CEO: Bill Long
About: About: Epicore BioNetworks Inc. is a major supplier of products to the aquaculture industry with a strong focus on the shrimp farming industries of Central and South America and Asia.
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Bill Long, CEO for Epicore BioNetworks. The company trades on TSX venture, tickers symbol is EBN. Thanks for joining us today Bill.
Bill Long: Juan I am delighted to join you.
WSA: Great, you know it’s good to have you on for an update to the interview we conducted back in October 2013…for some of our listeners that are new to your story can you give us a brief history and overview?
Bill Long: Yes, Epicore started just about 20 years ago now in Alberta Province in Canada as an environmental biotechnology company. The chief scientist for the company was here in New Jersey; so when I joined, I joined the US subsidiary and when I became CEO we re-domiciled the headquarters to New Jersey. And then operating out of this location ever since, but we are still a Canadian company and still on the Toronto Venture Stock Exchange. But early on Epicore realized that best business opportunity was in the field of aquaculture and we have spent the last 15 or so years concentrating on that area in building a business and been slow, but steady and the results have been very good.
WSA: Right, well yeah with that in mind what were some of the drivers behind your recent Q2 results, which were particularly strong?
Bill Long: Well, the basic driver, there are two, but the one that stands out the most is shrimp prices and if you look carefully at the grocery store and you think back to a year or two ago, you will see that shrimp prices have just about doubled in the last 12 to 15 months. The reason for this is because there are some diseases that are ramping in Asia and one of those diseases has landed in Mexico late last year. And these diseases wipeout crops and so that we have had a big effect on the supply of shrimp and as supply and demand goes and the supply shrinks radically and quickly, the price skyrockets and that’s just what’s happened.
So, where that benefits us is that the products we sell all improve the productivity of the shrimp growing operations. So people are now desperate to try anything that will improve their productivity to try to capture the high market prices for the shrimp. So we have seen that as a major driver for the business, but underneath that there is still a lot of just slog it out market development that we have invested years and years at working on different markets and some of those things are bearing fruits, so our market penetration is going up in some areas.
If you combine the two with a macro market being very favorable for our products and then the effort that we put in coming to fruition, it has created a — just a number of record quarters for us. We have had five record quarters in a row and this last one was by far and away, one of the biggest we’ve ever had.
WSA: Well, good and can you talk about the significance of the new aquaculture packaging?
Bill Long: Yeah, the significance of the packaging is it goes hand in hand with one of our market development efforts and that market development effort was in China. Over the years we had different initiatives in China, but nothing that was sustainable or significant. A couple of years ago we linked up with a partner who had a Chinese affiliate and with that partner we have been doing market development in China. These things take some time because all the products have to be registered with the Government and then you have to go out and get known in the market and find out what they are looking for.
One of the things they were looking for was classy looking packaging because in China when they buy foreign goods they buy them for a reason and they buy American goods because they expect them to be higher quality than what’s domestically available. The first thing they see of course is the packaging. So, we had to upgrade our packaging to satisfy the Chinese buyers and that has worked very well, the packaging has been very well accepted in China.
WSA: Well, good and what are some of the other factors that you feel make Epicore unique from some of the other players in the sector and also unique in the TSX Venture?
Bill Long: Well, in the sector we are, we sell things that are essentially productivity aids or additives to different parts of the aquaculture industry, so there are other people like us that were basic manufacture of specially feeds; that were basic manufacturer of our biological products. So, unlike some of our competition that just resells other peoples stuff, we are basic and we have roots back into R&D, product development, manufacturing and then the marketing.
So, for a little company we are pretty deeply integrated and I think that makes us unique. I think the quality of our products makes us unique because some of the products we have compete with some awfully big players in the market and they successfully compete with those products, so the quality is exceptionally good. And then on the TSXV well there 100’s, but not 1000’s of companies on the CSXV and a lot of those companies are more venture type companies like mining companies where they are drilling for something and haven’t done anything yet. So, the stock has got a value, but it’s all based on what they are hoping to get in the mind whereas Epicore is a real for-profit operating company that’s growing at a pretty good clip here recently and we are profitable. That separates us from many, many companies on the TSX Venture exchange.
WSA: Great and can you talk to us a little bit about the management team there Bill and as well as your background experience once again for some of our listeners that might not caught the first interview?
Bill Long: Okay, well my experience is prior to Epicore was in the specialty chemical industry. I worked for what at one time was the largest chemical company in the world, which was Imperial Chemical Industries and worked through a number of different positions from process engineering to product development and marketing and ended my time there as a General Manager for a micro biocides company. So, in ICI one of the businesses that I ran killed microbes and now the business that I am running grows microbes and uses beneficial microbes as part of our product portfolio.
The rest of the management team is pretty varied. We have a CFO with experience in a number of different industries in New Jersey including Campbell Soup quite a broad financial background. The two scientists that we have is an Indian fellow by birth who ran humongous fermentations units in India to produce antibiotics, excellent microbiologist with tons of experience. And then the most of the commercial team are people with aquaculture experience. Our Business Development Director has a master’s degree in aquaculture and has spent his whole life in the shrimp aquaculture industry. Most of the sales and marketing people, marketing team will have that kind of a background.
WSA: Excellent and what are some of the goals and milestones there that you are hoping to accomplish over the next year?
Bill Long: Well we still have a small market share in a number of markets particularly in the Asian markets. We got our start in aquaculture in Latin America, so it’s not surprising that we are better known in Latin America and we have a better market share. In Asia we have some very strong partners and we have been doing business there for some time, but we still don’t have a really high market share, so we are still working away at that. There is a lot of potential in Asia because historically Asia has represented 80% of the production of farm-raised shrimp whereas Latin America and the rest of the world were about 20.
So, there is tremendous market potential in Asia, but it’s a difficult market to sell to, a lot different than the Latin American market and we are still plugging away with that, so that’s still our near term goal to increase our penetration of the Asian market. We also made a major investment a year ago in infrastructure to give us the capability to produce a wider variety of microbes and we intend to use that capability to develop new products and enter new market sectors. So, for example, one of our major targets now is to broaden the business from what is primarily shrimp aquaculture to fish aquaculture and we have products in the research pipeline that will enable us to do that. So, those are some near term objectives. In the long run we intend to keep growing in the environmental biotechnology field and especially animal field, animal feed field and expect to continue the growth pattern we have established over the last dozen years or so.
WSA: Well, good and so in terms of investors in the financial community Bill, do you believe that the EBN story in your message and upside are completely understood and appreciated by them and if not, what do you wish investors better understood about the company?
Bill Long: Well, of course it’s difficult to know what all the investors thinks because they buy anonymously and I don’t get to do market research with them, but the ones that I talk to and there are a number that we do have direct contact with. A lot of them are used to these small cap companies that you find on the TSXV. So they are looking for companies that have good growth potential and they are hoping that those companies are going to be successful in a lot of cases and what’s unique about Epicore is they already see that we have been successful. So, now the question is well, how much bigger can you make the success and so that’s very attractive I think to a lot of our investors, but what we are missing is like a lot of small companies only, so many people here are message, and so there are a lot of investors after who might really love to own Epicore shares, but they just haven’t heard the story and that’s probably our biggest shortcoming, just trying to get that message to a whole lot of buyers.
WSA: Certainly and so once again joining us today is Bill Long, CEO for Epicore BioNetworks, which trades on the TSX Venture, ticker symbol EBN. Currently trading at 57 cents a share and before we conclude here Bill to recap some of your key points why do you believe investors should consider the company as a good investment opportunity today?
Bill Long: I think we have an excellent track record and a trend particularly this past 12- month period has been very strongly upward. We don’t have a crystal ball, we can’t protect the future with a 100% clarity, but it does look like the market situation is going to stay the same for some period of time with shortages in the shrimp industry is going to continue for some period of time. So that means the demand for our products is going to be a strong demand and aquaculture in a long run is got to be a good place to invest because we pretty much fish the seas to the limit that they can be fished, whereas population grows on the planet, where does sea food going to come from, it’s got to come out aquaculture. So, it’s a good long term area to invest in I believe and I think Epicore has got a major position in that industry and should be attracted to investors, that’s my opinion.
WSA: Well, we certainly look forward to continuing to track the company’s growth and report on the upcoming progress and we would like to thank you for taking the time to join us today Bill and update our investor audience on EBN, it’s always good to have you on.
Bill Long: All right Juan, I am delighted to talk to you