Astute operational strategy moves Alexium towards profitability

Having delivered outstanding results on a number of fronts in the June quarter, Alexium International Group Ltd (ASX:AJX) released a promising quarterly result which provided a comprehensive insight into the company’s operational performance, progress with new products and the group’s improved financial position, while also pointing to a step change in income from its sales pipeline.

During the quarter, Alexium delivered several key achievements that clearly demonstrated the progress being made on the group’s growth strategy which was framed by the new leadership team.

The fourth quarter cash inflows of US$2.1 million, up 78% on the previous quarter, are a clear indicator of this progress.

Underpinning the strong quarterly financial performance has been management’s focus on operational execution.

Alexiflam® and Alexicool® excel

Several milestones were achieved in the June quarter, including finalisation of an agreement with Pegasus Home Furnishings to supply Alexicool® technology for bedding products which was signed in July.

This agreement is the culmination of substantial product development and commercialisation with Pegasus and follows from the previously formalised memorandum of understanding (MoU).

With regard to agreements in place for commercial products, Chief Executive Bob Brookins said, “We also progressed our Development Agreement with Pine Belt for a flame retardant NyCo product for military use, and the MOU we signed with ICL to negotiate a license agreement for Alexiflam® NF positions us for future growth in global markets.

‘’To support the commercialisation efforts of Alexiflam® NF, we were delighted to have received EPA approval to manufacture and sell Alexiflam® NF into the key US market.

“Alongside this work, we have been diligently increasing market penetration of our Alexicool® product line that will see our customers launch a number of new bedding products based on Alexicool® products.

‘’This next wave of consumer products with Alexicool® technology is exciting to see and is expected to be a key area of revenue growth in the near term.

New analytical tools are key to success

Driving this growth are the analytical tools which have been an essential part of the commercialisation of the company’s Alexicool® products.

In the June quarter, the technical team developed a new analytical tool for demonstrating the value proposition of Alexicool® products and their applications, allowing Alexium to take multiple Alexicool®-based products, such as textile and foam components used in the mattress, and actually quantify how these all work together as a system.

In the June quarter, Alexium’s technical team increased its capabilities with the development of the Integrated Thermal Sacrum (ITS) method.

As a specific example, the ITS method shows how the textile and foam layers of a mattress work in combination to provide a cooling effect for the consumer.

This significantly expands the company’s capabilities over previous methods that analysed the cooling capacity of a single component in isolation.

This new technique will drive the next phase of Alexicool® product development.

From a financial perspective, this sees Alexium remaining on track to achieve positive monthly EBITDA by the fourth quarter of the 2019 calendar year and generating sustained profitable growth in the years ahead.

Sequentially, this has been a transformational year for the business as it delivers on all the key milestones the new leadership team has set out.

With development agreements in place with the largest product manufacturers in the group’s technology segments and additional distribution and sales channels opening in new markets, management is excited by the opportunities it sees for Alexium, its shareholders, partners, and customers.

Alexium’s performance has certainly generated excitement among investors with the company’s share price increasing 60% over the last six weeks as it closed in on its 12 month high of 20 cents.