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Interview with Steve Silverman, President and CEO of Axion International Holdings, Inc. (OTCBB: AXIH)

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Transcript of September 21, 2011 OTCEquity.com Interview with Steve Silverman, President and CEO of Axion International Holdings, Inc. (OTCBB: AXIH)

Good morning, this is Walter Prescott from OTCEquity.com and I am speaking today with Steve Silverman, President and Chief Executive Officer of Axion International Holdings Inc., a leading producer of industrial building products and railroad ties made from 100% recycled plastic and plastic composites. Axion can be found on the Over-the-Counter Bulletin Board under the ticker symbol AXIH.

OTCEquity - Good morning Steve and thanks for taking the time to speak with us today. If you don't mind perhaps you could provide a quick overview of what it is that Axion International brings to the market, specifically the patented processes involved in creating your products and how that ties into how the company goes about, as you say, "greening tomorrow's infrastructure."
Steve Silverman - Good morning Walter, thanks for having us today. Axion is a license holder of technology that started to be developed back in the late 80's at Rutgers University, many don't realize but Rutgers was the first federally funded recycling research center back in the 80's and this technology was grown out of that process. What our products are is we take this technology of combining recycled plastics and plastic composites and we build infrastructure building materials including things like railroad ties, which is our primary focus of our marketing efforts today, I-beams, pilings, and various sized boards to create and allow people to build infrastructure structures such as bridges, marinas, piers and docks. Our products are completely green, 100% recycled material, they're impervious to water, bugs, and chemicals and also ultra-violet light so our products have a very long, useful life that requires zero maintenance once they're put in the field.
OTCEquity - You mentioned green, now the initial push for "greener" technology may have been rooted in an environmental conscious there are also obvious economic benefits involved with implementing eco-friendly solutions, particularly in the infrastructure industry in which Axion concentrates. To give listeners an idea about what makes Axion attractive to governments, engineers, architects, contractors, and other potential clients, what are some of the competitive advantages that Axion's structural products have over traditional materials that would produce some of these economic benefits?
Steve Silverman - Yes, good question. First of all I would encourage everyone to take a look at our website and there's a series of videos that have been produced about our company over the of time of this technology and one of them is the first ribbon cutting ceremony at Fort Bragg where one of the Army personnel involved in the project actually states the return on investment that the military believes they'll have with the bridge structures that were built at Fort Bragg, North Carolina to support M1 tanks and he states a 34:1 return on investment . Where that comes from is really the useful life of the product because we are impervious to the outdoor element;s our product does not rust, it does not corrode, and it does not deteriorate over time like traditional materials such as wood, concrete and steel. So from a budgetary standpoint once the product is put in the field it doesn't require additional costs to maintain that structure or the products that are being utilized so from an economic benefits standpoint it obviously makes all the sense in the world and when you take our product and really put them in weather-challenged areas like areas in the Southeast part of the country where there's high levels of humidity and bugs and moisture, the Caribbean and various other parts of the United States and around the world where there's severe weather pattern changes such as temperature our product performs very very well. So those are really the benefits of the product and again the economic benefits are quite obvious when you look at the total useful life of the product.
OTCEquity - Right, while your clients enjoy some economic benefits obviously, it would be fair to say that Axion enjoyed some economic benefits in the second quarter 2011 where you generated revenue of approximately $1.3 million, a 191% increase compared to the second quarter of 2010. That revenue spike appears to be part of Axion's focus to move from what you call a "proof-of-concept demonstrator" to a strategically focused sales-oriented growth company. In your opinion what has been the driving force behind this growth?
Steve Silverman - As I said earlier, this technology has been around for quite some time and it has quite an extensive library of successful deployments and proof-of-concept. At the start of 2011 we really put this company in sales mode. We took one of our product lines, our railroad tie product and kind of determined this was going to be the anchor product that we were going to go out and support from a marketing and sales effort standpoint. One of the hardest things to do with such great technology is to keep a company like ours focused on driving revenue and earnings because there's so many good ideas you could do with the technology. So we've established a railroad tie business and laid the foundation in place for the company to grow around the railroad tie product for the near future and that's really what's fueling our growth today. From January to where we are now we've actually started selling our railroad tie product worldwide. In the first half of the year we sold product to nine new customers; we closed in January a major Class 1 domestic railway with a multi-year $15 million contract and those are the things that are driving the growth. We are very positive on how our pipeline our sales activity is developing with the railroad tie and it's developing around the world from places like Indonesia to the Caribbean to Europe and then here domestically.
OTCEquity - This railroad ties, this is your ECOTRAX is that correct?
Steve Silverman - That's correct. We recently announced the trademarks of two brand names. We've broken our marketing efforts on to those two trade names. One is ECOTRAX, which is our railroad tie product line and then our STRUXTURE product line which is for our building materials.
OTCEquity - Clearly the goal for Axion is to be the industry leader on a global scale and while you have an established presence within the United States and have orders in Central America, the Caribbean, and Australia you have reserved your excitement for the company's letter of intent to form a global joint venture with Sicut Holdings Inc., something you say could "represent a game-changing event for Axion." If you could, share with us what kind of markets this letter of intent would open for Axion and the impact it could have in branding Axion on an international level?
Steve Silverman - Yes, first of all from the beginning of the technology there's Sicut which is another license holder to the Rutgers technology that we currently license here at Axion and they have license to the technology for parts of the world such as Europe and India, being the two largest market,s and it made all the sense in the world for us to have one concerted effort especially around the railroad tie business. The advantage to the Axion shareholders is obvious; Europe is the largest railroad market anywhere in the world. Their transportation systems are all geared around railroad and they run more track miles than any other country or continent in the world. So we're very very excited about the opportunities. Additionally the European markets and the Indian markets are much more sustainable conscious if you will than perhaps here domestically. And also wood which is a leader of railroad tie construction if you will is all made out of wood. Wood is less of a factor in the European markets so we think those opportunities are large in size and present great revenue and earnings opportunities for us.
OTCEquity - Moving in step with Axion's growth is the well documented need for improving infrastructures not only in the United States but internationally as well. This need seems to be the perfect fit for what you addressed earlier on, your STRUXURE composite infrastructure products and this seems like it would be the perfect complement to the success of your ECOTRAX composite railroad ties, is this something that Axion will aggressively pursue?
Steve Silverman - Yes, the STRUXURE product line, the building material product line, really requires a two step sales process as opposed to the railroad tie products. The ECOTRAX products are sold to railways around the world, those customers are pretty identifiable, they stand out directly in front of you. In the STRUXURE product line, the building material side of the business what we're really creating is another steel, another wood, or another concrete; that takes a little bit of a different sales approach. We need, first of all, to have the right product line. The products that we currently manufacture were constructed when we did the proof of concept with the Army Corps of Engineers around the tank bridges and the railroad bridges and some of the other light vehicular bridges that have been constructed using this material. What we're in the process of doing now with the STRUXURE product line is rounding out the product line with different sizes and shapes. We're going to conduct some more ASTM testing and some, what they call, crete testing and then we are going to begin the process of producing guidance papers where we need to educate engineers and construction companies and contractors that build these type of outdoor structures how to use our material the same way they use steel, concrete, and wood today. So it is a bit of a different process but we do have a game plan for it and we are very excited about this business as we really think this is the true way for the world to realize the benefit of our material and our technology.
OTCEquity - Perhaps just as important as entering new markets and establishing new clients is the ability to fill the orders. What steps has Axion taken to increase production capacity to satisfy the rising demand for your products?
Steve Silverman - We've actually made a lot of headway here over the last six months. This is probably one of the first or second largest concerns in the company is increasing our capacity to produce the demand that we have for products today. We deployed more of our manufacturing equipment, mostly the molds, to our current outsource manufacturing facility in Pennsylvania which doubled our capacity and those came online back in July. We are in the process right now, as we speak here today, in starting up our second facility with a contracted supplier in Waco, Texas which will double our capacity; and then we have plans to start our third production line, also in Waco, Texas, in the same facility by the end of this year. And then we will continue to expand our capacity. Because we are an outsource manufacturing model we don't have the heavy-duty capital requirements that you'd need to put up a building and power and we are contracting with folks that already have that infrastructure in place.
OTCEquity - Now it's been just over a week since you were presenting at the Rodman & Renshaw Annual Global Investment Conference in New York and you'll be attending the upcoming American Public Transportation Association's Expo in New Orleans taking place October 3-5, which happens to be the largest public transportation showcase in the world. First, what kind of response did you get from the Rodman & Renshaw presentation, and secondly, what do you hope to gain from the APTA Expo?
Steve Silverman - The Rodman conference was very positive you know part of the process here for Axion is to begin the process of educating investors and showing our company to various investors and let them see how the company is positioned and the great proof-of-concept work that was done in the first three years of the company's evolution and then the progress we're making very quickly on the fundamentals of the business to get the company cash flow positive and earnings positive here very shortly. I thought that Rodman & Renshaw was a great platform for us to do that. We did get quite a bit of interest from the show and have been following up over the last couple of weeks. The APTA show is another exciting opportunity for us, it's going to be our, if you will, coming out party for the ECOTRAX brand name. We are very excited about that and our business development folks have been working very hard at the show and again our goal there is to broadly expose our railroad tie products to the transportation community and the railroad community. We believe we have the superior technology for a composite railroad tie our products have been tested worldwide extensively both with the American Railroad Association at the test track in Pueblo, Colorado for over 12 years and we're looking forward to showing our product off there to customers.
OTCEquity - I would like to thank you once again for taking the time to discuss the recent activities surrounding Axion as well as the some of the things we can look for in the future. Before we leave is there anything you would like to add?
Steve Silverman - Yes, just one parting comment. Thank you for having us. We are very excited about our future. We believe we have a great technology that has been very proven and has been handled over a 20-year period actually since the late 80s so this isn't some sort of fly by night technology and we have a game plan and a good foundation and platform for this company to grow as we move forward in time. So again thanks for having us and allowing us the opportunity to tell our story.
OTCEquity - Well, we certainly wish you continued success.

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