Company Interview / The Aussie small cap making big leaps in the US

Key discussion points:

Titomic’s growing traction in the US and the potential role of cold spray solutions in the company's successExpansion plans funded by a share placement and future strategies to increase their market presenceCash flow management and cost control measures in line with growth expectations

Herbert Koeck, CEO of Titomic (ASX: TTT), shares an update on the company's progress and growth strategies. Herbert states that following a successful fiscal year, Titomic (ASX: TTT) is seeing increased business recognition, particularly within the United States market. Mentioning names like Triton and Omega research lab, he hints at a growing American interest in the cold spray solutions Titomic (ASX: TTT) offers. The CEO expresses enthusiasm over the apparent market traction, mostly driven by the company's completed projects and consistent revenue influx.

Talking about expansion plans, Herbert divulges that the funds raised through a recent share placement would be used entirely for spreading their operations. A clear plan is underway for driving market activities in the United States and Europe to match the surging demands observed. He adds that they're executing a board-approved plan to increase their order-fulfilling capacity, news that will thrill investors and shareholders. Among the highlights in their ongoing expansion is a notable order from the Dutch army and plans to infiltrate the US market with the help of Dr Berthier.

Further into the conversation, Herbert assures that despite being a fledgeling startup, they have managed their cash flow effectively and strategically – a business aspect they will continue to monitor as they expand. The CEO also mentions efforts to control and restructure costs to ensure alignment with investor expectations and growth demands. Herbert expresses anticipation for accelerating their market outreach, particularly with companies such as Airbus, Boeing, and Triton topping their client base.

Full unedited transcript below:

]0:00

All right. Tectonic is expanding further into the US defence and aerospace market with defence players like Boeing and Airbus. Well, those are big names. Let's get the details with Titanic CEO Herbert Cook. Thanks for joining us on odds biz again. Really appreciate your time. So, um, yeah,

0:19

you know, you're giving us a little bit of an update basically on, you know, on sales and the inroads that you're making into the US market. Talk to us about it.

0:30

Nadine, thank you very much for having me today. As I said, as you know, we had a good run and development on the stock price, especially over the last couple of weeks. And at the end of the day, it goes back to a significantly increased business, which we saw in the last quarter, specifically our fiscal year 24. There were additional orders coming in, the additional revenue coming in because we completed projects we got earlier. And the major difference which we have seen was coming from the United States business we had out there. Okay, orders would you could see from specifically from Triton, from Omega research lab in the US is just showing that the US market is picking up and getting on to the idea of cold spray and the solutions we can offer. As to atomic. Okay, so cold spray is being picked up. Um, where and how are your expansion plans going from here? I understand you did do a share placement. Raised

1:29

$4.5 million, um, through existing existing shareholders. So what? What are those funds to be used for

1:39

this funds entirely used for further expansion. Okay, we have made a clear plan with a focused expansion on our go to market activities, mainly in the United States, but also in Europe to cope with the increased demand which we have been seeing. So I am executing right now on a plan which was signed up by the board to expand all the Europe and our ability to fulfill the orders, which we got already in the past and going forward, and also simply to fulfill orders we got from the Dutch army, where we could sell ten machines in one go, out of which, for example, nine are going to the Ukraine to support the situation out there. At the same time, we also signed in with uh, uh, Doctor Berthier, uh, an agent and a consultant, which is helping us now going into the US market. She has all kind of clearances She can get into classified conversations, and she also has the know how to approach the primes in the US, which

2:39

will give us further business going forward. Is it fair to say, though, that cash flow can be pretty lumpy? Um, you know, just the nature of the business. How do you how do you counterbalance that? How do you how do you make that work?

2:52

First of all, yes, as a as a small and young startup, cash flow is always a challenge, as you can imagine. So we have to turn every penny if we really want to spend it, and if we spend it, for which activities are we spending this money? At the same time, we have a product portfolio, which ranges basically from doing services and producing parts, which could be 20, 30, $40,000 up to selling machines, which we just recently got an order for from retcon, a defense company in Turkey, for $2.3 million. So yes, it is lumpy, but we kind of managed it in the past. And going forward, as we are seeing an increase in the orders coming in, obviously it flattens out and gives us a better run rate so that we also can, uh, easier manage the cash flow. But cash flow is something which we are monitoring carefully. But so far we have a good understanding how to do this. Okay. And um, so costs

3:52

are. Have you been able to keep costs under control

3:56

for one big action we executed and which helped us to get to the place where we are right now is also to monitor our cost structure. Actually, we initiated a major reorganization almost a year ago which brought our cost structure down by almost one third. And now any expansion which we are doing is in alignment with the investors of which we have, so that we can cope with the growth. And this is something which we have laid out also for our fiscal year 25. And we had a great start in the first couple of weeks of the new fiscal year. Okay. And so when it comes to your operational update, just that you released in your quarterlies, um, last week, I think it was so you you've got um, when we mentioned Boeing, we mentioned, you know, Airbus and some of these big names. Woodside Energy is in there as well. Alliance Singapore. So when you get these big customers and you get them using the cold space product,

4:53

do they come back for more? Do you anticipate that they will come back for more? So both actually, yes, they are coming back for more, as we could prove that the delivery on the product side is in line with their expectations. And at the same time, what we are seeing is a big leverage effect. Okay. So once that we get in touch with these large customers and others are seeing what we are doing, and then that raises interest and they are coming back to us and the beauty, which is really exciting also for myself, is to see after 2 or 3 years where we have been focusing on a very narrow set of applications, we are getting better in these applications, and now we can leverage and going to a Chase and industries looking to other companies which are having the same problem where we have a solution for. So going forward, we continue on our focus and the focus clearly is around two categories of products. One relates to service and repair, where we are working,

5:53

for example with Airbus, where we get orders from the Dutch army, and on the other side by producing, uh, three dimensional structures, producing parts where we are working with Redken, for example, in the barrel industry where we are working with Boeing, where we are working with Triton, uh, to further expand on these opportunities.