Despite being registered in Perth and listed on the ASX (AJX), chemical solutions firm Alexium International is now plying its trade in the United States, and has benefited greatly from harnessing military technologies and partnerships. The company’s CEO, Nicholas Clark, spoke with The Australian Business Executive to discuss his role in Alexium’s rise.
Before joining Alexium, Mr Clark spent a number of years in the US, undertaking mergers and acquisitions work with investment banks, before returning to Australia to work with Citi Securities.
“I sort of went backwards and forwards to China, and I was head of commercial and risk for them for a while, and then I just ran into Gavin Rezos, who’s the executive chairman [of Alexium] and he and I connected very well.”
Having amassed over seven years’ experience in the US, and with a strong investment banking background, as well as having had large Chinese exposure, Mr Clark was quickly offered a part in the Alexium story.
“It was a bit of a risk for me,” he explains, “because I had a lot of strong, senior executive leadership corporate roles, and [Gavin] said this is really exciting, and there are also alternative opportunities too in other areas.”
Mr Clark decided to take on the challenge, beginning in the role of CFO for the company secretary, before recommending the company appoint a strategic-driven CEO, a job which Mr Rezos believed he was already perfect for.
“He said, you’ve got all the experience in the US, you know where to go and you know what places to get into. So I packed up stumps to move back to the US to take on the role of CEO at a company that at the time really wasn’t doing very well.”
There was some concern around the company that it might not last, considering the poor position it was in, but Mr Clark was able to turn it around, creating a successful, steadfast business that is now growing steadily month by month.
During its first year of true commercial sales in 2016, Alexium expects to break even at run rate by mid-year, putting the company well on track to hit its impressive target of $18.5 million per year.
“We’re very unique,” Mr Clark adds, “because we really, genuinely are one-of-a-kind. Anybody that’s doing our sort of stuff is still in the brominated Flame Retardant market, and anybody who is doing our sort of stuff is huge.”
The other side of the market encompasses smaller companies without the same capacities and chemistry as Alexium, and without an ASX listing, putting the company in a very unique position in the market.
“We really sit in this very enigmatic area. We don’t fit in with the big boys and we don’t fit in with the small boys, and we’re sort of just out there alone. We’re not trying to mimic ourselves against anyone. We’re Alexium, and that’s it. It’s as simple as that.”
Reactive Surface Treatment
Alexium International was originally founded on the back of US Air Force technology called Reactive Surface Treatment (RST), a highly specific, niche chemistry technology for applying functional coatings onto fabrics than can bead liquids to stop degradation on fabric.
“It was originally developed,” Mr Clark tells us, “for chem-biological warfare suits, because how it runs is, when a chemical-biological warfare suit gets exposed to some kind of wetness – fuels, oils, whatever it may be, it degrades, and it’s not as effective.”
Alexium’s plan was to adapt the technology for other uses. Mr Clark admits that when he joined the company as CEO, it was at risk of becoming an R&D company, constantly trying to gain funding in the hope of eventually working with the RST chemistry.
“Naturally, what we wanted to do was go and commercialise, and I asked Dr Bob Brookins, who is now our Vice President of Research & Development, how do we get this particular chemistry commercialised?”
Dr Brookins advised that the task would be difficult, suggesting instead that the technology could be used in Flame Retardancy (FR), since it would provide an environmentally friendly, cost effective alternative to other FR technologies.
“RST based technology replaces all the bad toxin chemicals in the compound, such as Deca-bromine, and we can do it in a cost effective manner and we can do it across all materials, including polymers and resins.”
The result would be a unique product unlike any other Flame Retardant in the world. Mr Clark immediately authorised Dr Brookins to make it happen, setting the wheels in motion for the company’s core product to begin production.
“We came up with a safe, environmentally friendly Flame Retardant solution amongst all fabrics, and that’s basically how Alexium was born. The FR chemistry technology that we now have didn’t come from the original RST, so we still have the RST.”
The original chemistry technology, known to the company as Ascalon, is still sitting on the shelf ready to be utilised at a later date. In the meantime, Alexium’s work with Flame Retardants is 100% proprietary, developed in the company’s labs.
“Everything in life needs to be commercialised,” Mr Clark explains. “Unless you specifically target yourself as an R&D company, where you’re selling R&D to other people, everything has to be commercialised.”
Companies starting off with R&D mind-sets will benefit greatly from employing strategic minds with an understanding of where to take the technology and the place in which it sits in the commercial world. Even more importantly, they must know how to get it there.
“The second thing is, absolute leadership, employing the right people for the right positions. Taking the technical people and letting them do what they do, but not allowing them to have a commercial or strategic impact in the business outside of their core specialty.”
Mr Clark believes that too many businesses fail to take this approach, ending up in a sort of Research & Development loop, where scientific people focus too much on the technology, to the detriment of the commercial side of the business.
“The reason why this business is the way it is is simple: because we put the right people in the right jobs, and we made sure we let the right people know that they were the right people for specific jobs.”
Department of Defence
Alexium is listed on the ASX, and also features on the US OTC market, though Mr Clark doesn’t consider the company dual-listed. When the company was listed on the ASX back in 2010, its premises were noted as being in Perth, but it now operates exclusively in the US.
“The headquarters are in Perth, but 98.8% of our business operations are in the US,” Mr Clark explains. “We did come here purely because we started our life with DOD (Department of Defence) relationships, military relationships.”
The company’s core chemistry technology was defence, so it was a natural progression for work to begin in that capacity. As the company began to develop its Flame Retardant technologies, defence work continued steadily as a result of the original relationships.
“We just continued the defence work on, because we also knew that moving into the FR realm, especially with materials, fabrics and uniforms, we knew that was something that we could address, so the US just seemed to be a natural fit.”
Mr Clark admits the company tried very hard to introduce the chemistry into the Australian market, but for one reason or another it has so far proved challenging, with the technology failing to catch on.
“I’m not really sure whether or not they don’t understand it, or whether they’re just not ready for it. Over here [in the US], they seem to have picked it up a lot faster, and naturally because the US is always fighting in wars, this kind of chemistry is very important to them.”
Mr Clark describes the last few years since 2013 as representing “an amazing growth story” for the company, achieving a share price high of $1.17, while staying consistently in the high 60s, and posting quarter-on-quarter revenue growth for the last eight quarters.
“The stock performance is expected to improve now with the recent shift to the institutional register and our recent privilege of being listed as an S&P 300 company. Business doesn’t need to be complicated. At the end of the day all that counts is growth.”
The future for Alexium certainly promises a continuation of this growth, and Mr Clark sees this as the company’s primary objective going forward: “we see ourselves as just continuing to grow,” he says, “it’s as simple as that.”
The company’s simple business model is to continue to sell products, to open up into wider markets and provide solutions for bigger clients, to get people to recognise and know the company, all of which will naturally stimulate further growth.
“There’s certainly a lot of work in the background to make it happen. What would be nice is, maybe somewhere along the line, a company that we’re either working with or we’re working against takes enough notice, and might consider coming and knocking on our door.”
The work Alexium conducts with the military tends to be very clinical and a little stale, with fixed budgets meaning the company has little influence. The upside is that the relationship with the DOD lends the chemistry technology an extra level of validation.
“It’s the fact that we can put our hands on our heart,” Mr Clark says, “which we can, and say this is military grade chemistry that can be applied to the commercial sector. That’s what wins it for us, not to mention it’s still a ransom booty.”
The real growth story comes in the commercial sector, however, which Mr Clark describes as “a treasure-chest”, representing to the company over $7 billion a year globally in materials alone, and growing at over three percent annually.
“In addition to that, we’ve only just tapped into the polymers market, which is totally untapped. I mean, the polymers market – which is building materials, construction, plastics, resins – nobody has been able to achieve that up until now, which Alexium has.”
The opportunities in the commercial sector are significant. Alexium already uses its Flame Retardant chemistry to work with indoor and outdoor fabrics, tenting, carpets, curtains and many more everyday fabrics.
“I always like to look inside the house first,” Mr Clark says, when asked about developing the right people to drive the business forward. “And there’s two reasons why that is. Number one, because its respectful to your staff.”
Mr Clark admits there are no problems with demanding success-driven results, but it will mean nothing to the company’s employees unless they are shown respect and provided with professional growth opportunities within the business.
This involves paying attention and looking inside the organisation to find staff with something special to offer the business, something Mr Clark looks to harness by providing individual growth opportunities.
“I give them the opportunity, and if they want to take the challenge on, I give them the opportunity to take the challenge on, but I don’t hold it over their heads. One thing is, it was never their job in the first place.”
If a staff member is taken out of a job to try something new, which ultimately doesn’t work out, then Mr Clark believes the original job should be left open for that member of staff to return to.
“A classic example is one of our bench chemists. He had a really vibrant personality, he was dynamic, he was aggressive. He’s a technical guy, but I saw something particular in him that I thought: this guy can really sell ice to Eskimos, and he knows the technology.”
After being encouraged to pursue a role in the sales team, the staff member agreed to move departments. Mr Clark explains that this employee is now one of Alexium’s most successful sales executives, proving that most skills are transferrable.
Mr Clark admits that where many CEOs fall down is by placing too much importance on professional resumes and Ivy League educations as indicators of job suitability, an assumption which can often prove to be ill-founded.
“The problem is, you get them in the job and there’s no drive, there’s no value of performance, and they maintain their positions in their jobs based on their academia. Everybody that I’ve employed in Alexium have just been very modest.”
For Mr Clark, the defining value of these people has been an exemplary character, which has been visible right from the interview stage all the way through their career at the company.
“That’s the value of good leadership. That’s the value of looking past what’s glittery and bright and looking at the character. That’s what makes the business, that’s what grows the business, that’s why our business is thriving now.”
The company’s down-to-earth approach to direct sales has helped to drive continued growth, ensuring the right people are brought into the business. Mr Clark believes that this is the simplest way for a business to run.
“It’s just common sense. We’ve lost our way of common sense these days, everything has to become more complicated than what it actually is. At the end of the day, what is business? Business is simple; this is what you’ve got, and this is what you’ve got to do.”
Mr Clark laments the need for months of unnecessary planning, when business boils down to little more than identifying markets and then penetrating them, a strategy he pinpoints as one of the key drivers of success for Alexium.
“We don’t need to complicate things, and this is where we’ve lost perspective in driving businesses forward, in developing businesses. Now, I’m not suggesting that simplicity is the way to go, but when you break it down, it’s about the simple process of getting from A to B.”
It is vital to have good leadership to drive that journey forward. Mr Clark knows there is a big difference between leadership and management, and that strong leadership is key to pushing a business to the next level.
Having worked for a decade in America, Mr Clark recognises key differences in the way businesses are handled in the US and Australia respectively, most notably in the way leadership roles are assumed and key decisions made.
“I saw the US at a time in the early 2000s when it was very much like the Western Australian cowboy state, where you could be deaf, dumb and mute and still get $50 million for a project that you’d only read in a science fiction book.”
But times have changed in the US, and Mr Clark admits that the country made some huge mistakes with regulations, creating a fear of making executive decisions that has never been a problem in Australia.
“I live in the most litigious country in the world. There are more lawyers here than there are school teachers and doctors put together, which is horrible. And the problem is that you can sue anybody for anything.”
Along with its litigious nature, Mr Clark recognises how political a nation the US is, and how influence can be used to great effect to drive businesses forward, but conversely a lack of influence can have the opposite effect.
“Unless you’re here, unless you live it and breathe it, unless you have the influence, to move forward here in any form is next to impossible. So, it really becomes more about influence in relation to preventing or driving progress in the business.”
Find out more about Alexium International by visiting: www.alexiuminternational.com
To view this editorial as it originally appeared in The Australian Business Executive magazine, click here.
Editorial by Nicholas Paul Griffin.