EcoSynthetix (TSE:ECO) reported higher sales and improved profitability in its 2025 fourth quarter and full-year results, driven by continued growth in strategic end markets including pulp and tissue, wood composites, and personal care. Management said the company posted its first full year of positive adjusted EBITDA and emphasized that a multi-year transition away from legacy graphic paper markets is translating into stronger mix and margins.
Sales growth and first full year of positive adjusted EBITDA
CEO Jeff MacDonald said sales increased 9% year-over-year in the fourth quarter and 12% for the full year. CFO Rob (last name not provided in the transcript) reported net sales of CAD 5.9 million in Q4 2025, up CAD 500,000 from Q4 2024, and annual sales of CAD 20 million, up 12% from fiscal 2024.
Strategic markets now represent more than 70% of sales
MacDonald said growth is increasingly coming from the company’s targeted end markets. EcoSynthetix defines its strategic markets as pulp, tissue, specialty packaging, wood composites, and personal care, and management said these categories now represent more than 70% of the business.
By contrast, sales into the graphic paper end market have fallen to less than 30% of the business, down from 60% in 2021. MacDonald described the shift as “dramatic” and said it has helped improve margins given the value proposition in the newer markets.
During Q&A, MacDonald said graphic paper continues to decline globally at a double-digit annualized pace, but added that EcoSynthetix maintains a “baseload” of business with some customers. He also stressed that major graphic paper customers are “all doing work in SurfLock without exception,” making those relationships strategically important.
SurfLock adoption expands; pulp customer growth and order “lumpiness”
MacDonald said EcoSynthetix now has 15 lines running SurfLock products in pulp-based applications to enhance fiber strength, including eight new commercial accounts won in 2025. He said service provider and distribution partners have responded positively, and management noted that the tissue market has moved faster due to smaller, less complex lines, though each line can represent “hundreds of thousands of dollars” in annual material usage.
In pulp, MacDonald described the company’s first commercial account as a “top global pulp manufacturer” and said it has already become one of EcoSynthetix’s top five accounts within a year. He noted that the customer recently increased its stated addressable market for enhanced pulp by 50% from what it had reported six months earlier, while also communicating to the market that its investment in enhanced pulp and value-added products remains intact despite broader caution on the sector.
Addressing investor questions about the customer’s quarter-to-quarter order patterns, MacDonald emphasized long supply chains and inventory steps—from raw materials to EcoSynthetix production, ocean transit, customer inventories, and then enhanced pulp inventory—contributing to “lumpiness.” He said the account “made good” on the company’s previously discussed expectation of roughly a CAD 3 million account in 2025, within about CAD 100,000.
Management also referenced orders supporting the pulp customer’s production efforts at a second mill, but MacDonald said the company has limited visibility into the customer’s strategy. He suggested variability in natural feedstock and differing regional/customer needs could explain the move, and said EcoSynthetix’s role is to support the trial program. He added that, based on experience, the customer does not typically conduct trials without intended outcomes, though commercialization timing was described as unclear.
MacDonald also outlined channel expansion, noting the eight new SurfLock line wins in 2025 came from the first two service providers EcoSynthetix established, while the company now works with eight service provider partners and is in discussions with three more that could come on within six months.
Wood composites and personal care updates
In wood composites, MacDonald said the company posted significant growth in 2025 and that its international retailer customer continues steady progress. He said EcoSynthetix helped improve the customer’s economics through innovation, while favorable commodity markets also supported uptake. The company is supporting the retailer’s stated 2030 commitment to transition to bio-based glues across its network and supply chain, noting the retailer produces about 30% of its own wood panels and sources the remainder externally. EcoSynthetix said it has done technical work with other suppliers and is now at a stage where the retailer and its suppliers are discussing how to move forward.
In personal care, management reported record volumes in Q4 and fiscal 2025, though it characterized the business as still small relative to core markets. MacDonald said partner Dow is excited about progress and that some recent volumes may reflect inventory build as Dow prepares to enter a new region with its MaizeCare offering. In Q&A, MacDonald said EcoSynthetix does not see end-brand demand directly, but cited Dow’s reported engagement, including early adoption by emerging brands, subsequent wins with smaller brands at large consumer packaged goods companies, and a longer-term opportunity to convert major brands.
Margins, expenses, cash, and capital allocation
Rob attributed the year-over-year increase in Q4 sales primarily to higher average selling price from product mix, while the full-year improvement reflected higher volumes (CAD 1.6 million, or 9%) and higher average selling price (CAD 700,000, or 3%).
- Gross margin (net of manufacturing depreciation) was 38.1% in Q4 and 33.6% for the year, compared to 34.4% and 33.2% in 2024.
- Gross profit was CAD 2.0 million in Q4 (up 27%) and CAD 6.0 million for the year (up 14%).
- SG&A was CAD 1.7 million in Q4 and CAD 6.2 million for the year, down from CAD 1.8 million and CAD 6.5 million in 2024, with the annual decrease tied to asset relocation costs incurred in 2024.
- R&D was CAD 430,000 in Q4 and CAD 1.6 million for the year, compared with CAD 360,000 and CAD 2.0 million in 2024; R&D was 8% of annual sales.
MacDonald said the company has capacity to “more than 5x the business” without incremental capacity investments. He also reiterated the company’s longer-term CAD 100 million top-line target, calling the company “100% committed” to it, while acknowledging execution is “a matter of time.”
As of Dec. 31, 2025, EcoSynthetix had CAD 29.6 million in cash and term deposits, down from CAD 32.2 million a year earlier. Rob said the company invested CAD 400,000 in Q4 under its normal course issuer bid (NCIB) to purchase and retire 118,000 shares, and invested CAD 1.4 million in fiscal 2025 to purchase and retire 463,000 shares. Working capital investment increased year-over-year, primarily due to CAD 1.8 million higher finished goods inventory and accounts receivable.
Looking ahead, management declined to provide formal guidance. MacDonald said the company could face some Q1 headwinds due to inventory build at an important customer in December, but added that the pipeline across key markets “looks great” and that the upward trajectory in revenue and profitability is “really clear,” albeit with continued lumpiness given the company’s size and customer concentration.
About EcoSynthetix (TSE:ECO)
EcoSynthetix Inc is a renewable chemicals company. It is engaged in the development and commercialization of ecologically friendly bio-based technologies as replacement solutions for synthetic, petrochemical-based adhesives and other related products. The company operates in one reportable segment and generates revenue primarily from its biopolymer nanosphere technology platform. Its products include EcoSphere biolatex and DuraBindTM biopolymers. EcoSphere biolatex binders are used by manufacturers within the coated paper and paperboard industry, whereas the DuraBindTM is used in the production of wood composite panels.
