First Graphene Ltd (ASX:FGR, OTCQB:FGPHF, FRA:M11) earlier this week confirmed it had completed the acquisition of USA-based MITO® Material Solutions, with managing director and CEO Michael Bell telling Proactive the transaction had moved quickly and gave the company a stronger commercial platform in the United States.
Bell said First Graphene completed the deal within “sort of five or six days” of signing the agreement, describing the rapid turnaround as a reflection of the motivation shown by both teams. He said it was “a testament to both our team and the MITO® team being pretty motivated to get the deal across the line”.
The acquisition also brings MITO® Material Solutions chief executive officer Haley Marie Keith into First Graphene Ltd (ASX:FGR, OTCQB:FGPHF) as vice president of business development. Bell said Keith would lead US business operations, business development, commercial activity and promotion from Indiana.
For investors, the appointment appears to be an important catalyst in the company’s US expansion strategy. Bell said Keith brought “a huge amount of experience” in the US market, composites and the MITO® Material Solutions portfolio. He described her appointment as “a fairly clear line in the sand” that showed First Graphene Ltd was committed to growing its US business.
Bell said the scale of the US market required a focused approach. Drawing on previous experience, he said companies could not assume one person could represent a business across the entire country, noting that the market was vast and often required a state-by-state focus.
The company is initially looking at opportunities across aerospace, transportation and defence, although Bell said those sectors were likely to move more slowly. In the near term, First Graphene Ltd also intends to build on MITO® Material Solutions’ validation work in commercial sporting goods, where the acquired business already has clients.
Revenue growth and pipeline development were also highlighted. Bell said First Graphene Ltd had recently expanded from five new clients to six, with another footwear company coming across the line in recent days. He added that the time taken to move customers from inquiry to execution or production was speeding up.
Bell said the company had a pipeline approaching 700 opportunities, ranging from early-stage discussions to projects that had been in development for up to three years. He also pointed to a nearer-term group of around 30 to 40 potential clients in areas such as marketing releases and regulatory approvals, which he said could become contributors to revenue over the next six months.
Interview highlights
- First Graphene Ltd has completed the acquisition of USA-based MITO® Material Solutions within about five or six days of signing the agreement.
- Michael Bell said the fast completion reflected strong motivation from both the First Graphene Ltd and MITO® Material Solutions teams.
- MITO® Material Solutions chief executive officer Haley Marie Keith has joined First Graphene Ltd as vice president of business development.
- Keith will support US business operations, business development, commercial activity and promotion from Indiana.
- Bell said Keith brings significant experience in the US market, composites and the MITO® Material Solutions portfolio.
- First Graphene Ltd sees the appointment as a “line in the sand” showing its commitment to expanding in the United States.
- The company is targeting opportunities across aerospace, transportation, defence and commercial sporting goods.
- Bell said MITO® Material Solutions has already validated products in commercial sporting goods, giving First Graphene Ltd a base to grow from.
- First Graphene Ltd has added a sixth client in recent months, including another footwear company.
- The company has a pipeline approaching 700 opportunities, with 30 to 40 potential clients in later-stage areas such as marketing releases and regulatory approvals.
Proactive: Welcome back to Proactive Investors. I’m your host, Kerry Stevenson. I’ve asked Michael Bell to come back. He is the managing director and CEO of First Graphene Ltd, ASX code FGR. The reason I’ve asked Michael back is that the last time I had him on, which was only a couple of weeks ago, we were talking about the acquisition of MITO® Material Solutions. That has now closed. The deal is done, but First Graphene Ltd has also made its first hire in the United States. This looks like rapid global expansion. Michael, congratulations on closing the deal. We talked about the deal last time. Talk to us about closing the deal. It was a pretty quick turnaround.
Michael Bell: Yes, we managed to get it closed within sort of five or six days from signing the agreement. It was really a testament to both our team and the MITO® team being pretty motivated to get the deal across the line and get into it. We got it wrapped up the other week, and we also made our first hire as part of that deal.
Haley Marie Keith, who is the CEO of MITO® Material Solutions, has come across to First Graphene Ltd. She will head up our business operations, business development, commercial and promotion within the United States. She is based out of Indiana and brings a huge amount of experience in both the US market and composites, but also the MITO® portfolio. She will really help us drive that forward.
It is also a fairly clear line in the sand of our intent to grow the US business. There is huge opportunity there. As we immerse ourselves more, both in the MITO® materials as well as the First Graphene PureGRAPH line, we start to understand the true potential of the United States. It is a line in the sand saying we are committed to growing that side of the business.
Proactive: Is the US market a tough one to break into, Michael? I know it is a big market. It is huge, isn’t it?
Michael Bell: It is big. I have had previous experience of trying to grow businesses in the United States out of a company that I was a partner in, in New Zealand. That taught us some very hard lessons in terms of the size of the market. Where you think one person can represent you across the United States, you need to focus on a state basis because the market is so vast.
How I apply that to Haley Marie Keith is that she has a big role and a very broad opportunity. It will take some really critical focus on certain applications, certain client bases and so on.
Proactive: Talking about focus, are you going to focus more on government or are you going to focus more on private?
Michael Bell: It is a good question. The products that we have acquired from MITO® Material Solutions, and the ones that we see proving the most successful and having the fastest timeline, would be aerospace, transportation and defence. Those are probably slower-moving industries.
What MITO® Material Solutions has done is take its products and validate them in the commercial sporting goods segment. It has clients in those spaces and we have a pipeline to expand that. We will probably continue focusing on that, pushing that and growing the sporting goods side, while at the same time advancing the pipeline that MITO® Material Solutions has established in bigger industries like aerospace, transportation and defence.
Proactive: Before we finish up, it is important for our audience and investors to know that First Graphene Ltd has a very full pipeline, which means growth is happening. The company also already has revenue generation. What is that looking like?
Michael Bell: It is strong. It is growing. We mentioned previously, I think in our last call, that we had added five clients in the last couple of months. That has now expanded into a sixth client. We got another footwear company across the line just in the last few days.
That tax rate, or that time to get people from inquiry to executing or getting it into production, is speeding up. We have a big pipeline, somewhere up towards 700 different opportunities, somewhere between a week and three years deep in development. We have also got that really good next wave of clients, sort of 30 or 40 of them, that are in marketing releases, regulatory approvals and that sort of phase. Those are coming on and are our next contributors to revenue over the next six months.
Proactive: The US market is a major focus. MITO® Material Solutions has now been acquired, and the deal is done. More importantly, MITO® Material Solutions CEO Haley Marie Keith is joining First Graphene Ltd as vice president of business development as the company strikes out into a big US market. First Graphene Ltd’s ASX code is FGR. Michael is taking strides to expand and First Graphene Ltd is generating revenue. Michael, good to chat. Talk to you next time.
Michael Bell: Thanks so much.