and growing success our customer is having in the market with their new differentiated product that uses our SURFLOC strength aids. This success comes at a time when the need for a product that targets the significant supply and value gap between softwood fibre and hardwood fibre has never been more evident. Given the global macro environment, that gap is only going to become more significant given the lack of softwood supply relative to the growth of packaging and tissue. It’s a structural issue that is not going away from a supply perspective as a result of the imbalance between more expensive softwood fibre and the cost differential with hardwood. Pulp manufacturers beyond our first customer recognize hardwood strength aids will be a key growth driver for volumes, not just in capturing additional share in the market, but also in filling capacity with higher value product.

While the market is still in its relatively early stages, we’ve continued to expand our reach into additional pulp producers through the first half of the year. SURFLOC also continues to show great benefits and progress in the tissue and packaging end applications. We won two new commercial accounts in the tissue market in the quarter. These wins are a result of our relationship and work with one of our more recent distribution partners. As we’ve broadened our distribution relationships, we’re starting to see the fruits of our success.

These new wins demonstrate that the results with distribution partners are repeatable. The new distribution partners we’ve added are building a nice book of activities and opportunities. In tissue applications, we’ve consistently shown meaningful improvements with our SURFLOC strength aids, up to the point that some customers are eliminating their dependence on expensive long fibre completely at a time when the gap between long fibre and short fibre continues to grow. We’re demonstrating that we can continue to win new tissue accounts, which contribute to top line growth. However, tissue producers represent a smaller opportunity on a volume basis than pulp packaging or wood composites accounts.

Hundreds of thousands to $05,000,000 at a tissue line versus $05,000,000 to $3,000,000 at a packaging or wood composites line and tens of millions of opportunity at pulp mills. In terms of our pipeline of prospects, it’s skewed toward pulp packaging and tissue today with a solid contribution from wood composites. The pace of progress on the wood composites side is driven by our key strategic account in wood composites, a leading retailer of furniture and manufacturer of particleboard. Our key strategic account continues to show steady demand at the first mill and we continue to do advanced trials at a second mill which they own. We’re working together at both mills on process optimization projects with the goal of improving the economics of our DuraBind resin, which will enable us to penetrate more of their opportunity as well as more of the opportunity at their supply chain partners.

They continue to be supportive of the trial activity underway internally and at supply chain partners that they have chosen as the next steps in their program. Overall, their goal is to reduce their climate footprint by 30% by fiscal year two thousand and thirty by using bio based glue to make particle board versus fossil based glue. We have the right partner in this strategic account, and we have the production capacity and team ready today to execute on this $50,000,000 plus opportunity. Stepping back for a moment, I’ve spent a considerable amount of time with the key players in the wood composites end market last month, including with the key strategic account. Two key themes are consistent across the wood panel manufacturing space.

The investigation and adoption of AI in search of operational efficiencies and the adoption of bio based glues to replace formaldehyde glues. It’s clear there is an increasing level of activity in pursuing solutions for bio based glues. Based on the continued investment in our solution by our key strategic account and their supply chain, we have a significant lead in providing a solution which offers a significant carbon footprint reduction as well as the elimination of formaldehyde from wood panel products. What this level of activity demonstrates is that bio based glues are here to stay. They’re becoming more critical in the supply chain of our key account and the level of activity validates their importance.

And we have a significant lead that we’re continuing to invest in and drive further innovation so that we can earn a significant share of this multibillion dollar wood resin opportunity. On the Personal Care side of the business, we continue to view this end market as a warrant on our growth, but an important one that’s backed by a major player in the Personal Care space, Dow Chemical, our marketing and development partner. Dow remains highly engaged. They continue to invest resources and they’re broadening both the range of applications that use our all natural binder and broadening their customer trial program. They continue to make good progress on some larger brand opportunities, which in some cases they’ve been working on for several years with key customers, which shows the level of commitment on their end and the opportunity they see ahead given the continued demand for all natural ingredients.

This is an exciting time for EcoSynthetics. We’re well positioned for significant growth in all three core markets and are ready to execute. The technology is proven, we have the right customers and partners, we have the capacity and we have the right team. With that, I’ll turn it over to Rob to review the financials. Thanks, Jeff, and good morning.

Net sales

Rob, Chief Financial Officer, EcoSynthetics: were $5,000,000 in Q2 twenty twenty five, up 57% or 1,800,000 compared to the same period in 2024. The improvement was primarily due to higher volumes of $1,600,000 or 50% and a higher average selling price, which resulted in an increase of $200,000 or 7%. As Jeff mentioned, we’re seeing higher volumes at our strategic accounts in tissue, pulp and wood composites. Net of manufacturing depreciation, gross profit as a percentage of sales was 33% in the quarter compared to 31.1% in the same period in 2024. Gross profit was up 66% to $1,400,000 in the quarter compared to the same period last year.

The improvement in gross profit was primarily due to higher volumes. SG and A expenses were $1,200,000 in the quarter compared to 1,400,000 in the same period in 2024. The 14% improvement is primarily due to approximately 300,000 in asset relocation costs incurred in the prior year period from our manufacturing footprint realignment project, which was completed last year. R and D expenses were 430,000 in the quarter compared to $640,000 in the same period in 2024. The change is primarily due to higher product scale up costs incurred in the prior year as well as lower asset depreciation.

R and D expense as a percentage of sales was 9% in the quarter. Our R and D efforts continue to focus on further enhancing the value of our existing products and expanding our addressable opportunities. Adjusted EBITDA was $240,000 in the quarter, up $1,000,000 compared to the same period in 2024. This improvement was primarily due to the higher gross profit and lower operating costs. As Jeff mentioned, we have now reported positive adjusted EBITDA in three of the last four quarters and continue to be adjusted EBITDA positive over the last twelve months.

As of 06/30/2025, we had $30,700,000 of cash and term deposits compared to $32,200,000 as of 12/31/2024, representing a change of $1,500,000 During Q2, we invested 400,000 in the NCIB to purchase and retire 121,000 shares and have invested $700,000 to purchase and retire 228,000 shares during the first half of the year. We have also increased our working capital investment by $1,000,000 during the first half of the year, primarily due to $500,000 higher inventory compared to year end. 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.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Thanks, Rob. We’re building momentum in our two strategic end markets of pulp, tissue and paperboard and wood composites, with increased volumes driving higher sales in the quarter. The new purchase order from a leading global pulp manufacturer demonstrates the success they are seeing in the market with their new differentiated product that uses our strength aids. Our key strategic account in wood composites continues to grow and is committed to using bio based glues across their full supply chain by 02/1930. We continue to believe pulp and wood composites will be the major growth markets for the business with personal care, a warrant on that growth.

Our two most important accounts addressing these end markets are making an increasingly significant contribution to our financial results and that’s exactly what we want to see. With that, I’ll turn it back to the operator for questions.

Conference Call Operator: Thank you. And our first question is from Brian Morrison. Your line is now open.

Brian Morrison, Analyst: Thanks very much, operator. Good morning, Jeff. Good morning, Rob.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Good morning, Brian. Good morning.

Brian Morrison, Analyst: So nice to hear a positive tone, Jeff, especially with respect to the financials improving and the outlook. I want to start with the second purchase order news release for SurfLock as it appears very material, certainly from a qualitative standpoint today. So I just want to understand how an order for immediate delivery came to be. Is it simply they are actively marketing with customers and demand is exceeding initial expectations as the initial order was to span the whole year, as you said in your prepared remarks?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah. So I think you framed it up really well. So the initial order was to support what they saw as their existing book of business. They wanted to make sure that was secure with us and that generated the first order as we got the year started. This is an indication that things are going well and the customer base and the use of our product that the existing customers seems to be expanding.

And that’s resulted in what we believe if we extrapolate the best way we can see it, it’s roughly a tripling of their run rate since we started the year with indications that that growth is expected to continue and that we should be ready for it. So the optimistic tone is coming from the tone we’re getting, which is backed by some material activity on the commercial side.

Brian Morrison, Analyst: So you’re typically a conservative communicator, Jeff. I’m just wondering, you seem to have confidence there’s going to be follow on orders. Any color on potential magnitude or timing? And is it just safe to assume that this $800,000 quarterly run rate is good for now based on your tripling comment?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah. So I’ll continue to be a little conservative, and I’ll take this as the run rate for now, but with a level of optimism that has us ensuring that we’re gonna be ready to meet an increase in demand as well. I think I don’t think they even have full visibility on where this is going and we certainly don’t have full visibility into their pipeline, but we do see a great level of activity in the market on their side by an increasing base experts that are helping their customers to implement this new product for them. That effort seems to be going well. We don’t have we don’t and nor do I think they have super visibility into how this will exactly grow from here, but I think everybody’s believing now that everybody’s seeing that this is working very well and they’re believing that that’s going to drive further growth.

Brian Morrison, Analyst: So with the potential total addressable market, especially for this customer, I see your raw materials are elevated where they were at least at the beginning of the year. So how do you prepare with inputs and inventory planning to meet demand if we do get a hockey stick for demand at some point?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: It’s a matter of taking the indicators that they’re giving us and just making sure that we’re ready. And if we’re off by a little bit on timing in order to be prepared for them, we’ll take that. We don’t want to miss out on this growth and we don’t want to let them down. So we’ve been a little bit ahead on the supply chain and I think that’s allowed us now to fill this order for immediate demand. We actually have both operations working hard in tandem to make sure that they get what they need in time for their customer demand.

We’d love to have greater guidance as it goes forward so that we can prepare our supply chain and we’re working hard to be able to do that both with the customer and not only digging in deeper with our existing supply chain partners, but even during the quarter broadening our discussions with other potential supply chain partners to make sure we have backup supply as well. So all those things are necessary to be able to, first of all, understand and then to support the growth however it comes.

Brian Morrison, Analyst: Okay. So it seems that the product is performing as advertised, enhancing the quality of fraction of the softwood price and lowering costs. So outside the structural softwood availability gap, what’s the roadblock to displacing current hardwood pulp lines? I presume you’re on one line now, but last quarter or even today, you said that the potential to ECO is tens of millions on the line annually. Is there the potential for multiple line application over some timeframe?

I’m just curious on your take on dynamic.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yes, for sure there’s the potential for that, I would say both at this initial customer and add additional customers. And in the first half of the year, we’ve had some successful introductions to other customers. These are big mills, so it’s big effort and it is slow progress at each of them, but we now have multiple other pulp producers engaged. I think the first customer is benefiting from having an early lead due to their early adoption of our product. It seems like they’re focusing their efforts initially at one mill, which I think is probably the simplest and most effective way for them to meet their customer demand.

But they are also looking at expanding this into other product ranges for themselves and other customers, which I think is driving additional trial activity at other mills as well. So yes, within customer and beyond into other customers, not only is the potential there, but the activity is already there to support growth.

Brian Morrison, Analyst: So sorry, just as a follow-up, last question on this. Have you trialed on multiple lines with your key customer with similar success to date?

Mark Rebelle, Analyst, TD Bank: Yes.

Brian Morrison, Analyst: Okay. I want to switch gears. So it’s a little quieter on the tissue and paperboard front. I see you have one more tissue orders as you say in the release. Are you seeing a degree of resurgence on these verticals now that we’ve seen destocking somewhat complete?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah, I mean the dynamics are changing all the time in paper end markets. Tissue seems to be quite resilient, especially where a lot of our activity right now is in Europe. It seems to be a resilient space. Packaging is a little bit down right now, but again we are starting from a position of having almost zero market share in a market that is very cost conscious and wants to divorce itself as much as possible from expensive softwood fibres. I think we have a good value proposition there and even in a little bit more challenged market today and we’re making some progress on the packaging side too, which is good.

Brian Morrison, Analyst: How about I frame it a little bit differently? The service providers, are you seeing greater progress in terms of penetrating accounts? Are you adding additional service providers? Can you give us any data on trialing assuming, I assume numbers are improving?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah, the pipeline has improved nicely through the first half of the year and our number of service providers has increased through the first half of the year as well. We’ve got now the majority of the European space covered with service providers, still a couple of locations where we’d like to do a little bit more and are working on that. But I think we have really good coverage. In the quarter, a really important validation point to me because I hate a data point of one was the fact that a later service provider achieved two wins in the quarter. And that shows that our work with multiple people can be successful, which I feel confident we can replicate that now many times over.

Brian Morrison, Analyst: Okay, Let’s look at wood products for a second. It sounds like line two is now commercial and this is the first time I’ve seen in print that you’re making progress with some of their external customers. Customer, has their carbon footprint target of 2030 changed or should we see ongoing acceleration as we move into the second half and 2026 both from internal and external lines?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah, I think as I noted, 2030 goal remains, from what we see and hear, a very important goal to them that they’re not coming off of, and that definitely requires an acceleration. The level of activity at the second line has been good. We have not called it commercial yet. We do have a steady level of activity and they’re taking product from us regularly. But they’re gearing up actually to start their new fiscal year, which is coming up here shortly, not a calendar year, with some new equipment to support growth.

They’ve installed some already. There’s a little bit more to go. And I think that’ll be the trigger for us to see everything working the way it needs to for continuous production to say, yeah, this is an ongoing good going concern. But otherwise, are going well. Yeah, with the supply chain partners, great support.

In fact, in the last month, was with them and the supply chain partners And I think everybody’s convinced that this is the future. I think there’s still some question about how that pace and how that will operationally unfold, but we’re ready to support it however our end customer dictates it.

Brian Morrison, Analyst: Are there learnings you can take from the first, let’s call it two lines, are there learnings you can take with your work to date with the external customers?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Oh, a 100%. There are learnings we can take from further optimization work we did literally last week that we I mean, we continue to take steps forward. You have to remember formaldehyde has been around for decades and they’ve had a ton of time to optimize that. We’re still in the grand scheme, still we’re in our infancy and we’re learning and improving all the time. And yeah, even just last week we took I’d say we took a meaningful operational and cost reduction step by doing some optimization work altogether.

So yeah, the learning continues and then that learning and this is a good thing about being involved in a program that they’re defining and driving is that they help them to translate that learning across others as well.

Brian Morrison, Analyst: Okay. Just on Dow, you mentioned it. You’ve called out some small wins. They’re all important with the margin profile. But you also mentioned that they continue to invest.

Is there any update for notable larger brand potential wins in the next six to twelve months?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: I mean nothing we can share. We’ve continued to support them in expanding their portfolio. They’ve taken existing products into new spaces, but we’ve also helped them with some new products that seem to be triggering some success at some of these large brands. And there’s a there’s a I would say a great sense of optimism in the work that they’ve done with some of these big brands that that some of these things are coming closer to the goal line. It’s a lot it’s a lot of work and I think we maybe didn’t fully understand that as we got started but displacing an incumbent chemistry in major brand that’s been on the shelf for years without disrupting the value of that brand and actually enhancing the value of that brand.

It’s obviously a really big job.

Brian Morrison, Analyst: Okay. My last question. Just going through the disclosure in detail. I want to understand how close we are to nearing a bottom for graphic paper. Are we at a steady bottoming and that shouldn’t be an offset to your key growth engines going forward?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yes. So graphic paper has been declining for years. It’s going to continue to decline. Its share of our business is declining kind of in tune with that rate. But I don’t like to celebrate the demise of it because those accounts actually to an account are important strategic partners for the future.

In fact, one of our largest most important strategic accounts did start as a graphic paper account and I think they took some confidence from that relationship as we got started in a new more important area to the future. Today it’s a small, volume of our business that I view as an important sort of strategic foundation with key customers for the future. So, the three largest graphic paper accounts that we have remaining are all active SURFLOC opportunities today. So, they’re important still.

Brian Morrison, Analyst: Okay. The rate of decline though is somewhat modest though going forward. Is that fair to say?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah. Yeah. Yeah. You know, like if I had to predict it and it’s not super predictable, but if the graphic paper market’s declining at sort of 1012% on average per year, then I would say probably our business with those existing accounts will remain at a similar level of decline.

Brian Morrison, Analyst: Okay. Fair enough. I’ll turn the line over. I really look forward to starting to get exciting. I look forward to seeing future progress.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Thanks a lot, Brian.

Conference Call Operator: Thank you. And our next question is from Mark Rebelle from TD Bank. Your line is now open.

Mark Rebelle, Analyst, TD Bank: Hi. Good morning, guys. Hi, Mark. Good morning.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Hi. Good

Mark Rebelle, Analyst, TD Bank: morning. I just wanted to ask on the EcoSphere product. I think I’ve got that right. That’s for the pulp. Right?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: No. That’s so Surf Lock

Rob, Chief Financial Officer, EcoSynthetics: is for the pulp. Sorry.

Mark Rebelle, Analyst, TD Bank: Surf Lock. That’s what I meant. Yeah. Sorry. Yeah.

The Surf Lock. Can you share, what you view as a competitive threats out there to your product? And I’m assuming, like, when you’re when you’re testing this with other pulp mills, I mean, there’s only I I I’m assuming there’s a small number of pulp mills globally. Probably a dozen or so. I don’t know.

But at some point, if this is the secret sauce, like, I can only imagine that your product is gonna be in demand if there’s, you know, relatively little competition. So could you speak to that? And then also, I’m I’m interested to understand to what level you’re you have penetrated the executive ranks of extent is the CEO really have you engaged with the CEO if at all? Is he aware of this? I mean, he must be aware of it, but the profound impact that it may have.

So I’m just wondering if you could speak to this generally, please.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Sure. So the market for pulp mills, say the largest player has roughly just to put it in perspective, the largest player has somewhere around 10 mills and they represent something around 20% of merchant pulp market. So that might give some perspective as to how big the market opportunity is. I think what remains to be seen is whether our first customer and the market more broadly will adopt this as something that enhances all hardwood pulp or if they choose to segment part of their product line to a higher value added product that uses our SurfLock. We don’t know and that will all unfold.

But either way, it’s significant opportunity for them and for us. In terms of engagement, I mean, I’m not going to give a lot of detail on the exact conversations we’re having, but I think maybe the best indicator is that this initiative shows up in the public disclosures that the CEO of our customer is making to his investors. So, it’s clearly a very significant initiative and opportunity for them. And that’s actually when we do our estimates of what this could mean to us, the best thing we could do is just basically take the guidance that he’s giving to his investors and his team as to what this can be. So, we obviously follow that very closely.

With all of our customers, it’s a multi level relationship though. You have to have something that’s strategically important and being driven by the highest levels you can get to. But that on its own, I’ll say sometimes doesn’t work but it actually never works because if that’s just the top down push and the mill level people haven’t bought into it, you’re going to have problems getting that implemented. So you always have to work both ends of it and that’s what we do.

Mark Rebelle, Analyst, TD Bank: And can you just touch on your understanding of the competitive offerings out there for the pulp market specifically as this is the biggest growth opportunity for us.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yes, sorry, I forgot that point. So we know that our first customer spent, I’m going to say it’s about two years evaluating different potential ways of modifying pulp to bring the right value. We know through that that we’re not without competition, but out the other side of that came us as the leading solution that they went ahead and implemented. There are other technologies. They’re not too similar to what we do.

We believe that just with our process and the consistency of the results we’ve been able to demonstrate, we can consistently offer better value. And I think that’s why customer is going ahead so aggressively with our product.

Mark Rebelle, Analyst, TD Bank: Right. I see. And on the like, so at some point, the competitive players in this industry are gonna start sampling this. I mean, are are you sensing any concern from your key player that other players may start to use this, like or not?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: No, I mean other players are already sampling it and have taken it even beyond the sampling stages in some situations. No, I mean it’s still early stages. I think it’s very exciting for us. I think it’s very exciting for our customer, but we haven’t had any concerns or requests beyond that at this point. So we’ll see how it plays out, but what we’re excited about is we have something that really works here.

It’s now proven many times over and we need to get that out there into as many hands as possible as quickly as possible to make good on the opportunity we’ve created. We’ll drive that in whatever way we see success.

Mark Rebelle, Analyst, TD Bank: All right, perfect. Thanks for the answers. Appreciate it.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Thanks a lot, Mark.

Conference Call Operator: Thank you. And your next question is from Mark Haas. Please ask your question.

Mark Haas, Analyst: Hey, gentlemen. Good quarter. Glad to see volumes are up. I feel like there’s a consistent rhetoric that sales pipeline is building, and it’s good to see that translate to volumes. My question is more on capital allocation.

I feel like it’s been well telegraphed that adding additional lines isn’t very capital intensive. And look. I mean, you guys got $30,000,000 of cash on your balance sheet. You know? Why wouldn’t you want to accelerate your buybacks if you do think you can, you know, four x your your revenues or whatever it is in the next, you know, three to five years?

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Yeah. Good question. So I’ll just say from experience, I’ve seen companies that have a great product in a similar position to us run out of cash and then not be able to raise it enough and die on the vine sometimes with a good idea. So, we like having the security of the cash to be able to support growth in whatever way we need to. The other really important thing is those two most important strategic accounts that we talked about.

They ask us, I mean last month I got asked personally specifically, how’s your balance sheet and are you here to stay for the long run because we’re counting on you as a relatively small company to deliver a big initiative for us. So, it’s very important to our customer base. We do say and it’s true that our model for manufacturing is capital light. But if you consider our cash balances around 30,000,000 today, if we have to expand quickly in two locations to support growth, that’s going to be roughly 10,000,000 per new installation. And I would rather be focused on making sure that goes really well, that our customer relationships go really well, that I’m spending my time with our people and our growth as opposed to out trying to raise money to get that done.

We’re going to continue to take a balanced approach to our balance sheet. We’ve been consistently doing an NCIB to show support and belief in where we’re going, but we don’t want this to unwind and then have to be spending our time as a small company out again raising capital that we just had yesterday.

Mark Haas, Analyst: Okay, fair enough. Good answer. Thank you.

Rob, Chief Financial Officer, EcoSynthetics: Thanks.

Conference Call Operator: Thank you. There are no further questions at this time. I will now hand the call back over to Jeff McDonald.

Jeff McDonald, Chief Executive Officer, EcoSynthetics: Okay. Thanks again for everyone joining us today, and we’ll talk to you again soon.

Conference Call Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.

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