[Podcast] TRISTEL With Mark Atkinson And Maynard Paton

27 July 2022
By Maynard Paton

I have recorded another pilot episode of The Private Investor’s Podcast with my good friend Mark Atkinson. We talked about Tristel and the company’s hospital disinfectants and shareholder open day: 

We cover:

  • 0:00 Tristel’s open day and when we invested.
  • 1:31 Tristel’s business and disinfection chemistry.
  • 3:00 Tristel’s revenue and profit.
  • 5:56 The price I purchased and when I started selling.
  • 7:01 The latest trading update and the potential for US growth.
  • 12:51 The different products Tristel offer.
  • 16:21 Debtors and product restructuring. 
  • 18:26 The shareholder open day.
  • 20:90 High gross margins.
  • 21:92 Patent expiries.
  • 23:44 The CEO, CFO and the non-execs.
  • 26:24 A buy, hold or sell?
  • 29:41 Closing remarks.

We may record more podcasts if sufficient interest is shown.

Happy listening!

Maynard Paton

PS: Tristel’s open day took place on 18 July 2022 and the recording was made on 25 July 2022.

Disclosure: Maynard owns shares in Tristel.

4 thoughts on “[Podcast] TRISTEL With Mark Atkinson And Maynard Paton”

  1. Hello Mr.Paton.
    Tristel never had and will never have a slightest chance to be USA FDA aproved for high level disisnfection,look at the list of approved FDA HIGH LEVEL DISINFECTANTS,what products are approved,where they manufactired,what chemistry is approved andat what tempereature,you will find preetey quick Tristel has nothing of these,preetey yeasy and quick to see it.
    Besides the above nowthere is a big controveresary now with CDC AND FDA about nececity and ability to comply with current CDC recommendations for disinfection of invasive ultrasound probes with High Level Disinfection.
    Saying all the above, Tristel management to be asked surely knowing all the facts the above why they have sucked out money from the company when tey new they never be aproved by the FDA USA for high level disinfection,how exactly they can perform with the wipe HIGH LEVEL DISINFECTION.If you dont trust ,talk to profesional pharmaceutical chemists and to experts in fda usa registration.Good Luck !

  2. Tristel (TSTL)

    Trading update and special dividend published 18 July 2022

    A reasonable update in the circumstances, with news of a special dividend the highlight. The finer details will appear within October’s annual results, during which all the revenue and profit adjustments should be disclosed. And even then the picture may not be that clear until FY 2023.

    Here is the full text interspersed with my comments:

    Tristel plc (AIM: TSTL), the manufacturer of infection prevention products, provides a trading update for the year ended 30 June 2022 and declares a special dividend.

    Trading update

    Across all our geographical markets, the number of patient procedures carried out by hospitals picked up in the second half. This fed directly through to a higher number of disinfection procedures and an upturn in our second half revenue as expected. Sales of the Company’s surface disinfectants also increased in the second half as hospitals searched out the highest performing disinfection products as a legacy of the pandemic.

    All our activities in the second half were focussed on our proprietary chlorine dioxide technology in the hospital market, having wound down our non-core activities during the first half.

    Revenue and adjusted profit before tax* for the year from the continuing operations will be in line with consensus forecasts of £28.4m and £4.5m respectively.

    *adjusted for share-based payments

Revenue at £28.4m means H2 revenue was £14.8m, which is 18% ahead of the very weak H2 2021 revenue of £12.5m and 8% ahead of the preceding H1 2022 revenue of £13.6m. So trading does seem to be picking up after hospitals suffered the pandemic disruption.

    Bear in mind TSTL’s preceding H1 performance was influenced by earlier Brexit stock-piling, which if excluded would have generated H1 revenue of £14.5m. So H2 revenue of £14.8m was only a little better than H1 on that basis.

    Profit of £4.5m (before SBPs) suggests a £2.6m profit (before SBPs) for H2, although TSTL’s profits are affected by variable US costs. Adjust for £0.6m US costs for H1 and £0.2m for H2, and profit (before SBPs and US costs) are £2.5m for H1 and £2.8m for H2. Again, the Brexit stock-piling then obscures the genuine underlying performance, which I fear may not be readily apparent until FY 2023 when the pandemic fluctuations and Brexit issues settle down.

    Special dividend

    Tristel continues to be cash generative. Cash balances on 30 June 2022 were £9m (30 June 2021: £8.1m). The Company has no debt.

    The Board has decided to return to shareholders a portion of the cash that it considers surplus to its investment and operational requirements and announces a special dividend of three pence per share payable on 10 August 2022 to shareholders on the register on 29 July 2022. The corresponding ex-dividend date is 28 July 2022.

    The Company will declare a final dividend for the year of 3.93 pence at the time of its full year results in October which will be the same as the final dividend for last financial year.

    I did not expect a special dividend, but will take it. I hope the payment underlines management’s confidence about current trading and plans for FY 2023 and beyond.

    Cash of £9m compares with cash of £8.8m at the preceding H1, which adjusted for the intervening £1.2m interim dividend means H2 generated extra cash of £1.4m. That seems a little light versus the £2.6m H2 pre-tax profit. Influencing matters could be cash outflows relating to the business restructure that occurred during H1.

    News of a standstill final dividend is perhaps expected given the special. Let’s hope the ordinary payout starts moving upwards again during FY 2023.

    Paul Swinney, CEO of Tristel plc, comments: “Hospitals worldwide are gradually returning to normal levels of service, which for Tristel means an increasing number of diagnostic procedures, each requiring a disinfection event. During the year 15.7 million disinfection events took place with a Tristel medical device disinfectant, which is 31% higher than in the year ended 30 June 2019, before the pandemic struck.

    “Our Cache surface disinfectant products are continuing to gain market share in the United Kingdom and adoption in the small number of overseas markets where regulatory approvals are in place is increasing. A widespread regulatory approvals programme is underway.

    “The Company achieved a major milestone event at the end of June by making its De Novo submission to the United States Food and Drug Administration for its Duo ULT product. A decision from the agency is anticipated within the coming year. Within the next five years we have high hopes that America will be a significant revenue and profit contributor to the Group.

    “We are emerging from the disruption caused by Brexit and the pandemic with a highly focussed business, the prospect of entering the largest single healthcare market in the world, with an exciting pipeline of new product innovations, and a strong balance sheet. The outlook for Tristel is positive.”

    This line is bold: “Within the next five years we have high hopes that America will be a significant revenue and profit contributor to the Group”.

    The DUO product has just been submitted for FDA approval and management is already talking about significant profit contributions.

    Also welcome is the disclosure of 15.7 million disinfection events. Such numbers will help shareholders judge the group’s growth and progress through revenue per disinfection event.

    Shareholder Open Day

    Tristel is holding an Open Day for shareholders, at 11am today, at the Company’s headquarters in Snailwell, Cambridgeshire. A presentation will be made during the Open Day. No new material information will be disclosed during the course of the day.

The open-day slides are available here while a video of the open-day (management presentation only, no audience Q&A) is available here.


  3. Tristel (TSTL)

    Open Day notes

    Below are my notes from the open day and various conversations with TSTL employees. The notes are my best recollection of what was said, and they are not always 100% word for word and I may be paraphrasing. But the notes should reflect the general tone of the conversations:


    * 3-year guidance — 10-15%/a year — no US sales
    * Nanosonics — consumable revenue £30m a year
    * Already educated the US market about high-level disinfection
    * “Receiving questions from US hospitals on a daily/weekly basis
    * “Strong expressions of interest
    * “Expect first year to be significant” — no real lag

    JULIA (US)
    * Approval? “quietly optimistic
    * Spent a lot of time talking to the FDA making sure there is no ambiguity
    * “No gaps” — in data — “put together quite a convincing document
    * First FDA meeting 2015 — FDA quite excited “too good to be true, you go for it and show us
    * “long list of American customers
    * Receive maybe 5 enquiries a week, from google search on ultrasound disinfection
    * “Great relationship now with all US ultrasound manufacturers
    * “The buzz is there
    * Already doing manufacturing trials
    * Will have stock ready in anticipation
    * Not going to sell the foam “cheaply
    * Matching Trophon pricing, or just below –> “plenty of margin“

    * Not just the chemistry of the reaction, but also the chemistry of manufacturing so that’s where the IP is
    * Don’t divulge the chemistry, but don’t divulge the manufacturing that goes into the chemistry
    * BG used CI02 in tanning and dying in the leather trade — dehairing and changing the colour of leather
    * CI02 been around since 1920s, BG had knowledge of CI02, not “super hard to look at the chemistry” because he understood it
    * Big american companies have tried to ‘reverse engineer’ the chemistry, but “not knowing the right route to go
    * “Somebody starting now will be 20 years behind” — take too long to make a worthwhile return
    * Patents running out — “don’t be concerned
    * Had lots of offers to leave TSTL, but have lots to do — charity work etc
    * New patents — “game changer on a world basis” — work of ensuring a manual process is effective as a machine — film the disinfectant process, AI software logs/checks it — “nearly there

    * TANK — routine disinfection
    * Jet — emergency use, spillage (ready to use)
    * TANK price point — comparable to wet wipes
    * Pre-wetted wipes — popular because of cost
    * More powerful red wipe 15x higher price than green wipe
    * Cannot compete on efficacy alone — must provide competitive price
    * Cache tank — x 5ml dose = 1 pre-wetted wipe
    * Also cheaper than the green wipes — any disinfectant wipe
    * TANK price point below the disinfectant wipes
    * “major change in the market
    * NHS going green — getting rid of plastic wipes
    * Sell into NHS? “Only a matter of time before it really takes off“

    * Vaporised hydrogen peroxide — quite toxic, can burn
    * TSTL wipes primary benefit — time
    * Trophon machine takes 45-50 minutes to heat up
    * 15 mins to disinfect device then some time to cool down
    * Even 7 mins stated disinfection time longer than wipe = 3.5 mins
    * TSTL advantage –> mobility –> ultrasound probes in all departments, needle guiding, * A&E, not just maternity — trophon need installation (power, water)
    * Must position device very precisely in the Trophon — must not touch the insides — positioning very finicky –> “incredibly vulnerable to human error
    * Must also pre-clean device for Trophon
    * Dye-based indicator system — shows where the disinfection is happening — indentations in devices, dirt remains within Trophon machine

    * GER manager joined 11 years ago, then wanted GER sales > UK-
    * “getting close” — “have the potential to be greater than UK next 2-3 years”
    * UK sales c£9m/ GER sales £5m now
    * FRA/BEL/NED/LUX — > high potential, but different timeline
    * Do foresee FRA becoming big
    * ITA 2 salespeople — grown tremendously (annual sales £1m)
    * Finding the right people — explains the gaps on the map
    * Why Serbia? — not obvious market, but found great people ‘believe in the story’
    * Middle East/Saudi Arabia — 100% TSTL, managing sub-distributors, painted office purple, “good guy in challenging market
    * Meetings with Indonesia, Vietnam, Philippines
    * FDA approval — a lot of markets very influenced by US guidelines, Chile, Saudi, Singapore, copy of US guidelines,
    * Partner with market leader with ophthalmic equipment in Canada

  4. Tristel (TSTL)

    North America update published 29 September 2022

    A mixed update, confirming a US product launch alongside an ‘expected’ information request from the FDA. Here is the full text interspersed with my comments:

    Tristel plc (AIM: TSTL), the manufacturer of infection prevention products, provides an update on progress in addressing the commercial opportunity in the United States ultrasound market with products utilising its proprietary chlorine dioxide technology.

    Launch of Tristel DUO into the North American Market

    Tristel announces that it has now launched Tristel DUO into the North American market in conjunction with the Company’s manufacturing and distribution partner, Parker Laboratories (“Parker”). Parker is a leading manufacturer in the USA market for the conductive gels and sheaths that are used in all ultrasound procedures, and has a nationwide distribution network.

    Tristel DUO is a disinfecting foam approved by the USA Environmental Protection Agency (EPA) for the cleaning and disinfection of general medical surfaces – including skin surface ultrasound transducers. DUO is widely used throughout Europe, the Middle East, Asia, and Australasia and during the Company’s current financial year the product will be used in over 11 million ultrasound probe disinfection procedures worldwide.

    The launch is coordinated across three conferences and trade shows taking place simultaneously this week: the American Society of Diagnostic Medical Sonography in Atlanta (29 Sept – 1 Oct); the American Association of Vascular Access in Minneapolis (30 Sept – 3 Oct), and the American Emergency Nurses Association in Denver (30 Sept – 3 Oct).

    Neal Buchalter, President of Parker Laboratories, commented: “Tristel’s products are used in 35 countries and for millions of disinfection procedures every year. We’re proud of this new partnership with Tristel, as it reflects our continued commitment to improving the safety of any procedure involving ultrasound equipment.”

    (Link to Parker press release)

    At last we have a TSTL product on sale in the States! My interpretation of TSTL’s H1 results indicated the initial EPA-approved version would not be a great money-spinner, but let’s see.

    The critical part within this entire US project is Parker Labs, which is a leading manufacturer of ultrasound gel and a partner that lends validation and credibility to the US plan.

    This line is interesting: “DUO is widely used throughout Europe, the Middle East, Asia, and Australasia and during the Company’s current financial year the product will be used in over 11 million ultrasound probe disinfection procedures worldwide.

    Back in June when the FDA submission was made, TSTL cited “over 8 million” procedures for FY 2022.

    Moving from 8 million to 11 million procedures for FY 2023 feels encouraging.

    FDA De Novo Submission – additional information request

    In June Tristel achieved a major milestone event by making its De Novo submission to the USA Food and Drug Administration (FDA) for its Tristel DUO ULT product which is used as a high-level disinfectant for ultrasound intra-cavity probes. Following the FDA’s complete review of the submission, it has provided the Company with an Additional Information request.

    As previously outlined to shareholders, Additional Information requests are commonplace within the De Novo submission process, and therefore the previous guidance on the average duration for review and approval of approximately 11 months remains accurate for this submission. The Company and its advisors are confident that the 180-day timeline set by the FDA to return the information will be met. The overall expected timescale for the process is unchanged.

    Paul Swinney, CEO of Tristel plc, comments: “We are delighted to have products entering the North American hospital market in partnership with Parker Laboratories who are specialists in the ultrasound arena. In all the countries in which we operate, hospital ultrasound is one of our most important segments. We have high hopes for our EPA approved product.

    “Our opportunities will expand enormously with an accompanying FDA approval and it is good the review of our submission is progressing. Additional Information requests are expected in this process and we are confident that we will be in a position to return the requested information on time. Nothing has changed in terms of our overall view on the timescale for the completion of this process and the likelihood of success. We remain excited about the opportunity America holds in terms of potential revenue and profit contributions.

    “Our global outlook remains positive. We have a highly focussed business, we now have products available in the largest single healthcare market in the world, an exciting pipeline of new product innovations, and a strong balance sheet to support our growth.”

    Work on the FDA submission started in 2014, so I suppose an Additional Information request from the FDA will not perturb veteran shareholders.

    But 8 years of preparation and still the FDA wants more info?! TSTL promised to submit the FDA documents by 30 June 2022, and announced the submission on the very last day. I get the impression TSTL was tight for time with the submission, so submitted on its self-imposed deadline anyway and always expected the Additional Information request.

    The FDA has responded to TSTL’s application in less than three months, so another 180 days (6 months) gives TSTL until the end of March 2023 to supply the extra info. Then the FDA has to announce its verdict by the end of May to keep within TSTL’s eleven-month timeline that’s been expressed to shareholders.

    October’s results (or more likely the investor briefing) should provide more details about the extra info required. All the talk at July’s open day was positive about the States and rejection by the FDA would be at best be extremely embarrassing for the executives.



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